| A | B |
|---|
| Factor Markets | Markets in which firms buy the resources they need to produce the goods and services |
| Leisure | The time available for purposes other than working to earn money to buy goods and services |
| Marginal Revenue Product | The change in the firm's total revenue from the hiring of an additional unit of an input |
| Marginal Resource Cost | The change in the firm's total cost from the hiring of an additional unit of an input |
| Profit-Maximizing Resource Employment | The firm hires the profit-maximizing amount of a resource at the point where MRP = MRC. |
| Demand for Labor | Shows the quantity of labor demanded at all wages (MRPl curve) |
| Derived Demand | Demand for a resource arises from the demand for the goods produced by the resource |
| Determinants of Labor Demand | The external factors that cause the entire demand curve to shift left or right. |
| Least Cost Rule | MPl/Pl = MPk/Pk |
| Profit Maximizing Rule | MRPl/Pl = MRPk/Pk = 1 |
| Monopsonist | A firm that operates in a factor market in which it has absolute market power, that is, a wage setter |
| Unions | Organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining |
| Minimum Wage | A price floor in the labor market |
| Factor Distribution of Income | The division of total income among labor, land, and capital |
| Rentral Rate | The cost, implicit or explicit, of using a unit of land or capital for a given period of time. |
| Efficiency Wages | Above-equilibrium wages paid by firms to increase worker productivity |
| Factors of Production | Natural, Capital, Human and Financial Capital |
| Production Function | Inputs --> Outputs |
| Marginal Product of Labor | increase in the amount of output from an additional unit of labor |
| Diminishing Marginal Product | the marginal product of an input declines as the quantity of the input increases with a fixed input |
| Value of Marginal Product (MRP) | the marginal product of an input times the price of the output |
| Determinants of Labor Demand | Output Price, Technology, Other Factors |
| Determinants of Labor Supply | Tastes, Alternative Opportunities, Population, Demographics |
| Monopsony | a market in which there is a single buyer of a resource |
| Elasticity of Resource Demand | Product Demand, Substitution Effect, Proportion of Budget, Time Horizon |
| Economic Rent | the price paid for the use of land and other natural resources, the supply of which is fixed |
| Bilateral Monopoly | A market in which there is a single seller (monopoly) and a single buyer (monopsony) |
