ch 18 econ

which of the following may decrease value of marginal product of supply and a rise in price for one of the inputs used to make the good? -bad weather that causes decrease in supply and rise in price for one of the inputs to make that good -increase in MPL -increase in wage rate -decrease in output price

-bad weather that causes decrease in supply and rise in price for one of the inputs to make that good -decrease in output price

neoclassical theory of income distribution

-factor prices are determined by supply and demand, -each factor is paid the value of its marginal product

which of the following may increase marginal product of labor? -good weather causes an increase in supply and fall in price for one of the inputs to make the good -tech improvement that is substitutable for labor -decrease in the wage rate -tech improvement that is complementary for the labor

-good weather causes an increase in supply and fall in price for one of the inputs to make the good -tech improvement that is complementary for the labor

which of the following may increase labor supply? -decrease in working population -decrease in wage -increase in working population -increase in women's desire to work rather than stay home

-increase in working population -increase in women's desire to work rather than stay home

why labor is supply may slope upward

-opportunity cost of leisure increases as wage increases

what happens to supply/demand curve when there's a bad crop in Vermont for their blueberries? (vermont and florida's blueberries are the same)

-supply curve goes left because they won't make as many blueberries -that increases the price -VMPL= price of good x MPL and VMPL=Demand -price of good increases, VMPL increases, demand increases --> demand curve moves to right

requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Required to give each worker $3 of fringe benefits. what happens to labor supply and demand curve?

-the company would reduce the wage therefore reducing the demand (firms won't demand as many workers if they have to pay for those benefits), but could also shift the supply curve right because workers may value the benefits and want to supply their labor to that company

market labor demand curve

-the graphical representation of the relationship between the wage rate and the quantity of labor FIRMS ARE WILLING TO HIRE to hire in the market -sometimes known as derived demand

two assumptions

1. all markets are competitive: typical firm is a price taker in the market for the product it produces and in the labor market 2. firms only care about maximizing profit

things that shift labor supply curve

1. immigration 2. changes in tastes or attitudes regarding labor-leisure trade off 3. opportunities for workers in other labor markets

things that shift labor demand curve

1. price change of good (if price increases, VMPL increases) 2. tech (can either increase MPL or decrease MPL depending if the machine helps the workers or replaces the workers) 3. amount of other inputs (ex: if there's more or less land)

value of marginal product (VMPL) =

P good x MPL

anything that increases P of good or MPL increases the _______ and shifts the labor ________ curve upward

VMPL, demand

total cost for a company=

W (wage) x L (labor)

diff between markets of factors of production and markets for goods and services

demand --> derived demand

capital is an input, so if capital increases, the labor _____ curve shifts ____

demand, right

derived demand

derived from a firm's decision to supply a good in another market

MPL and VMPL slope ________ as L increases

downward

capital

equipment and structures used to produce goods

factors of production

inputs used to produce goods and services (land, labor, and capital); prices and quantities of these inputs are determined by supply and demand in factor markets)

increase in W --> increase in ________ of leisure

opportunity cost

if you own the land, rental price can be considered the _________ of using the land for your business

opportunity cost (forgone rent); rental rate is either explicit or implicit

purchase price

price person pays to own that factor indefinitely

rental price

price person pays to use that factor for a limited period of time; wage = rental price of labor (it's on the Y axis); capital (K) on x axis

production function

relationship between the quantity of inputs used to make a good and the quantity of output of that good

effect of inflow of capital on the market for capital in the United States

shifts SUPPLY CURVE right

around 1973, the US economy experienced a significant _______ in productivity growth coupled with a _______ in growth of real wages

slowdown, slowdown

Suppose an increase in the demand for computer analysts leads to a rise in their wages, while the demand for consultants remains the same. What effect does the rise in demand of computer analysts have on consultants have on supply curve OR demand curve OR both?

supply curve moves left (bc opportunities in other fields)

value of marginal product of labor

the additional revenue the firm receives from selling the output produced from an additional unit of labor

market labor supply curve

the graphical representation of the relationship between the wage rate and the quantity labor WORKERS ARE WILLING TO PROVIDE in a market

marginal product of labor

the increase in the amount of output from an additional unit of labor

opportunity cost of leisure is the ____

wage

for competitive, profit-maximizing firms, to max profits, hire workers up to where _____

wage = VMPL

labor supply is the tradeoff between _____ and _______

work, leisure