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14 Cards in this Set

  • Front
  • Back
Physical capital
manufactured resources
Human capital
improvement in labour ex. Education
Factor distribution of income
is the division of total income of the economy among labour, land and capital
Value of the marginal product
the value of the additional output generated by one more worker
Marginal benefit
the additional benefit derived from one more unit of activity
Value of the marginal product curve
shows how the marginal product of that worker depends on the quantity of workers employed
Equilibrium value of the marginal product
the additional value produced by the last unit of that worker employed in the factor market as a whole.
Marginal productivity theorem of income distribution
every worker is paid its equilibrium value of the marginal product.
Compensating differentials
wage difference across jobs that reflect the desirability of the job.
Efficiency-wage model
employers might pay an above equilibrium wage as an incentive for better performance
Leisure
time available for purposes other than earning money, is a normal good
Utility
measure of satisfaction a consumer derives from the consumption of goods etc.
Substitution effect
consumer will want to use a cheaper substitute.
Income effect
if a consumer is receiving more income, will want to spend more