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Economics > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

Wages

A

Paid hourly or weekly it is a variable cost to a firm

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2
Q

Salary

A

Paid monthly as a fixed amount

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3
Q

Piece rate

A

Fixed amount per unit produced however workers tend to focus on quantity rather than quality

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4
Q

Commission

A

Percentage value of goods or services sold

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5
Q

Bonus

A

Extra sum of money paid to workers who produce above standard amount of finish ahead of time

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6
Q

Overtime pay

A

Payment workers work excess of standard working hours

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7
Q

Non-wage Factors

A

Just wish we picked juice instead for lunch

  • Job satisfaction
  • working conditions
  • working hours
  • pension
  • Job security
  • Education and training
  • fringe benefits
  • Location
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8
Q

How are wages determined

A

By supply and demand of labor

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9
Q

Factors leading to shifts in demand for labor

A

DPC

  • increase in demand
  • Increase in productivity
  • High price of capital
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10
Q

Factors leading to shift in supply of labor

A

FTFNUM

  • fall in labor force
  • increased length of training
  • low fringe benefits
  • Better Nonwage factors in other occupations
  • Rise in unemployment benefits
  • occupational and geographical immobility
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11
Q

What gives workers the ability to negotiate for increased wages

A

Strong bargaining power

  • if labor or members in a trade union with high power
  • if labor have high skill due to education and more experience
  • if there is high demand for goods and services produced
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12
Q

Advantages of setting minimum wage above equilibrium

A
  • Increase labor productivity
  • more labor supply as incentive to work increases
  • aggregate demand increases so firms hire more labor and produce more output leading to economic growth
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13
Q

Disadvantages of setting national minimum wage above equilibrium

A
  • unemployment increases as firms demand less labor and they may replace them for machines
  • Workers who are an above national minimum wage may ask for a wage increase to maintain wage difference so cost of production increase
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14
Q

Why skilled earn more

A
  • low supply is they require more education and training

- High demand due to high productivity and cannot be replaced by machines

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15
Q

Why unskilled labor may earn more

A
  • increase demand for goods and services
  • maybe members of a trade union
  • Unskilled may be working in a developed country
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16
Q

Why male may earn more

A
  • Female work part time
  • Female take Career breaks to have children so less promotion
  • females may accept low paid jobs to have more flexible hours
  • discrimination against female
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17
Q

Why females may earn more

A

Females in developed countries have high paid jobs and are well educated, May Post pone having children for career prospects

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18
Q

Why public sector may offer more wages

A
  • High demand for public sector goods
  • low supply of labor in public sector so higher wages
  • private sector may offer longer holidays and shorter working hours
  • High degree of danger so may be compensated with higher wages
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19
Q

Private sector May earn more

A

They offer high paid because public sector offers more job security and high pension
-Seek profit maximization someone to attract skilled labor that are more productive

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20
Q

Why primary sector and secondary sector may earn more

A
  • High demand on goods and services produced
  • workers can be members of trades union
  • have more experience than Fresh graduate in service sector
  • maybe working in a developed country with high standard of living
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21
Q

Why Tertiary sector may earn more

A
  • Low supply due to high use of education and training

- High demand on labor due to high productivity and can’t be replaced by machines

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22
Q

Specialization of labor

A

Concentration on a particular task this occurs when work becomes an expert in a certain profession

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23
Q

Division of labor

A

Occurs when the production process is split the tasks and workers specialize in one task only

24
Q

Why specialization Will lower average cost of firms

A
  • workers specialize in what they are best at and repetition of the task would increase productivity
  • Workers between more quickly and cheaply in one task only
  • workers do not have to move from one job to another so time is saved
  • reduces wastes
  • Firms can use machine and labor so productivity increases
25
Q

Why may specialization also lead to higher average cost

A
  • Workers get bored Tasks or repetitive so productivity decreases
  • difficult to replace workers who are ill as they are specialized
  • specialized workers are skilled so they have no supply and if there is high demand for their service wages will increase so average cost of firms increase
26
Q

Advantages of specialization for workers

A
  • experts in skilled in their field so earnings will increase as they are low in supply and have high demand due to increased productivity
  • Time and cost of training is Lower
27
Q

Disadvantages of specialization for workers

A
  • Work is boring and repetitive leading to know productivity so wages decrease
  • workers specializing in law school work and be replaced by machines leading to unemployment
  • work is like occupational mobility to difficult to find other jobs
28
Q

Trade union

A

And organization of workers formed to negotiate on their behalf for improved pay in good working conditions

29
Q

Role of trade union

A
  • negotiate on behalf of the members
  • help with education and training of new members
  • trade union can pressure government to adopt laws that will benefit The members
30
Q

Factors that increase strength of trade union

A
  • output and income in economy is high
  • high number of members
  • High labor skill
  • High demand for goods and services produced by members
  • favorable government laws
31
Q

Reason for declining trade union membership

A
  • unfavorable government laws
  • increased unemployment
  • increased membership fees
  • increased employment in small firms
32
Q

Advantages of a trade union

A
  • act as a channel of communication between firms and employees leading to increased productivity
  • encourage workers to get education and training
  • negotiate on behalf of workers so standards of living increase
33
Q

Disadvantages of a trade union

A
  • Industrial action will reduce output firms leading to lots of revenue and profits
  • demanding I wages will increase costs of production for firms so profits Will decrease
  • Government tax revenue decreases due to increased unemployment and lost profit
34
Q

Functions of money

A
  • medium of exchange
  • Measure value
  • Store value
  • Standard for deferred payment
35
Q

Medium of exchange

A

Money is widely accepted for payment of goods and services

-allow people to buy and sell goods and services

36
Q

Measure of value

A

Unit of account

  • Measure market value of goods and services.
  • more efficient for trading express price value
  • enables buyers and seller to agree on what items Are worth
37
Q

Store of value

A

Money can be saved and used At a later date(useless with high inflation)

38
Q

Standard for deferred payment

A
  • allows people to borrow and lend

- they can agree on the amount to be paid in the future

39
Q

Characteristics of money

A
  • acceptability
  • durability
  • divisibility
  • scarcity
  • portability
  • homogeneous
40
Q

Commercial banks

A

Banks that aim to make profit by providing services to households and firms

41
Q

Primary function of commercial banks

A
  • Account deposits
  • making loans
  • enable customers to make and receive payment out of their account using debit card credit card or online banking
42
Q

Secondary function of commercial banks

A
  • collecting and clearing checks on behalf of customers
  • offer financial services example buying and selling shares
  • safety deposit box
  • money transfer facility
  • provide credit care facility
  • Internet banking
43
Q

Central Bank

A

Government on bank provides banking service to government and commercial banks and sets monetary policy

44
Q

Functions of a central bank

A
  • sole issuer Ofnotes and coins
  • Government bank: except government deposits and makes loans to government
  • bankers bank: Old accounts at commercial banks to settle between them
  • lender of last resort:Lends to Banks which R temporarily short in cash
  • manages national debt
  • sets monetary policy
  • holds the countries foreign currency and gold
45
Q

Overdraft

A

short term loan with very high interest

46
Q

Type of Deposits in commercial banks

A
  • current acc

- time deposit

47
Q

Backward bending S of labor

A

tradeoff between work and leisure time when wages rise high enough

48
Q

National min wage

A

lowest wages a firm can pay to workers, set by gov above equilibrium

49
Q

Collective bargaining

A

a negotiation between TU and employer

50
Q

Why may TU ask for higher wages

A
  • inc cost of living
  • workers in other occupation had a rise in wages
  • inc profit of firms
  • inc labor productivity
51
Q

Closed shop

A

employers can only employ member of TU

52
Q

Industrial action

A

when worker disrupts production to pressure employer to agree to demands

53
Q

Time deposit

A

period of notice must be given in advance to withdrawal, interest is payed

54
Q

Wealth

A

stock of assets

55
Q

How can wealth influence sp

A
  • generates income as dividend on shares or interest on saving
  • can be cashed in
  • act as a collateral
  • inc confidence levels

Economics (11 decks)

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