Q1. L7. Unit 6 – Employment Relationship: [10 marks] a) Use the
Labour-discipline model of wage-setting within the firm to explain
how wages are determined. In your answer, show how the employer
sets the wage to minimise the cost of effort. [5 marks]
Show, in general, how the best response curve depends on the
level of unemployment and the unemployment benefit. Demonstrate,
more specifically, how the conditions of the Labour-discipline
model affect the employee’s best response function when an improved...