ECON221 exam 3
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58 terms
Terms | Definitions |
|---|---|
 derived demand | the demand for a resource that depends on the demand for the products it helps to produce |
| marginal product | the additional output produced when 1 additional unit of a resource is employed (the quantity of all other resources employed remaining constant); equal to the change in total product divided by the change in the quantity of a resource employed |
| marginal revenue product | the change in a firm's total revenue when it employs 1 additional unit of a resource (the quantity of all other resources employed remaining constant); equal to the change in total revenue divided by the change in the quantity of the resource employed |
| marginal resource cost | the amount the total cost of employing a resource increases when a firm employs 1 additional unit of the resource (the quantity of all other resources employed remaining constant); equal to the change in the total cost of the resource divided by the change in the quantity of the resource employed |
| MRP=MRC rule | the principle that to maximize profit (or minimize losses), a firm should employ the quantity of a resource at which its marginal revenue product is equal to its marginal resource cost, the latter being the wage rate in a purely competitive labor market |
| substitution effect | 1) a change in the quantity demanded of a consumer good that results from a change in its relative expensiveness caused by a change in the product's price 2) the effect of a change in the price of a resource on the quantity of the resource employed by a firm, assuming no change in its output |
| output effect | the situation in which an increase in the price of one input will increase a firm's production costs and reduce its level of output, thus reducing the demand for other inputs, conversely for a decrease in the price of the input |
| elasticity of resource demand | a measure of the responsiveness of firms to a change in the price of a particular resource they employ or use; the percentage change in the quantity of the resource demanded divided by the percentage change in its price |
| least cost combination of resources | the quantity of each resource a firm must employ in order to produce a particular output at the lowest total cost; the combination at which the ratio of the marginal product of a resource to its marginal resource cost (to its price if the resource is employed in a competitive market) is the same for the last dollar spent on each of the resources employed |
| profit maximizing combination of resources | the quantity of each resource a firm must employ to maximize its profit or minimize its loss; the combination in which the marginal revenue product of each resource is equal to its marginal resource cost (to its price if the resource is employed in a competitive market) |
| marginal productivity theory of income distribution | the contention that the distribution of income is equitable when each unit of each resource receives a money payment equal to its marginal contribution to the firm's revenue (its marginal revenue product) |
| wage rate | the price paid for the use or services of labor per unit of time |
| nominal wage | the amount of money received by a worker per unit of time |
| real wage | the amount of goods and services a worker can purchase with his or her nominal wage; the purchasing power of the nominal wage |
| purely competitive labor market | a resource market in which many firms compete with one another in hiring a specific kind of labor, numerous equally qualified workers supply that labor, and no one controls the market wage rate |
| monopsony | a market structure in which there is only a single buyer of a good, service, or resource |
| exclusive unionism | the practice of a labor union of restricting the supply of skilled union labor to increase the wages received by union members; the policies typically employed by a craft union |
| occupational licensure | the laws of state or local governments that require that a worker satisfy certain specified requirements and obtain a license from a licensing board before engaging in a particular occupation |
| inclusive unionism | the practice of a labor union of including as members all workers employed in an industry |
| bilateral monopoly | a market in which there is a single seller (monopoly) and a single buyer (monopsony) |
| minimum wage | the lowest wage that employers may legally pay for an hour of work |
| wage differentials | the difference between the wage received by one worker or group of workers and that received by another worker or group of workers |
| marginal revenue productivity | the change in a firm's total revenue when it employs 1 additional unit of a resource (the quantity of all other resources employed remaining constant); equal to the change in total revenue divided by the change in the quantity of the resource employed |
| noncompeting groups | collections of workers in the economy who do not compete with each other for employment because the skill and training of the workers in one group are substantially different from those of the workers in other groups |
| human capital | the knowledge and skills that make a person productive |
| compensating differences | differences in the wages received by workers in different jobs to compensate for nonmonetary differences in the job |
| incentive pay plan | a compensation structure that ties worker pay directly to performance; such plans include piece rates, bonuses, stock options, commissions, and profit sharing |
| income inequality | the unequal distribution of an economy's total income among households or families |
| Lorenz curve | shows the distribution of income in an economy graphically; the cumulated percentage of families (income receivers) is measure along the horizontal axis and cumulated percentage of income is measured along the vertical axis |
| Gini ratio | a numerical measure of the overall dispersion of income among households, families, or individuals; found graphically by dividing the area between the diagonal line and the Lorenz curve by the entire area below the diagonal line |
| income mobility | the extent to which income receivers move from one part of the income distribution to another over some period of time |
| noncash transfers | a government transfer payment in the form of goods and services rather than money, for example, food stamps, housing assistance, and job training; also called in-kind transfers |
| equality-efficiency trade off | the decrease in economic efficiency that may accompany a decrease in income inequality; the presumption that some income inequality is required to achieve economic efficiency |
| poverty rate | the percentage of the population with incomes below the official poverty income levels that are established by the federal government |
| entitlement programs | government programs such as social insurance, food stamps, medicare, and medicaid that guarantee particular levels of transfer payments or noncash benefits to all who fit the programs' criteria |
| social insurance programs | programs that replace the earnings lost when people retire or are temporarily unemployed, that are financed by payroll taxes, and that are viewed as earned rights (rather than public charity) |
| social security | the social insurance program in the US financed by federal payroll taxes on employers and employees and designed to replace a portion of the earnings lost when workers become disabled, retire, or die |
| medicare | a federal program that is financed by payroll taxes and provides for 1) compulsory hospital insurance for senior citizens, 2) low cost voluntary insurance to help older americans pay physicians' fees, and 3) subsidized insurance to buy prescription drugs |
| unemployment compensation | the social insurance program that in the US is financed by state payroll taxes on employers and makes income available to workers who become unemployed and are unable to find jobs |
| public assistance programs | government programs that pay benefits to those who are unable to earn income (because of permanent disabilities or because they have very low income and dependent children); financed by general tax revenues and viewed as public charity (rather than earned rights) |
| supplemental security income | a federally financed and administered program that provides a uniform nationwide minimum income for the aged, blind, and disabled who do not qualify for benefits under social security in the US |
| temporary assistance for needy families | a state administered and partly federally funded program in the US that provides financial aid to poor families; the basic welfare program for low income families in the US; contains time limits and work requirements |
| food stamp program | a program permitting low income persons to purchase for less than their retail value, or to obtain without cost, coupons that can be exchanged for food items at retail stores |
| medicaid | a federal program that helps finance the medical expenses of individuals covered by the supplemental security income and temporary assistance for needy families programs |
| earned income tax credit | a refundable federal tax credit for low income working people designed to reduce poverty and encourage labor force participation |
| discrimination | the practice of according individuals or groups inferior treatment in hiring, occupational access, education and training, promotion, wage rates, or working conditions even though they have the same abilities, education, skills, and work experience as other workers |
| taste for discrimination model | a theory that views discrimination as a preference for which an employer is willing to pay |
| discrimination coefficient | overt discrimination; a measure of the cost or disutility of prejudice; the monetary amount an employer is willing to pay to hire a preferred worker rather than a nonpreferred worker |
| statistical discrimination | the practice of judging an individual on the basis of the average characteristic of the group to which he or she belongs rather than on his or her own personal characteristics |
| 11,700 | poverty for a single person is someone who makes less than ___ a year |
| 23,000 | poverty for a family of 4 is a family making less than ___ a year |
| 32,800 | poverty for a family of 6 is a family making less than ___ a year |
| 15.1 | poverty rate in 2010 was ___% |
| entitlement | ___ programs include all those eligible to receive aid |
| ss, medicare, unemployment compensation | social insurance programs include.... |
| welfare, supplemental security income, temp assistance for needy families, food stamp program, medicaid, earned income tax credit | public assistance programs include... |
| occupational segregation | the crowding of women or minorities to less desirable, lower-paying occupations |
| institutional discrimination | assumptions: all workers are equally capable of being productive, so what is the effect of inferior education/training opportunities for minorities?; inferior training/education for minorities limits the supply of high skilled workers and increases the supply of low skilled workers; as a result minorities obtain lower wages and white obtain higher wages, reflecting both the impact of supply and the higher MRP for high skilled jobs |
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