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Terms in this set (16)
Rev added by hiring 1 more worker.
(Firm will hire another worker if MRP > Marginal Wage Bill) (MRP = MWB)
Change in output from an addt'l unit of input/labor.
Law of Diminishing Marginal Product
as one point of production is added to a fixed amount of other inputs, after some point, the marginal product of the variable input continually diminishes
-this is because if paid to hire the next worker, and the next, etc. then increasing marginal product with constant wage levels means that firms would be an infinite size, and that just can't happen
*refer to diminishing marginal product as diminishing returns at the intensive margin
Is always = to price!
Market Labor Supply
Higher Wages cause ppl to join labor force even if current workers reduce the # of hrs worked.
Total Wage Bill =
Wage x Total Labor
Individual vs Market
Market Labor demand is steeper than individual firms.
Fair Labor Standards Act (1938)
Established Min Wage
1. "Living Wage" all full-time workers can purchase bear necessities.
2. Prevents Monopsony power from exploiting low skilled workers.
1. Increases unemployment among low-skilled workers.
2. Encourages teenagers to drop out of school.
3. Most min. wage workers don't live in poverty.
-Tends to be higher in Goods producing Industries. (Blue collar jobs too)
-Tend to be Lower in Service Industry and White Collar Jobs.
-In 2014, 10% of workers were unionized.
-Public (Gov't) industries have above avg. unionization.
Structure of Unions
-Labor movement has developed a multilevel organizational structure.
Federations (55 nat'l)
(Biggest one is "Change to Win" which has 3 orgs.)
-Formulate laborers' opinions on political issues; settle jurisdictional disputes b/w unions.
Negotiate w/ employers; organize employees
Settle employee grievances; police contracts
Addt'l rev by increasing product sales by 1 unit
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