Question

(a) With respect to efficiency of labour answer the questions that follow: 

1. On what basis can efficiency of labour be measured? 

2. State two factors that influence the efficiency of labour. 

3. Explain two measures for improving efficiency of labour in India.

(b) What is meant by elasticity of supply? Using graphs explain any four types of elasticity of supply.

Answer 1

(a) 1. Efficiency of labour can be measured on the basis of: 

1. the quantity of output produced by a worker. 

2. the quantity of the product produced by a worker. 

3. time taken by a worker to produce that product 

2. Two factors that influence the efficiency of Labour: 

1. Wages not determined by efficiency—Workers in India are not paid according to their efficiency. The employers do not give to the efficient workers the higher wages that they deserve. 

2. Inadequate training facilities—There is also a lack of training facilities for the workers in India. In the absence of training facilities, the workers are not able to develop their skills thus leading to low efficiency. 

3. Two measures for improving efficiency of labour in India: 

1. Productivity linked wage—Wages should be linked to productivity of the workers. Hence more efficient workers should be paid higher wages than compared to their less efficient counterparts. 

2. Improved working conditions—Attention should be paid to the working conditions in the factories. More hygienic conditions and congenial conditions would help in achieving higher levels of efficiency. 

Adequate training Facilities—Adequate provisions for imparting training to the workers should be made. 

(b) Elasticity of supply can be defined as a measure of the degree of responsiveness of supply to change in price.

E_s = Percentage change in Quantity supplied /percentage change in price

Four types of elasticity of supply: 

1. Perfectly inelastic: The supply of a commodity is said to be perfectly inelastic when quantity supplied does not change at all in response to change in its price. 

In such a case, supply curve becomes vertical or parallel to Y-axis. The fig. (a) clearly indicates that supply remains fixed at OS, even when price rises to OP₁; or fall to OP₂. The numerical values of elasticity of supply in this case will be

(a) Perfectly inelastic supply curve

(b) Less inelastic supply curve

2. Less Inelastic or Relatively Inelastic: When the percentage change in quantity supplied is less than the percentage change in price, supply will be relatively inelastic. The supply curve has a steep slope. Fig. (b) represents the slope of the curve SS is steep here which shows that change in supply (QQ₁) is less than change in price (PP₁). In this case, straight line supply curve SS originates from the X-axis. 

3. More than unit Elastic or Relatively Elastic: When percentage change in supply is greater than percentage change in price, supply is said to be relatively elastic (i.e., Es >1). In Fig. (c) Supply curve SS reflects the ‘more than unit elastic’ supply. It clearly shows that percentage change in quantity supplied is greater than percentage change in price. This will be the case when any straight line supply curve originates from the Y-axis.

 Fig (c)

Fig (d)

4. Perfectly Elastic: The supply of a commodity will be perfectly elastic when its supply changes to any extent irrespective of any change in price. In fig. (d) supply curve is horizontal line in shape. It implies that a fixed price of OP, the quantity supplied may increase or decrease to any extent.