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29 Cards in this Set
- Front
- Back
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resource owners supply resources in ways that
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maximize their utility
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derived demand
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demand that arises from the demand for the product the resource produces
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graphically, the market supply of labor is
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upwardly sloping
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resource price differences that trigger reallocation so as to keep cost down
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temporary differentials
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resource price differentials that do not trigger reallocation of resources
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permanent differentials
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if all resources are in the form of economic rent
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the supply curve is vertical
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the more elastic the supply curve
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the greater the opportunity cost
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economic rent
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portion of a resource’s total earnings that exceeds its opportunity cost
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what happens after resources have crossed their point of diminishing marginal returns
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additional increments of output decreases
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In a PC market, where is profit maximized in regards to labor
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where wage rate = marginal revenue product
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non-market work
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time spent on education or producing your own goods and services
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leisure
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normal good
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leisure is subject to
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subject to law of diminishing marginal utility
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along a backward bending labor supply curve
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substitution effect always dominates income effect at low wages
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substitution effect of an increasing wage rate
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will always increase the amount of labor provided
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the market supply curve represents
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the sum of the individual supply curves
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the first unions in the US were
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local craft unions
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what is featherbedding?
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union requirement of an unnecessary large number of workers
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AFL-CIO is a ...
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an association of both craft and industrial unions
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who is a mediator in a labor dispute
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an impartial observer
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what is collective bargaining?
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the process of contract negotiations
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are union wages in the US higher than non-union wages?
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yes, by about 15%
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how can craft unions try to increase wages?
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reducing the labor supply by requiring tests
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how else can unions try to increase wages?
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by appealing to consumers to buy union made products, increasing demand, thus increasing wages
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why are unions on the decline?
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the US economy has shifted from a manufacturing based economy to a service based one
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what is vertical integration?
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expansion of a firm into earlier or later stages of production
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bounded rationality?
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the limit on the amount of information a manager can comprehend about a firms operation
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why might a computer manufacturer decided to begin making it own chips despite a higher cost?
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quality control
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what are economies of scope?
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expanding product lines in attempt to reduce marginal cost
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