Section 13

Question 1

Human capital

Answer 1

Is the improvement in labor created by education and knowledge that is embodied in the workforce

Question 2

Derived demand

Answer 2

Results from the demand for the output being produced

Question 3

factor distribution of income

Answer 3

Division of total income among land, labor, capital, entrepreneurship

Question 4

Value of the marginal product

Answer 4

Value of the additional output generated by employing one more unit of that labor

Question 5

Value of the marginal product curve

Answer 5

Shows how the value of the marginal product of that factor depends on the quantity of the factor employed.

Question 6

Rental rate

Answer 6

The cost of either the Land of capital of using a unit of that asset for a given period of time

Question 7

Marginal productivity theorem of income distribution

Answer 7

Every factor of production is paid the equilibrium value of its marginal product.

Question 8

Time allocation

Answer 8

How many hours to spend on different activities

Decisions about labor and supply

Question 9

MRPL

Answer 9

MPL times the marginal revenue from receiving the additional output

Question 10

MFCL

Answer 10

Additional cost of hiring another worker

Question 11

Monopsony

Answer 11

A single buyer in a factor market

Question 12

Cost minimization rule

Answer 12

Hire factors so that the marginal product per dollar spent on each factor is the same.

Question 13

Compensating differentials

Answer 13

Wage differences across jobs that reflect the fact that some jobs are less pleasant or more dangerous than others.

Question 14

Unions

Answer 14

Organizations of workers that try to raise wages and improve working conditions for their members by bargaining collectively

Question 15

Efficiency wage model

Answer 15

Some employers pay an above equilibrium wAge as an incentive performance and loyalty

Question 16

Marginal social cost of pollution

Answer 16

The additional cost imposed on society as a whole by an additional unit of pollution

Question 17

Marginal social benefit of pollution

Answer 17

The additional gain to society as a whole from an additional unit of pollution

Question 18

Socially optimal quantity of pollution

Answer 18

The quantity of pollution that society would choose if all costs and benefits were fully accounted for.

Question 19

External cost

Answer 19

An uncompensated cost that an individual or firm imposes on others

Question 20

External benefit

Answer 20

Is a benefit that an individual or firm confers on others without receiving compensation

Question 21

Externalities

Answer 21

External costs and benefits

Question 22

Coase theorem

Answer 22

Even in the presence of externalities, and economy can always reach an efficient solution as long as the cost of making the deal is low

Question 23

Transaction cost

Answer 23

The costs to individuals for making a deal

Question 24

Environmental standards

Answer 24

Rules that protect the environment by specifying limits or actions for producers and consumers

Question 25

Emissions tax

Answer 25

A tax that depends on the amount of pollution a firm produces

Question 26

Pigouvian tax

Answer 26

Taxes designed to reduce external costs

Question 27

Tradable emissions permits

Answer 27

Licenses to emit limited quantities of pollutants that can be bought and sold by polluters

Question 28

Physical capital

Answer 28

Manufactured productive resources | -equipment, buildings, tools, machines