Chapter 40 - Labor market forces and government intervention

Question 1

Marginal Revenue Product

Answer 1

The addition to total revenue as a result of employing one more worker.

Question 2

2 Assumptions of demand for labor

Answer 2

1) Firm wishing to hire labor is operating in a perfectly competitive market.
2) Firm is a profit maximized

Question 3

Main Factors that determine the demand for labor

Answer 3

1) Wage Rate
2) Productivity
3) Demand for the product

Question 4

Long-run supply of labor

Answer 4

• Size of population
• Labor participation rate
• Tax and benefits
• Immigration and immigration

Question 5

Wage determination

Answer 5

• Wage paid to labor equals the value of the marginal product of labor
• Willingness of labor to supply their services

Question 6

Trade Union

Answer 6

An organization of workers that aims to protect and enhance the well-being of its members through collective negotiations with employers and the government.

Question 7

Monopsony

Answer 7

Where there is a single buyer in the market.

Question 8

Wage Differntial

Answer 8

Difference in pay between workers with different skills and responsibilities.

Question 9

Transfer Earning

Answer 9

The amount that is earned by a factor of production in its best alternative use.

Question 10

Economic Rent

Answer 10

A payment made to a factor of production above that which is necessary to keep it in its current use.