Question

“I don’t even know if I’m going to have a career after this semester” - Katherine Cox. Ms Cox is facing the prospect of finishing her PhD and then being jobless.

A. What positive externalities will this create for the labour market? Explain your answer in 2-3 lines. [1.5 marks]

B. What negative externalities will this create for the labour market? Explain your answer in 2-3 lines. [1.5 marks]

Answer 1

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Question:

Answer:

Positive externalities related to the benefits  to the third party and negative externalities related to the loss to the third party.

A). Answer:

As per the question there is a situation - "I don’t even know if I’m going to have a career after this semester” - Katherine Cox. Ms Cox is facing the prospect of finishing her PhD and then being jobless. In this case the positive externalities is- it will open the opportunity for the other job seeker. It will affect the supply of labour force and will positively affect the wages rate in the job market.

B). Answer:

As per the question there is a situation - "I don’t even know if I’m going to have a career after this semester” - Katherine Cox. Ms Cox is facing the prospect of finishing her PhD and then being jobless. In this case the negative externalities is- the job market will lose a skilled and highly qualified candidate and it could be affect the productivity of the firms. The market will lose a talent and it could be possible that the market hire an employee that is less qualified and skilled that will negatively affect the market. It is a another possibility that it will increase gap between demand and supply and affect wages negatively.

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