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| A firms production function is a combination of _________ and ________. |
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Definition
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| The Marginal Product of Labor is: |
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Definition
• the change in output resulting from hiring an additional worker, holding constant the quantities of other inputs |
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| The Marginal Product of Capital is: |
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Definition
•the change in output resulting from hiring one additional unit of capital, holding constant the quantities of other inputs |
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| As more units of labor and capital are hired, output... |
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Definition
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| When firms hire more workers, output |
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Definition
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| The slope of Total Product Curve |
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Definition
| The Marginal Product Of Labor |
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| The Law of Diminishing Returns for labor |
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Definition
| Eventually, the marginal product of labor declines |
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Definition
| the amount of output produced by typical worker |
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Definition
| The total product curve gives the relationship between output and the number of workers hired by the firm |
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| The Marginal Product Curve |
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Definition
| gives the output produced by each additional worker, and the average product curve gives the output per worker |
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Definition
| Maximize profit, minimize costs |
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Definition
| Total Revenue - total costs |
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Definition
| wages x Labor + rental price x Capital |
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| The Value of the Marginal Product ( VMP ) |
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Definition
The marginal Product of labor X Dollar value of the output Indicates the benifit derived from hiring additional worker ceterus paribus |
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| A firm hires (x) workers where wage rate equals |
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Definition
| value of marginal product of labor |
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Definition
indicates how firm reacts to wage changes downward sloping because of diminishing marginal returns to labor |
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| A short run drop in wages will cause a/an _____ in employment |
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Definition
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| An increase in the price of output shifts the value of marginal product curve ______, so employment will _______. |
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Definition
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Term
The profit maximizing firm should produce up to the point where: |
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Definition
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Term
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Definition
The cost of producing an additional unit of output (marginal cost) is equal to the revenue obtained from selling that output (marginal revenue) |
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Marginal productivity rule |
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Definition
hire labor up to the point when the added value of marginal product equals the added cost of hiring the worker |
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A firm produces until output price equals |
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Definition
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| Longrun profit maximization aquring by choosing number of workers AND: |
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Definition
| how much plant and equipment to invest in |
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Definition
describes the possible combinations of labor and capital that produce the same level of output
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Definition
- downward sloping - cannot intercept - convex to origon - slope negative or ratio of MP capital and labor - higher indicates more output |
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Definition
| Indicates possable combinations of Labor and Capital the firm can hire given a specified budget |
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Term
| Higher isocost lines indicate ______costs |
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Definition
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Term
| The slope of the isoquant equals |
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Definition
| - wage rate / rental price |
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Term
A firms optimal combination of inputs |
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Definition
| Isocost line tangent to isoquant curve |
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| Profit maximaztion also means |
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Definition
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| cost minimazation occurs where |
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Definition
Isocost line tangent to isoquant curve |
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The Marginal Rate of Substitution equals |
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Definition
| the price ratio of capital to labor |
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Term
| In long run, if wages drop, a firm will take advantage of lower prices by __________ and _____________ |
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Definition
| expanding production ( scale effect ), rearranging mix of inputs ( substitution effect ) |
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Term
| A wage reduction ________isocost curve, holding constant initial cost outlay constant |
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Definition
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Term
| A wage cut will ________ the marginal cost of production, encourages a firm to ________ |
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Definition
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Term
The Long Run Demand Curve for Labor |
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Definition
| gives a firm's employment at a given wage, downward sloping |
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A wage cut generates ______effects and _____effects |
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Definition
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Term
| _________encourages a firm to expand, increasing the firm's employment |
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Definition
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| _________ encourages a firm to use more labor intensive method of production, further increasing employment |
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Definition
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Term
When two inouts can be substituted at a constant rate, the imputs are called ____________ |
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Definition
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Term
When an Isoquant is right angled, the inputs are called ___________ |
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Definition
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Term
| The ________ effect is large when two imputs are perfect substitutes |
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Definition
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There is no substitution effect when inputs are ____________ |
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Definition
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The curvature of the isoquant measures _____________ |
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Definition
Elasticity of substitution |
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Term
| Capital and labor are ___________ if isoquant is linear. |
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Definition
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The two imputs are ________ if isoquant is right angled |
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Definition
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Term
| __________ is the percentage change in capital to labor given a percentage change in the price ratio |
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Definition
| The elasticity of substitution |
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Term
In the long run, the long run demand curve is ________ elastic then the short run demand curve |
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Definition
more in the long run, a firm can take full advantage of economic opportunities introduced by change in wage |
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Term
| An affirmative action _______ a firm's cost |
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Definition
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Term
Labor Demand is more elastic when elasticity of substitution is ________, elasticity of demand for firms output is __________, the _________ labors share in total cost s of production, and the _______ supply elasticity of other factors of production. |
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Definition
| Greater, greater, greater, greater |
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Term
| Inputs can be ______ and ________ |
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Definition
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Term
| If cross elasticity of factor demand is positive, the two inputs are __________ |
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Definition
| substitutes in production |
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Term
| In a competitive labor market, equalibrium is attained at the point where_______equals _______ |
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Definition
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Term
In the labor market, the higher the minimum wage, the _______ the unemployment rate |
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Definition
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the benifits of minimum wage accrue mostly to workers who are not __________ in the distribution of permanent income |
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Definition
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A minimum wage in sector 1 (covered) but not sector 2 (uncovered) causes employment to shift from _____ to _____, thereby _______ the uncovered sectors wage. |
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Definition
| sector 1, sector 2, lowering |
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Term
| The expenditures that firms inccur as they adjust size of their workforce are called __________ |
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Definition
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Term
| A quick change in employment causes _______costs, these costs _____________ |
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Definition
high, increase at an incresing rate |
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Term
Variable adjustment costs encourage firms to adjust employment level at a _______ rate |
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Definition
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