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econ test 4

vocab for ch 18, 19 20

factors of production the inputs used to produce goods and services
Labor, land, and capital the three most important factors of production.
marginal product of labor the increase in the amount of output from an additional unit of labor
diminishing marginal product the property whereby the marginal product of an input declines as the quantity of the input increases
derived demand The demand for a factor of production is a.
production function the relationship between the quantity of inputs used to make a good and the quantity of output of that good
diminishing marginal product As the quantity of the input increases, the production function gets flatter, reflecting the property of.
value of the marginal product the marginal product of an input times the price of the output is the
marginal revenue product: It is the extra revenue the firm gets from hiring an additional unit of a factor of production
downward value of the marginal product curve slopes_______ because the marginal product of labor diminishes as the number of workers rises.
wage competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the
labor-demand the value-of-marginal-product curve is the ____ _____curve for a competitive, profit-maximizing firm
the value of the marginal product Any event that changes the supply or demand for labor must change the equilibrium wage and_______ -|______ by the same amount because these must always be equal
A monopsony a market with one buyer
Capital the equipment and structures used to produce goods and services
Purchase price of land or capital the price a person pays to own that factor of production indefinitely.
rental price the price a person pays to use that factor for a limited period of time
marginal contribution Labor, land, and capital each earn the value of their _________to the production process
neoclassical theory the amount paid to each factor of production depends on the supply and demand for that factor
value of its marginal contribution In equilibrium, each factor of production earns the ____________to the production of goods and services
Compensating differential a difference in wages that arises to offset the nonmonetary characteristics of different jobs
human capital the accumulation of investments in people, such as education and on-the-job training
union a worker association that bargains with employers over wages and working conditions
strike the organized withdrawal of labor from a firm by a union
efficiency wages above-equilibrium wages paid by firms to increase worker productivity
discrimination the offering of different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics
eliminate discriminatory wage differentials Competitive markets contain a natural remedy for employer discrimination. The entry into the market of firms that care only about profit tends to.
when the government mandates it wage differentials persist in competitive markets only when customers are willing to pay to maintain the discriminatory practice or
poverty rate the percentage of the population whose family income falls below an absolute level called the poverty line
poverty line an absolute level of income set by the federal government for each family size below which a family is deemed to be in poverty
in-kind transfers transfers to the poor given in the form of goods and services rather than cash
life cycle the regular pattern of income variation over a person’s life
permanent income a person’s normal income
positive statements in the sense that it merely described the world as it is
utilitarianism the political philosophy according to which the government should choose policies to maximize the total utility of everyone in society
utility a measure of happiness or satisfaction
utilitarian case for redistributing income is based on the assumption of diminishing marginal utility
liberalism the political philosophy according to which the government should choose policies deemed just, as evaluated by an impartial observer behind a “veil of ignorance”
maximin criterion the claim that the government should aim to maximize the well-being of the worst-off person in society
social insurance government policy aimed at protecting people against the risk of adverse events
libertarianism the political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income
welfare government programs that supplement the incomes of the needy
negative income tax a tax system that collects revenue from high-income households and gives subsidies to low-income households
The output price: An increase in the price of output increases the value of the marginal product and shifts labor demand right.
Technological change: An advance in technology typically raises the marginal product of labor and shifts labor demand right.
Luddites oppose technological progress because they mistakenly think it destroys jobs
The supply of other factors: An increase in the supply of a factor used with labor in production increases the marginal product of labor and shifts labor demand to the right
the right changes in tastes, alternative opportunities, immigration all can shift the labor supply to ______
Created by: romoore245



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