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Econ Final
study
30
Economics
Undergraduate 1
05/06/2012

Additional Economics Flashcards

 


 

Cards

Term
Market Failure
Definition
An imperfection in the market mechanism that prevents optimal outcomes
MC is typically below ATC
Term
Two ways of Government Intervention
Definition
1. structure of a market:mergers, acquisitions, and competitive nature of the market
2. Behavior of firms in a market: pricing, output decisions, advertising
Term
Natural Monopolies
Definition
firm where ATC declines over the entire output range
Term
Economies of Scale
Definition
ATC is always decreasing as output increases
MC is typically below ATC
Term
regulated natural monopolies
Definition
govt allows certain markets to be dominated by one supplier
IF one firm operated by the principle of profit maximizing, it would reduct output and charge higher prices
Term
Equilibrium Price in the Labor Market
Definition
Equilibrium wage
Term
Equilibrium quantity in Labor Market
Definition
number of people employed
Term
Labor Supply
Definition
the willingness and ability to work specific amounts of time at a variety of wages in a given time period, certain parabis
Term
Opportunity cost of working
Definition
the amount of leisure that must be given up
Term
Higher wages are required to compensate for...
Definition
the higher opportunity costs of labor
ex. Oc of working 10 hrs a week is high but OC of working 70 hrs a week is higher
Term
Diminishing Marginal Returns
Definition
marginal utility of income decreases as your income increases
Term
Two effects of change in income
Definition
1. Substitution effect
2. Income Effect
Term
Substitution Effect
Definition
increased wage rate encourages people to work more hours
ex. offer to be paid time and a half on holidays
Term
Income Effect
Definition
an increase wage rate allows a person to reduce hours worked without losing income
Term
which type of effect is stronger?
Definition
-income effect is stronger than the substitution effect, then there is possibility that a worker will actually be less willing to work at higher wages
-this means that there is a backward bend in the S Curve
Term
Total market supply of Labor
Definition
total quantity of labor that workers are willing and able to supply at a variety of wages in a given time period
Term
Determinants of Labor Supply
Definition
1. Tastes (for leisure, work, and income)
2. Income and Wealth
3. Expectations
4. Prices of Consumer goods
5. Taxes
Term
if determinants of labor supply change then..
Definition
the supply curve will shift in/out
Term
if wage rage changes (price) then
Definition
we will simply move to a different point along the supply curve
Term
Elasticity of Labor Supply
Definition
The percentage change in the quantity of labor supply given a percentage change in wage rate
Term
Labor Demand
Definition
the quantities of labor employees are willing and able to hire at alternative wages in a given time period, ceteris perabis
Term
Derived Demand
Definition
the demand for labor and other factors of production depends on the demand for the final goods and services produced by these factors
Term
when demand for a product increases..
Definition
then that industry likely demands more labor
-when demand decreases people get fired
Term
Marginal Physical Product
Definition
change in total output divided by change in quantity of labor
Term
marginal revenue product
Definition
change in total revenue/change in Q of Labor
Term
minimum wage encourages...
Definition
-more law skilled workers to seek employment
-quantity of labor supply
Term
cost efficiency
Definition
the amount of output associated with an additional dollar spent on input
mpp/price
Term
efficiency decision
Definition
choice of production process
Term
personal income
Definition
received by households before payment of taxes ex. monthly paycheck
Term
in-kind income
Definition
goods/services received directly without payment in a market transaction
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