final exam

Question 1

marginal physical product ((MPP)) of labor

Answer 1

The change in output resulting from the addition of one more worker. The MPP of the worker equals the change in total output accounted for by hiring the worker, holding all other factors of production constant.

Question 2

Marginal revenue product ((MRP))

Answer 2

The marginal physical product (MPP) times marginal revenue (MR). The MRP gives the additional revenue obtained from a one-unit change in labor input.

Question 3

Marginal factor cost (MFC)

Answer 3

The cost of using and additional unit of an input. For example, if a firm can hire all the workers it wants at the going wage rate, the marginal factor cost of labor is the wage rate.

Question 4

derived demand

Answer 4

Input factor demand derived from demand for the final product being produced.

Question 5

outsourcing

Answer 5

A firm’s employment of labor outside the country in which the firm is located.

Question 6

labor unions

Answer 6

worker organizations that seek to secure economic improvements for their members; they also seek to improve the safety, health, and other benefits (such as job security) of their members.

Question 7

craft unions

Answer 7

labor unions composed of workers who engage in a particular trade or skill, such as baking , carpentry, or plumbing.

Question 8

collective bargaining

Answer 8

negotiation between the management of a company or of a group of companies and the management of a union or a group of unions for the purpose of reaching a mutually agreeable contract that sets wages, fringe benefits, and working conditions for all employees in all the unions involved.

Question 9

industrial unions

Answer 9

Labor unions that consist of workers from a particular industry, such as automobile manufacturing or steel manufacturing.

Question 10

right-to-work laws

Answer 10

Laws that make it illegal to require union membership as a condition of continuing employment in a particular firm.

Question 11

closed shop

Answer 11

A business enterprise in which employees must belong to the union before they can be hired and must remain in the union after they are hired.

Question 12

union shop

Answer 12

A business enterprise that may hire nonunion members, conditional on their joining the union by some specified date after employment begins.

Question 13

jurisdictional dispute

Answer 13

A disagreement involving two or more unions over which should have control of a particular jurisdiction, such as particular craft or skill or a particular firm or industry.

Question 14

sypathy strike

Answer 14

A work stoppage by a union in sympathy with another union’s strike or cause.

Question 15

secondary boycott

Answer 15

A refusal to deal with companies or purchase products sold by companies that are dealing with a company being struck.

Question 16

strikebreakers

Answer 16

Temporary or permanent workers hired by a company to replace union members who are striking.

Question 17

featherbedding

Answer 17

Any practice that forces employers to use more labor than they would otherwise or to use existing labor in an inefficient manner.

Question 18

monopsonist

Answer 18

The only buyer in a market.

Question 19

monopsonistic exploitation

Answer 19

Paying a price for the variable input that is less than its marginal revenue product; the difference between marginal revenue product and the wage rate.

Question 20

bilateral monopoly

Answer 20

A market structure consisting of a monopolist and a monopsonist.

Question 21

distribution of income

Answer 21

The way income is allocated among the population.

Question 22

lorenz curve

Answer 22

A geometric representation of the distribution of income. A Lorenz curve that is perfectly straight represents complete income equality. The more bowed a Lorenz curve, the more unequally income is distributed.

Question 23

income in kind

Answer 23

Income received in the form of goods and services, such as Housing or medical care; to be contrasted with money income, which is simply income in dollars, or general purchasing power, that can be used to buy any goods and services.

Question 24

age-earnings cycle

Answer 24

The regular earnings profile of an individual throughout his or her lifetime. The age-earnings cycle usually starts with a low income, builds gradually to a peak at around age 50, and then gradually curves down until it approaches zero at retirement.

Question 25

third parties

Answer 25

Parties who are not directly involved in a given activity or transaction. For example, in the relationship between caregivers and patients, fees may be paid by third parties (insurance companies, government).

Question 26

health saving account

Answer 26

Parties who are not directly involved in a given activity or transaction. For example, in the relationship between caregivers and patients, fees may be paid by third parties (insurance companies, government).