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21 Cards in this Set
- Front
- Back
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The short run |
The period of time in which at least one factor of production is fixed in supply |
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The long run |
The period of time in which all factor inputs are variable |
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The law of diminishing marginal returns (LDMR) |
As additional units of a variable factor are applied to fixed amounts of a fixed factor, the additions to output will at first increase before decreasing and eventually becoming negative |
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Marginal product of labour (MPL) |
The increase in total output from employing an additional unit of labour |
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Marginal revenue product (MRP) |
MR x MPL |
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Wage (price) elasticity of demand for labour |
% change in the quantity of labour demanded / % change in the wage rate |
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The substitution effect (of an increase in the wage rate) |
Individuals will substitute work for leisure as the opportunity cost of leisure increases leading to an increase in the quantity of labour supplied |
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The income effect (of an increase in the wage rate) |
Individuals demand more normal goods such as leisure as their income rises leading to a decrease in the quantity of labour supplied |
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Pecuniary factors |
The financial features of a job (such as the wage or salary, overtime, bonuses, private healthcare) |
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Non-pecuniary factors |
The non-financial features of a job (such as working conditions, job security, flexibility, status) |
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Competitive labour market |
homogeneous units of labour many small buyers and sellers price-takers perfect mobility perfect knowledge no barriers to entry or exit |
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Wage differentials |
Differences in wages between and within occupations, industries, firms and regions that tend to persist in the long run |
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Transfer earnings |
The minimum payment required to keep a factor of production (usually labour) in its present occupation |
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Economic rent |
The amount that a factor production (usually labour) receives over and above its transfer earnings |
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Labour market failure |
... occurs when the interaction of the supply of and demand for labour does not result in an efficient allocation of labour resources |
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Monopsony |
A single buyer of labour (e.g. a dominant employer in a labour market, region or country such as the UK government) |
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Trade union |
... a workers' association that aims to improve the pay, employment and working conditions of its members |
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Bilateral monopoly |
A monopsony buyer of labour (e.g. a dominant employer) and a monopoly seller of labour (e.g. a trade union) |
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Collective bargaining |
The process of a union negotiating on behalf of its members with representatives of an employer or group of employers in order to set pay and conditions |
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Discrimination |
When employees of equal qualifications and ability are paid different wages for the same work |
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Union density |
The actual membership of a union as a percentage of the potential membership |
