Factor Markets

Question 1

Marginal Revenue Product of Labor (MRP of L)

Answer 1

MRP of L = MP of L x P of Output

Question 2

Monopsony

Answer 2

When one firm is the sole purchaser of labor services in a market

Question 3

Marginal Factor Cost (MFC)

Answer 3

The additional cost of hiring one more worker

Question 4

Union Intentions

Answer 4

• Increase D of L
• Decrease S of L
• Negotiate Higher Wages

Question 5

Bilateral Monopoly

Answer 5

When there is just one seller and one buyer in the same market

Question 6

Market Failure

Answer 6

Occurs when resources are not allocated optimally

Question 7

Imperfect Information

Answer 7

Means that buyers and/or sellers do not have full knowledge about available markets

Question 8

Externalities

Answer 8

Costs or benefits felt beyond those causing the effects

Question 9

Marginal Private Cost (MPC)

Answer 9

The additional cost per quantity in a private market

Question 10

Marginal External Cost (MEC)

Answer 10

The additional cost imposed to those not in the market

Question 11

Public Goods

Answer 11

Goods that many individuals benefit from at the same time

Question 12

Nonrival

Answer 12

Means that one person’s consumption of a good does not affect its consumption by others

Question 13

Nonexcludable

Answer 13

Goods cannot be held back from those who want them

Question 14

Free Rider

Answer 14

One who attempts to benefit from a public good without paying for it

Question 15

Lorenz Curve and Gini Coeffient

Answer 15

Measure income equality

Question 16

Poverty Line

Answer 16

The official benchmark of poverty

Question 17

Progressive Tax

Answer 17

The government receives a larger percentage of revenue from families with larger incomes

Question 18

Regressive Tax

Answer 18

Collects a larger tax from families with smaller incomes

Question 19

Proportional Tax

Answer 19

Collects the same percentage of income from all families

Question 20

Social Security

Answer 20

Provides cash benefits and health insurance to retired and disabled workers and their families

Question 21

Public Assistance/Welfare

Answer 21

Provides temporary assistance to the very poor

Question 22

Supplemental Security Income (SSI)

Answer 22

Assists very poor elderly individuals who have no assets or Social Security Entitlements

Question 23

Unemployment Compensation

Answer 23

Provides temporary assistance to unemployed workers

Question 24

Medicaid

Answer 24

Provides and health and hospitalization benefits to the poor

Question 25

Food Stamp and Public Housing

Answer 25

Provide food and shelter for the poor