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10 Cards in this Set

  • Front
  • Back
why is there higher unemployment in western Europe than in the US?
- higher degree of govenemtn regulation
- higher degree of unionization
aka wage rigidity
marginal product of labor
the extra output obtained by hiring an additional worker
diminishing returns to labor
if other inputs are fixed, marginal product of labor will decrease per additional worker because there is less equipment to work with
value of marginal product
- (selling price of product) X (marginal product)
- also the demand curve for labor
what shifts the demand curve for labor?
1.) selling price per product increases
2.) marginal productivity of workers increases
quantity of labor demanded
- movement along the demand for labor curve
- goes up and down based on the real wage rate
what causes fluctuations in the supply of labor?
increases and decrases in the wokring age population and the labor force
what causes frictional unemployment?
the matching of workers with good jobs for them
which type of unemployment is a problem?
structural unemployment
what causes cyclical unemployment?
when the economy goes through a recession