| Term | Definition |
|---|
| Externality | Side effect of an economic transaction; can be positive (economic growth) or negative (pollution) |
| Free Rider | A person who receives the benefits of a good without paying for it. |
| Property Rights | The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it. |
| Positive Externality | A situation where a third party outside the transaction benefits from a market transaction by others (economic growth, education, etc.) |
| Negative Externality | A situation where a third party, outside the transaction, suffers from a market transaction by others (pollution, traffic congestion, etc.) |
| Third Party | Someone other than the principals who are involved in a transaction - one who garners benefits or suffers costs as the result of an economic transaction between two other individuals. |
| Social Cost | The total cost of producing a good or service, including both the private cost and any external costs or externalities. |
| Market Failure | A situation in which the market fails, on its own, to produce in an efficient allocation of resources. |
| EPA | Environmental Protection Agency - An independent federal agency, created in 1970, that sets and enforces rules and standards that protect the environment and control pollution. |
| Asymmetric Information | A situation in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace. |
| Moral Hazard | The risk that the behavior of one party may change to the detriment of another after a contract has been agreed upon. Example: Those with insurance may be less likely to guard against loss than those without insurance. |
| Public Good | A good that is produced and owned by the public and one that is non-rivalrous and non-exclusive. This means that consumption of the good by one individual does not reduce the amount of the good available for consumption by others; and no one can be effectively excluded from using that good. |
| Private Good | A good that produced and owned by private firms and/or individuals and one that is rivalrous and exclusive. Those who chose not to pay for the good are excluded from its use. |
| Government Failure | A situation in which a government policy causes inefficient use of recources. |
| Lobbyist | A person who is employed by and acts for an organized interest group or corporation to try to influence policy decisions and positions in the executive and legislative branches. |
| Marginal Physical Product | The extra output produced by one more unit of a variable input (labor.) MPP = change in output/change in labor |
| Marginal Revenue Product | The extra revenue produced by one more unit of a variable input (labor.) MRP = change in total revenue/change in labor |
| Law of Diminishing Marginal Returns | Beyond some point the marginal product of labor decreases as as successively more units of labor are employed. |
| Wage Rate | This is the compensation workers receive in exchange for their labor per unit time - the price of labor. Usually calculated as dollars paid times hours worked. |
| Total Labor Cost | Quantity of labor times the wage rate. TCL = w(L) |
| Marginal Labor Cost | The extra labor cost incurred by hiring an extra unit of labor. MLC = change in TLC/change in labor |
| Noncompeting Labor Markets | Markets whose specific skill requirements necessarily exclude workers who do not have these specific skills. Example: Professional athletes |
| Efficiency Wages | Wage rates higher than market equilibrium wage rates - higher wages paid in expectation that such wages reduce employee turnover and increase labor productivity. |
| Monopsony | A market situation where there is only one buyer. |
| Labor Union | An organization of workers that tries to improve working conditions, wages, and benefits for its members by negotiating as a single unit. |
| Strike | A collective refusal by workers to do their jobs until their demands are met. |
| Collective Bargaining | A process by which management and labor reach agreements through negotiation and compromise. |
| Discriminatory Discharge | The firing of prounion workers, with or without cause. |
| Blacklisting | Sharing lists of prounion workers in an attempt to assist other firms from hiring prounion workers. |
| Injunction | A court order preventing some activity (as related to this chapter - a court order to "cease and desist" ordered against union activities.) |
| Criminal Conspiracy Doctrine | The idea that workers could legally unionize, but could not participate in any activities that infringed upon the existing rights of the business owner to conduct his business as he saw fit. |
| Paternalism | A policy of treating subject people as if they were children, providing for their needs but not giving them rights. Example - allowing mill workers to live in company houses, as long as the workers did exactly as the mill told them to do. |
| Company Union | A labor organization that is controlled by management - workers basically have no real rights. |
| Lockout | When management closes the doors to the place of work and keeps the workers from entering until an agreement is reached. |
| Closed Shop | A company in which all employees must be members of a union prior to being employed. (Outlawed by the Taft-Hartley Act of 1947.) |
| Union Shop | A company allowed to hire nonunion workers on the condition that they will join the union within a specified time. |
| Open Shop | A company where the employee is not required to join or financially support a labor union as a condition of hiring or employment. |
| Yellow Dog Contract | An agreement between an employer and employee in which the employee agrees, as a condition of employment, not to join a labor union. (Outlawed in 1932 with passage of the Norris-LaGuardia Act.) |
| Craft Union | A union representing skilled workers in a single occupation - electricians, carpenters, plumbers, etc. - regardless of the industry in which the worker is employed. |
| Industrial Union | A union representing all workers in a specific industry - automobile workers, textile workers, etc. - regardless of their skill or occupation. |
| Samuel Gompers | American labor union leader who founded the American Federation of Labor (AFL). Focused on wages and working conditions. |
| John L. Lewis | Organized workers in specific industries, regardless of skills to create the Congress of Industrial Organizations (CIO). |
| AFL-CIO | Labor union forged by the 1955 merger of the AFL and the CIO. |
| Norris-LaGuardia Act of 1932 | First major piece of prolabor legislation - outlawed Yellow Dog Contracts. |
| Wagner Act of 1935 | Also called the National Labor Relations Act. Established National Labor Relations Board; protected the rights of most workers in the private sector to organize labor unions, to engage in collective bargaining, and to take part in strikes and other forms of concerted activity in support of their demands. |
| NLRB | National labor Relations Board: (established by Wagner Act) Guaranteed the "twin rights" of unions - the right to organize and the right to collectively bargain. Greatly enhanced power of American labor by overseeing collective bargaining, forced management to bargain in good faith; continues to arbitrate labor-management disputes today |
| Taft-Hartley Act of 1947 | Also called the Labor Management Relations Act. This act was Congress' response to the abuse of power. Outlawed closed shops; prohibited unions' unfair labor practices, and forced unions to bargain in good faith. |
| Landrum-Griffin Act of 1959 | Also called the Labor Management Reporting and Disclosure Act was passed in reponse to allegations of criminal activity in unions, to safe guard union members from the union. Required detailed reporting of union finances, etc. |
| Civil Rights Act of 1964 | In relation to the American Labor movement, this act required that unions adopt affirmative action policies within the unions themselves, to guard against institutionalized union power. |
| Lorenz Curve | A quick, visual expression of income inequality in an economy. A widely used graph of the distribution of income, with cumulative percentage of families plotted along the horizontal axis and cumulative percentage of income plotted along the vertical axis. |
| Gini Coefficient | A number between zero and one that measures the extent of income inequality in an economy, calculated by measuring the degree to which the Lorenz curve deviates from the line of equality. |
| Income | The amount of money received by an individual in a specific time period - daily, weekly, monthly, yearly. |
| Wealth | Accumulated assets one owns. |
| Life-Cycle Wealth | Wealth that includes non-money assets - your home, your car, your furniture, etc. |
| John Rawls | Harvard philosopher. "Rawl's Theory of Justice" (1972) if faced with the uncertainty of poverty, if forced to do so, people would accept income equality. |
| Poverty | The condition of lacking and adequate amount of money, belongings, and/or means of financial support. |
| Medium Income | One of two ways to identify poverty - the middle point of a society's income level. Those below the mid-point have reached the poverty threshold. |
| Poverty Threshold | An income level below that which is needed to support families or households. |
| Meeting Basic Needs | One of two ways to identify poverty - those people who do not have a "minimal acceptable physical standard of living." |
| War on Poverty | The name President Lyndon Johnson gave to his crusade to improve the lifestyle of America's poor, especially those in Appalachia. It included economic and welfare measures aimed at helping the large percentage of Americans who lived in poverty. |
| Cash Assistance | Government assistance in the form of cash payments. |
| In-Kind Assistance | Government assistance in the form of direct goods and services, such as medical care (Medicaid), housing assistance, foods stamps, etc. |
| Negative Income Tax | A proposed type of tax that would make cash payments to certain groups below the poverty line. Allows the poor to earn as much income as possible without penalty. |
| Less-Developed Countries | LDCs - the economies of parts of Asia, Africa, and Latin America |
| Per Capita Income Growth | Income growth per person. (Income growth/population growth) |
| Double-Whammy of Poverty | The problem of low rates of income growth compounded by high rates of population growth. |
| Vicious Circle of Poverty | "People are poor because they cannot invest in capital goods, and the cannot invest in capital goods because they are poor." |
| Human Capital | Investment in workers' health, knowledge, and skills acquired through education, training, and experience, all of which increases their productivity. |
| Economic Dualism | The existence of two separate and distinct economies in a LDC - one economy is modern, urban, and export driven while the other is traditional, rural, and realitivey self-sustaining. |
| Traditionalism | The process of following longtime practices and opposing many modern technologies and ideas, which may keep LDCs from progressing technologically. |
| Infrastructure | The basic facilities, services, and installations needed for the functioning of a community or society (e.g. transportation and communication systems, water and power lines, schools, etc.) The absence of which which may keep LDCs from progressing technologically. |
| Big Push Development Strategy | An intergrated network of government sponsored and financed investments introduced into an economy all at one time. |
Combine with other sets
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