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58 Cards in this Set

  • Front
  • Back

Demand for Labor (DL)

BF demand Labor



Derived Demand

demand for other good and services

Bush Tax on Business Firms

Policy that went against the demand for labor.


The only reason you hire people is because households demand products

Marginal Product of Labor (MPL)

Change in output from one additional unit of labor

Marginal Revenue Product of Labor (MRPL)

Change in revenue from one additional unit of laborMPL x Price

Effects of Demand for Labor

Output Effect and Input Substitution Effect

Output Effect

As wages increase, prices will increase, demand decreases. Thus, the demand for labor goes down and unemployment goes up.

Input Substitution Effect

As wages go up, it becomes easier for BF to substitute facts of product or other labor for current labor.




(labor out-pricing itself.)




Ex. Monitors taking your order at restaurants

Supply of Labor

shows the relationships between quantity of labor supplied and leisure.




Ex. work vs. leisure time

Effects of Supply for Labor

Substitution Effect


Income Effect




*Substitution outweighs income

Substitution Effect

Wages increase, the opportunity cost of not working increase. Thus we work more.

Income Effect

As wages increase, the desire for leisure increase, thus we work less.

Driving Factor for Wages

Supply because of the household

Low Supply

Natural God Given Ability


High Training Cost


Undesirable Working Conditions


Dangerous Jobs


Artificial Professional Barriers

Natural God Given Ability

something that becomes natural to you.




ex. professional athletes- born with it

High Training Cost

Start to finish process- lowers supply.




Ex. Doctors

Undesirable Working Conditions

Ex. Trash Collector

Dangerous Jobs

Electrician, Deadliest Catch

Artificial Professional Barriers

LSAT, CPE, BAR

Minimum Wage

Price Floor

College Premium

College students tend to earn over twice what non-college students earn.

2 Reasons for the College Premium

Learning Effect


Signaling Effect

Learning Effect

Receiving information and knowledge that the employer will have to teach you.

Signaling Effect

Able to handle multiple tasks at one time and still complete the task or class

Labor Unions

Groups of organized workers who's purpose is to improve working conditions and increase benefits

2 Main Labor Unions

Craft Union


Industrial Union

Craft Union

Organization of workers from particular occupations




ex. plumbers, electricians

Industrial Union

Semi-skilled workers from a particular industry




ex. assembly lines, steel mills

3 Main Labor Laws

Wagner Act


Taft Hartley Act


Landrum Griffith Act

Wagner Act

Guaranteed workers the right to join a union- set up the National Labor Relations Board.

Taft Hartley Act

Stops a strike, allowed states to set up as right to work states- do not have to join union for employment.

Landrum Act

Guaranteed workers the right to fair and private elections

Feather Bedding

Unionized industries. Requiring more labor to complete a task

How feather bedding works

you have a quantity restriction. this causes an increase cost to the consumer- like taxi medallion

Finance

More Macro

International Trade

More Micro

Trade benefits

Society as a whole

Autarky

Absence of trade

Comparative Advantage

the ability of a person, business firm, or government to produce at a lower opportunity cost.

Terms of Trade

Equilibrium Price Ratio at which trade occurs

Trade Barriers

Tariff or Non-Tariff

Tariff Barriers

Tariff


Quota


VER

Tariff

Tax on import, makes imports more expensive.



Ex. Smoot Hawley Tariff- 59% tax

Quota

limit of imports- happens in developing economies

VER (Voluntary Export Restraint)

Trade agreement between two nations to voluntary restrict exports

Non-Tariff Barriers

Dumping


Export Subsidies


Export Promotion

Dumping

selling a product too cheap. you must be able to prove intent. (explicitly illegal)

Export Susidies

subsidizing a business base on per unit export. this allows and encourages dumping

Export Promotion

Encourage domestic exporters to become more efficient (Legal)




ex. Cheabols- large businesses that operate like the mafia

Reasons for Protectionist Policies

Infant Industry Protection


National Defense and Security


Income Distribution


Discourage Consumption of a Certain Good

Infant Industry Protection

New industry in a nation can't compete to protect the industry. Since they aren't competing they are never able to protect themselves

National Defense and Security

Importing all goods from one nation. But if you make them mad, that is an issue.




Making sure you have a domestic industry- Farming industry

Income Distribution

Barriers to protect workers in a certain industry




US and Canada- Truck industry

Discourage Consumption of a Certain Good

Barriers to trade so you do not consume a certain good

International Institutions

Bretton Woods Accord


World Bank


IMF

Bretton Woods Accord



GATT- General Agreement on Tariffs and Trade. helped reduced trade barriers.




WTO- World Trade Organization. observed trade treaties, not enforcement mechanisms.

World Bank

Originally developed to reconstruct nations after WW2. Change purpose to infrastructural improvements (roads, bridges, power plants, streets)

IMF- International Monetary Fund

Helps nations when invited, when there is a financial crisis (debt)