Labour Markets Flashcards
Production function
Relationship between the inputs into production and output from production
As Q of input increases, production function gets flatter-diminishing marginal product
Derived demand
Demand is determined by the supply in another market
Value of the marginal product
The marginal product of an input X Price of the output
Marginal revenue product
Extra revenue a firm gets from hiring an additional unit of FOP
Formula for marginal cost of a unit of output
MC=W/MP
W is wage
MP is marginal product
What causes labour demand curve to shift
Output price (value of marginal product X price of firms output) Technological change Supply of other factors
What causes labour supply curve to shift
Changes in taste
Changes in alternative opportunities
Immigration
Monopsony
Market with single buyer
Human capital
The accumulation of investments in people such as education and on the job training
Min wage
Lowest price an employer may legally pay to a worker
Union
A worker association that bargains with employers over wages and working conditions
Efficiency wages
Above equilibrium wages paid by firms in order to increase worker productivity
Discrimination
The offering of diff opps to similar individuals who differ only by race, ethnic group, sex, age or other personal characteristics
Economic rent
Amount a FOP earns over and above its transfer earnings
Transfer earnings
The min payment required to keep a FOP in its current use
