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econ test 4
vocab for ch 18, 19 20
| Question | Answer |
|---|---|
| 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