Chapter 10

Question 1

Law of Diminishing Returns

Answer 1

As more labor is used, the extra output that an employee can produce declines at some point

Question 2

Value Marginal Product

Answer 2

Marginal Product of a worker multiplied by the price of the output

Question 3

Human Capital

Answer 3

Raising the demand for the individuals labor

Question 4

Screening Theory

Answer 4

Says that education and training may be valuable to the individual, points out which employees will be good

Question 5

Make Work Fallacy

Answer 5

Idea that jobs have value, regardless of whether labor actually creates value

Question 6

Establishment Survey

Answer 6

Ask large businesses about how many employees are on their payroll, to measure the number of jobs the economy is creating.

Question 7

Household Survey

Answer 7

Asks indivuals about their employment status by telephone

Question 8

Labor Force Participation Rate

Answer 8

Measures how many people are interested in holding a job

Question 9

Discouraged Workers

Answer 9

Those who have looked for a job at some time during the previous 12 months, but are no longer looking because they think no jobs are available

Question 10

Frictional Unemployment

Answer 10

Occurs because of the normal workings of the labor force with people changing jobs and entering the labor force with skills that will likely soon yield a job

Question 11

Structural Unemployment

Answer 11

Longer Term problem which occurs due to changes in the labor force that render some skills obsolete

Question 12

Cyclical Unemployment

Answer 12

It arises due to contractions that occur during the business cycle

Question 13

Full Employment

Answer 13

is said to exist when there is no cyclical unemployment