QUESTION 1

a)  Carefully describe what is shown in Figures 1 and 2 below. Your answer should focus on what the graphs actually show and not what you can infer.

(10 marks)

Figure 1: Work patterns of home workers. Total homeworkers who were working from home by time of day, Great Britain, 2015 to 2020. Index 12:00=100. Wave 1 reference period 28 March to 26 April 2020. Wave 2 reference period 5 September to 11 October 2020.

Source: Office for National Statistics and NatCen – Time Use Survey.

Figure 2: Net sentiment towards advantages/disadvantages of homeworking. Great Britain, 21 April to 16 May 2021. Questions: “Which of the following advantages/disadvantages have you experienced since working from home compared to your usual place of work?” Net sentiment is calculated by subtracting “disadvantages” percentage points from the associated “advantages” percentage points. Source: Office for National Statistics – Opinions and Lifestyle Survey (COVID-19 module).

QUESTION CONTINUES ON NEXT PAGE >>>>

b)   In 2-4 sentences, explain what is meant by the term ‘incomplete contract’ and how it links to what is shown in the graphs above.

Your explanation should be appropriate for an audience with no-prior knowledge of economics. It should be intuitive and should not use any technical terms or jargon.

(10 marks)

c)

i)          Below are a set of labour discipline models, illustrating four different          scenarios, each with one point indicated as point A. Choose one of the     scenarios and explain why point A in that scenario represents a Nash equilibrium. Your answer should also refer to the terms marginal rate of substitution and marginal rate of transformation and what these terms mean within the context of this model.

(15 marks)

3 2

7

8

3 2

Hourly wage, ($)

SCENARIO 2

8 7

Hourly wage, ($)