Economics 16

What can higher wages do?

Increase the opportunity cost of working Increase the quantity of labor supplied

When workers gain market power they can push wages _____ the market equilibrium.

above

Inputs usually have

diminishing marginal productivity.

Based on the local price of each factor of production, a profit-seeking firm will choose the combination of ___________ that maximizes profit.

inputs

The wage that workers earn is the ______ of labor.

price

The ____ price is what a producer pays to use a factor of production for a certain period or task; the ____price is what a producer pays to gain permanent ownership of a factor of production.

rental purchase

A firm in a competitive market maximizes profits by producing the quantity at which

revenue it earns from the last unit is equal to the cost of producing that unit.

Changes in non-price determinants cause a ___________ in the supply and demand curves for labor.

shift

Maximizing profit in a competitive market is focused on making the right choice about the quantity to produce because

the firm is a price-taker and cannot control the price of inputs.

In general, a firm will hire a worker so long as

the worker generates more revenue than it costs to hire them.

The _____, the largest such union organization in the United States, is a confederation of unions that represents 13 million workers, ranging from pilots and bricklayers to actors and police officers.

AFL-CIO

The word capital can mean which of the following?

Physical capital Human capital Financial capital

Many shifts in the labor demand curve can traced to three determinants. Which of the following are the three determinants?

Supply of other factors Technology Output prices

True or false: Human capital is so crucial in determining how labor markets work that economists sometimes consider it the most important factor of production.

True, You can't operate machines without workers.

The value of the marginal product, which is ________, decreases for each additional worker because the ______ decreases for each additional worker.

[MPL x Pproduct]; MPL

Economic rent is the area ___ the supply curve but ___ the equilibrium rental price.

above below

The value of the marginal product is identical to the firm's ______ curve for labor.

demand

Land, Labor, and Capital are

factors of production

Because of the opportunity cost of working, if workers get paid more per hour, they tend to work _____ hours.

fewer

Minimum wage laws are examples of price .

floors

A minimum wage might not be the cause of unemployment if the minimum wage is ____the equilibrium level.

below

If the minimum wage is below the equilibrium level, the effect might transfer surplus from _____to .______

businesses workers

The area above the supply curve but below the equilibrium rental price is economic .

capitalist

For a _____ firm, the price of the output is always going to be the same.

competitive

As wages increase, more people find that the benefits of working are greater than the _______ , and so the amount of people who are willing to supply labor increases. (Use one word for the blank.)

cost

The main ___ for workers when supplying labor to firms is the _____ cost of supplying another hour of labor.

cost opportunity

As wages increase, more people find that the benefits of working are greater than the ______ and so the amount of people who are willing to supply labor increases. (Use one word for the blank.)

costs

Changes that increase the opportunity cost of work or decrease the number of workers

decrease the labor supply, shifting the curve to the left.

The profit-maximizing quantity of labor that the firm decides to use occurs where the labor _______ curve intersects the market- _____ level

demand wage

The income effect occurs when workers respond to higher incomes by

demanding more leisure.

The demand for cloth is , ___________ in part, from the demand for clothes.

derived

The demand for labor is ______ from the demand for goods and services.

derived

For a given amount of land, the tenth worker will generally contribute less to a farm's output than the first worker because of

diminishing marginal productivity.

In all competitive markets, the _____ is found at the point where the supply and demand curves intersect.

equllibrium

The question of how much labor a firm will hire comes down to whether added workers are

generate more revenue than what it costs to hire them.

The productivity of workers is determined by

human capital.

Changes that decrease the opportunity cost of work or increase the number of workers

increase the labor supply, shifting the curve to the right.

Based on the local price of each factor of production, a profit-seeking firm will choose the combination of ____ that maximizes profit.

inputs

Graphically, the marginal product of a factor of production

is the slope of the total product curve.

The number of workers and the opportunity cost of providing their labor determine _____ supply

labor

At the profit-maximizing quantity of ________ , the value of the last worker's marginal _____ is greater than or equal to marginal profit.

labor product

Economists usually categorize all non-work activities under the term .

leisure

The cost of supplying labor is the forgone opportunity of forgone __________ .

leisure

When wages go up, workers have more money, so they might enjoy more _______ time.

leisure

Since the firm is a price-taker in a competitive market, the firm cannot control the going price of inputs or the going wage of workers, so maximizing profit is focused on

making the right choice about the quantity to produce.

When output is plotted against the quantity of the input that is used, ______ the product of a factor is the slope of the ______ production curve.

marginal total

Based on the local price of each factor of production, a profit-seeking firm will choose the combination of inputs that

maximizes profit.

Opponents of a _____ wage see it as a form of government interference in the free market, one that raises the cost of doing business, causing unemployment in the process.

minimum

When there is an effective ___ wage, fewer people are employed than when the market is at equilibrium, causing unemployment.

minimum

To raise wages or improve non-wage benefits and capture some surplus for workers, unions must have, at a minimum, a __________ or near- ________ on labor in a particular market.

monopoly monopoly

In general, the larger the membership of a union, the _____ power it has.

more

Normally, when higher wages are offered, people will want to work ,____________ and the quantity of labor supplied will increase.

more

Normally, when higher wages are offered, people will want to work _______ , and the quantity of labor supplied will increase.

more

Since higher skilled workers are cheaper per output relative to low skilled workers, when the minimum wage increases, employers might hire ______ skilled and experienced workers, and _ young and unskilled workers.

more less

An analysis that implies that the existing factor distribution of income is, or is not, fair in a broader sense is a ______ analysis.

normative

Marx's ideas differ from the factual analysis; in other words these are __________ ideas.

normative

Economists usually categorize all non-work activities as a(n) ____ cost of working.

opportunity

Anyone who owns stock in a company owns a share in that company's _______ capital.

physical

When people talk about investing money, they mean that they have lent their money to someone who will use it to buy _____ capital

physical

Countries with a declining _______ may have too few workers ________ to power production and too few consumers to drive a healthy ________ for goods and services.

population demand

Changes in non-__determinants can shift the supply and demand curves for labor right or left.

price

When the ________effect is bigger than the _____effect, the worker is likely to respond by supplying more labor hours.

price income

When workers respond to higher wages by working more, it is the result of the _____ effect; but when they respond to higher incomes by demanding more leisure, it is the result of the ___ effect

price income

The labor supply curve will be upward-sloping if the

price effect is bigger than the income effect.

Based on the local price of each factor of production, a profit-seeking firm will choose the combination of inputs that maximizes .

production

A firm in a competitive market maximizes ____ by producing the quantity at which the revenue it earns from the last unit is equal to the cost of producing that unit.

profits

The area above the supply curve but below the equilibrium rental price is economic .

rent

Any event that decreases the value of the marginal product

shifts the labor demand curve to the left.

When output is plotted against the quantity of the input that is used, the marginal product of a factor is the __________ of the total production curve.

slope

The number of workers and the opportunity cost of providing their labor determine labor ___.

supply

Countries with a declining population may have

too few workers to power production and too few consumers to drive a healthy demand for goods and services.

In some cases when the labor market is inefficient, a minimum wage appears to cause a small amount of ________ . In others, it seems to change who is _____.

unemployement employed

The rental price is what a producer pays to

use a factor of production for a certain period or task.

The firm's demand curve for labor is identical to the

value of the marginal product curve.

The ____ Correct Unavailable that workers earn is the price of labor.

wages

The price effect occurs when workers respond to higher wages by

working more.