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Economics > Chapter 10 > Flashcards

Chapter 10 Flashcards

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1
Q

Law of Diminishing Returns

A

For any particular plant size, as more labor is used, the extra output that an employee can produce declines at some point.

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2
Q

Marginal Product

A

The extra output that an employee can produce. Falls as more employees are added.

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3
Q

The extra output is not the true value of the employee to the employer, but it is?

A

The extra revenue that comes in from selling that extra output.

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4
Q

Value Marginal Product (VMP)

A

Marginal Product of a worker multiplied by the price of the output.

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5
Q

Higher wages or higher non-wage benefits cause?

A

Employers to hire fewer employees

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6
Q

For every labor cost, we look at the?

A

Value Marginal Product to figure out how many employees to hire.

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7
Q

The VMP is what?

A

The demand for labor

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8
Q

As employees spend time on the job, they first sacrifice what?

A

The least valuable other uses of their time, in order to work even more, they must sacrifice more valuable alternative uses of their time, according to the principle of optimal arrangement

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9
Q

Which way does the demand curve shift?

A

Downward

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10
Q

Which way does the labor supply curve shift?

A

Upward

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11
Q

The labor demand curve comes from?

A

Employee productivity and the product price.

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12
Q

The Labor supply curve comes from?

A

Employee’s willingness to work at various wages and benefits

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13
Q

Together, labor supply and demand yield?

A

An equilibrium in the market.

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14
Q

Workers have non-labor opportunities, such as are provided by?

A

Social welfare programs, labor supply falls. Results in less employment and higher wages

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15
Q

If less is being overall, the nation cannot be?

A

Better of even with the higher wages

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16
Q

If the govt places taxes or higher regulations on employers that raise labor costs, this cause the demand for labor to?

A

Fall. This lowers employment and wages.

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17
Q

Law of unintended consequences often applies to situations

A

Like yeah dude. I don’t know.

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18
Q

Social security taxes lower what?

A

The demand for labor, as does rising the cost of legally firing an employee, as do Workers Compensation programs.

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19
Q

Since employees are paid for productivity, anything that raises productivity increase?

A

Output, and hence income.

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20
Q

Human Capital

A

Education and training may improve productivity, building the individual’s human capital, raising the demand for the individual’s labor.

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21
Q

Screening Theory

A

Says education and training may be valuable to the individual, not because the training increases productivity, but because it points out which employees will be good.

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22
Q

Under human capital theory, it matter what the subject matter of education is, though while under screening theory…

A

The subject matter is not of interest.

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23
Q

Do we know what the labor market of the future will be like?

A

Nah dude

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24
Q

What did the German and Spanish governments place large bets on?

A

Solar and wind energy

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25
Human central planners who claim to know the future do what?
Move resources away from high valued uses toward into low valued uses, making us worse off.
26
As transportation costs fell...
More trade was possible
27
Planners boast about jobs created by government doing what?
Spending in directing these resources
28
"Every 10,000 tons of solid waste going to landfills...
1 job is created"
29
"That same amount of waste, kept out of landfills...
can create 10 recycling jobs or 75 materials reuse jobs"
30
The public can see jobs that are created from inefficient uses of resources, but they cannot know what?
Which efficient uses of resources, which jobs, were destroyed.
31
Make work fallacy
Idea that jobs have value, regardless of whether the labor creates value
32
If the state requires a minimum wage,
more potential employees will begin looking for jobs, but employers would not offer as many jobs at the higher wage.
33
Minimum wage would cause?
Unemployment that the workings of supply and demand would not cure.
34
March 2013
Minimum wage of $20 had drastic consequences
35
Establishment survey
Bureau of Labor Statistics ask large businesses about how many employees are on their payroll, to measure the number of jobs the economy is creating.
36
Who did establishment survey's omit?
All self-employed persons or contractors, who do not appear on the company's payroll, but only as a operating expense
37
BLS household survey
Asks individuals about their employment stats by phone.
38
US Population
315M
39
Civilian Non-Institutional Population (CNIP)
Members of the population 16 years or older, not in the military, and not institutionalized. The reason that the military is omitted is that otherwise wartime makes the unemployment rate fall, making it look as if the labor market is doing well. About 248.5 million.
40
Employed (E)
Everyone who worked at least 1 hour for pay or profit in the previous week. Everyone who was not paid for working in a family business, but worked at least 15 hours at that business in the previous week. Everyone who missed regular work due to illness, vacation, strike, etc. About 146.6 million.
41
Unemployed (U)
Everyone who was not employed, but made specific, active efforts to find a job in the previous four weeks. Everyone who was waiting to be called back from a layoff. About 9.3 million.
42
Civilian Labor Force (LF)
Employed + unemployed. about 155.8M
43
Unemployment Rate
Unemployed, divided by the civilian labor force.
44
Ur= U/(LF) =
9.3/155.8 = 5.9%
45
Unemployment over 5.5% is considered?
High. The highest since the GD are around 10-11%.
46
A falling LFPR reveals what?
Economic/ societal problem that the recent recession and sluggish recovery has accelerated
47
Some portion of the falling rate is due to?
Unattractiveness of work, compared to welfare alternatives.
48
A large part of the recent fall of LFPR fall be due to?
A flood of applications for social security disability, not because of an increase in actual disabilities, but as a result of the pool labor market.
49
LFPR of women is doing what?
Was rising until the last recession, but is now falling
50
Compared to men, how are women doing?
Much better
51
Young women (20-30 yrs old) had about how much higher income than me?
8%. In ATL, young women earn about 20% more than men.
52
In 1980, ___% of university graduates were female.
40%
53
Today, ___% of university graduates are female.
60%
54
Discouraged workers
Those who have looked for a job at some time in the previous 12 months, but are no longer looking because they think no jobs are available.
55
Why are discouraged workers not listed among the unemployed?
Because they have not looked for a job in the past 4 weeks.
56
As times get better, why does the unemployment rate get higher?
Because more people begin looking for jobs again.
57
What happens after 1 year to discouraged workers?
They are no longer counted at all, except as members of CNIP.
58
In April 2013, 73,000 jobs were lost, but....
806,000 people left the labor force. (6.7% to 6.3%)
59
How many jobs does it take each month to slightly lower the unemployment rate?
250,000
60
What does U-6 include?
People who have stopped looking for jobs and those who are part time, but want to be full time.
61
U-6 was how much in May 2014?
12.3%, while the unemployment rate was 6.3%
62
New claims for unemployment insurance
Compiled by the states and collected by the Department of Labor on a weekly basis.
63
Casey Milligan of the Univ. of Chicago found what?
Half of the increase in unemployment in the recession and recovery came from extending unemployment benefits.
64
Frictional unemployment
Occurs because of the normal workings of the labor force with people changing jobs and entering the labor force with the skills that will likely soon yield a job.
65
Structural unemployment
Long term problem which occurs due to changes in the labor force that render some skills obsolete. May be due to changes in technology, to trade or to changes in consumer tastes.
66
Cyclical unemployment
What we usually think of as unemployment,-- it arises due to contractions that occur during the business cycle.
67
Research done by Austrian economists and the Chicago School shows what?
That government errors are the best coordinator of market failures, so the state is often found to the cause of downturns in the business cycle.
68
Full employment
Said to exist when there is no cyclical unemployment. This means that a full employed economy has some frictional and structural unemployment.
69
If the economy is not leaving anybody behind, then...
It is not growing.
70
If the economy is not moving...
it is not healthy
71
Somalia and Cuba have...
likely have little structural unemployment, since their economies are stagnant.
72
At full employment, the unemployment rate is about...
5.5%

Economics (8 decks)

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