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WEEKS 7-12 ECON102 FLASHCARDS > WEEK 10 > Flashcards

WEEK 10 Flashcards

1
Q

the 2 options to model labour

A

Spend time working
Spend time leisure

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2
Q

the substitution effect of a wage change on labour supply is always what

A

positive

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3
Q

The income effect of a wage change on labour can be what

A

positive or negative

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4
Q

Whats the equation for Marginal value product of labour

A

MVPL = marginal product of labour x output price

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5
Q

What is the marginal cost of labour in perfect competition

A

Wage

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6
Q

Firms will employ workers up to the point where

A

Wages = MVPL

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7
Q

IN monopoly power what does MPL x MR make

A

labour demand curve

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8
Q

What is left out of MVP in monopolies

A

MRP

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9
Q

Why is MRP left out of MVP in monopolies

A

As a monopoly produces less output than a competitive firm - employs less workers

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10
Q

In a monopsony MCL will be what sloping

A

Upwards sloping

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11
Q

In monopsony power profit maximisation occurs where

A

MCL = MRP

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12
Q

Wage is determined by what in monopsony

A

Average cost of labour

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13
Q

When do firms gain monopsony powers

A

When workers are not constantly searching for other jobs

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14
Q

What are 5 reasons there is difference in earnings

A

Human capital explanation

Trade unions

Compensating wage differentials

Discrimination by employers

Discrimination by others

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15
Q

What is the human capital explanation

A

Pay is determined on their stock of “human capital”

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16
Q

What is human capital

A

Certain factors of someone such as education, energy, experience

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17
Q

Why does trade unions explain differences in wages

A

Group of workers bargain with employers for better wages

18
Q

Why does compensating wage differential explain differences in wage

A

Can expect jobs with worse working conditions to pay more than one with nice conditions

19
Q

Why does discrimination by employers explain differences in wage

A

An employer reflects a preference for a group of workers compared to another

20
Q

Why does discrimination by others explain differences in wage

A

Customers might want to only buy a product produced by their favored group

21
Q

What was the % of the bottom 20% of income distribution in 2008

A

3.4%

22
Q

What was the % of the highest 20% of income distribution in 2008

A

50.3%

23
Q

What is the gini coefficient

A

A measure of equality and distribution on income or wealth by percentages of households or individuals from poorest to richest

24
Q

What does the gini coefficient provide

A

A basis for comparing distributions on an onjective numerical basis

25
Q

If the income of the population was perfectly equal what would happen to the gini coefficient graph

A

45 degrees line

26
Q

What is the Lorenz curve

A

The graph of the cumulative distribution of income by % of people from poorest to richest

27
Q

What foes an indifference analysis show

A

Shows preferences for working and leisure

28
Q

Example of something that can be used as a budget constraint

A

A weekly wage

29
Q

is a budget constraint a curved or straight line

A

Striaght

30
Q

How do indifference labour demand graphs show how many hours of labour should be done

A

When the budget line and indifference curve touch

31
Q

The substitution effect shifts left or right on the labour demand graph

A

Right

32
Q

What are the X and Y axis on labour graphs

A

X = Leisure
Y = Income

33
Q

At high wages what can happen

A

the income effect dominates the substitution effect

34
Q

What does the income effect dominating the substitution effect mean

A

leads to a backward bending supply of labour

35
Q

What graph shape can high wages lead to

A

A reverse c

36
Q

What does overtime introduce in labour demand graphs

A

A kink (An extra downwards line that will hit a higher indifference curve as more income)

37
Q

Will a monopoly hire more or less workers

A

Less as less output

38
Q

What can a minimum wage generate

A

An excess supply of labour - unemployment

39
Q

What can a minimum wage do under a monopsony

A

Raise employment

40
Q

When a minimum wage is imposed the MCL becomes what

A

the minimum wage

WEEKS 7-12 ECON102 FLASHCARDS (7 decks)

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