factor markets Flashcards
Labour market assumptions ?
- quality differentiation
- independent workers
- perfect mobility and perfect knowledge
What do trade unions do ?
Collective bargaining
negotiations between employer and trade union over pay or workplace conditions
What is the goal of trade unions ?
to reduce the amount of workers being employed and to increase wages for those in employment
What are the G5 economies ?
France, Germany, Japan, UK and US
What is derived demand ?
This arises for a factor of production because there is a demand for the output of the factor of production e.g. demand for labour
Profit maximisation =
marginal revenue = marginal cost
in the short run labour is…
variable
in the short run capital is…
fixed
What is the additional output an extra worker produces ?
Marginal physical product
What is the extra revenue that is produced from an extra worker called ?
marginal revenue product of labour
who are the economically active ?
Those who are in some kind of paid employment or those who are actively seeking it.
What is the participation rate ?
This is the proportion of economically active workers in a particular group iof the population
What is the reservation wage ?
The amount of wage required to induce an individual to accept a job
what is the substitution effect ?
As the wage rate increases, there is a positive incentive to work more hours because the benefit of work compared to leisure is higher
What is the income effect ?
An increase in wage rate can reduce the incentive to work more hours because less hours of work are required to achieve a given income
