3. Labor Market, Human Capital, and Income

Question 1

Derived demand

Answer 1

Demand resulting from what a good or service can produce, not demand for the good or service itself.

Question 2

Determinants of Demand

Answer 2

Factors other than the price of a good or service that change (shift) the demand schedule, causing consumers to buy more or less at every price. Factors include income, number of consumers, preferences and prices of related goods.

Question 3

Productivity

Answer 3

The amount of output (goods and services) produced per unit of input (productive resources) used. In this case, the value of a worker’s output compared to the worker’s wage.

Question 4

Determinants of Supply

Answer 4

Factors other than the price of a good or service that change (shift) the supply schedule, causing producers to supply more or less at every price, Factors include number of producers, production costs, and technology and productivity.

Question 5

Human Capital

Answer 5

The health, education, experience, training, skills and values of people. Also known as human resources.

Question 6

Human Capital Investment

Answer 6

Investment of time, effort and resources in education and training to increase one’s own knowledge, skills, health, etc., (or to develop those assets in others.)

Question 7

Salary

Answer 7

A regular payment, often at monthly or biweekly intervals, made by an employer to an employee, especially in the case of professional or white-collar employees. This are paid for services rendered and are not based on hours worked.

Question 8

Wage

Answer 8

Payments for labor services that are directly tied to time worked, or to the number of units of output produced.

Question 9

Overtime

Answer 9

Additional compensation based on hours worked in excess of a maximum during a given period. In the U.S., overtime is usually awarded for time worked in excess of 40 hours per week, and usually at a rate equivalent to 1 and a half times the regular wage.

Question 10

Tips

Answer 10

Additional compensation provided by customers to workers in certain service sector jobs. This are frequently given for services like waiting on tables or personal services like hair care.

Question 11

Commission

Answer 11

Compensation based on the amount of business transacted, usually measured as a percentage of sales.

Question 12

Bonus

Answer 12

Additional compensation received in addition to wage or salary, usually awarded for meeting certain targets or successful completion of a project.

Question 13

Piece Rate

Answer 13

Compensation based on the number of units produced.