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8 Cards in this Set

  • Front
  • Back
cost-benefit analysis
first rule of economics
if two lines cross, the intersection is the answer to some question
marginal revenue product
if labor increases by one unit, revenue increases by MPL*MR
pareto efficient
there is no other allocation that makes someone better off without making someone else worse off
pay negative salary to get int, keep all profits
risk cost
cost to the worker of bearing income fluctuations
incentive intensity principle
optimal piecerateis higher when:
MNR is higher,
employee is more responsive,
employee is less risk averse,
there is less noise
moral hazard
high types mimic low types to exploit their cost advantage