Quiz 10 Flashcards
Equilibrium value of the marginal product
the additional value produced by the last unit of a factor employed in the factor market as a whole.
Unions
organizations of workers that try to raise wages and improve working conditions for their members by bargaining collectively.
Transaction costs
the expenses of negotiating and executing a deal.
Marginal revenue product of labor (MRPL)
equals the marginal product of labor times the marginal revenue received from selling the additional output. The marginal revenue product of land and marginal revenue product of capital are equivalent concepts.
Compensating differentials
wage differences across jobs that reflect the fact that some jobs are less pleasant or more dangerous than others.
Individual labor supply curve
a graphical representation showing how the quantity of labor supplied by an individual depends on that individual’s wage rate.
Coase theorem
the proposition that even in the presence of externalities an economy can always reach an efficient solution as long as transaction costs are sufficiently low.
Monopsony
a market in which there is only one buyer.
Internalize the externalities
when individuals take into account external costs and external benefits.
Socially optimal quantity of pollution
the quantity of pollution that society would choose if all the costs and benefits of pollution were fully accounted for.
Marginal factor cost of labor (MFCL)
the additional cost of hiring an additional worker. The marginal factor cost of land and marginal factor cost of capital are equivalent concepts.
External benefit
an uncompensated benefit that an individual or firm confers on others; also known as positive externalities.
Marginal social benefit of pollution
the additional gain to society as a whole from an additional unit of pollution.
Positive externalities
external benefits
Emissions taxes
a tax that depends on the amount of pollution a firm produces.
