| A | B |
|---|
| Physical capital | capital - manufactured resources such as buildings and machines |
| human capital | the improvement in labor created by education and knowledge |
| factor distribution of income | the division of total income among labor, land, and capital |
| value of the marginal product of a factor | is the value of the additional output generated by employing one more unit of that factor |
| value of the marginal product curve of a factor | shows how the value of the marginal product of that factor depends on the quantity of the factor employed |
| rental rate of either land or capital | is the cost, explicit or implicit, of using a unit of that asset for a given period of time |
| equilibrium value of the maraginal product of a factor | is the additional value produced by the last unit of that factor employed in the factor market as a whole |
| marginal productivity theory of income distribution | every factor of production is paid its equilibrium value of the marginal product |
| compensating differentials | wage differences across jobs that reflect the fact that some jobs are less pleasant than others |
| unions | organizations of workers that try to raise wages and improve working conditions for their members |
| efficiency wage model | some employers pay an above equilibrium wage as an incentive for better performance |
| decisions about labor supply result from decisions about time allocation | how many hours to spend on different activiites |
| individual labor supply curve | shows how the quantity of labor supplied by an individual depends on that individual's wage rate |
| the income effect caused by a change in wealth | shifts the labor supply curve |
| income effect from a wage increase | is a movement along the labor supply curve |
