Unit 5 Flashcards Preview

AP Microeconomics > Unit 5 > Flashcards

Flashcards in Unit 5 Deck (19):
1

resources, why?

money income determination, cost minimization, resource allocation, poliicy issue
assume:
purely competitive
wage taker

2

demand (derived)

resource demand comes from product demand:
everything that comes from making a good

3

marginal productivity theory of product demand

MRP=MRC=D

4

least cost rule

max profit must
MP/P=MP/P

5

max profit

MRP/P=MRP/P=1

6

marginal productivity theory of income distribution

wage equals value of labor
criticisms:
1. inequality
2. market imperfections

7

wage rate

price per unit labor
nominal ($ payed)
real (whats bought w/nom)

8

productivity

1. plentiful capital
2. abundant natural resources
3. advanced tech
4. labor quality
5. other (size,specialization)

9

purely comp. labor mrkt

-large # firms hiring
-wage takers
-workers have same skills
assume: non-union, indiviually compete

10

monopsony

non-competitive
1.single buyer
2. workers immobile
3. wage makers

11

minimum wage

wage floor helps less skilled workers

12

wage differentials

diff salaries among occupations
1. supply+demand
2. marginal revenue productivity
supply:
- noncompeting
-workers not homogenous

13

higher ed = higher income, why?

1. fewer educated workers
2. more productivity
3. compensating difference

14

market imperfections

1. lack of job information
2. geopraphic immobility
3. unions and gov. restrictions
4. discrimination

15

alt to min wage

1. piece rates
2. commisions/royalties
3. bonuses
4. stock options
5. profit sharing

16

negatives to pay for performance

1. produce faster=poor quality
2. questionable sales practivce
3. who earns?
4. free riding
5. executive manipulation
6. no turnover

17

economic rent

price paid for land/resources in fixed supply
assume:
1. single use
2. smae quality
3. competitive market
4. derived demand
5. demand is downward

18

interest range of rates

1. risk
2. maturity
3. size of loan
4. taxability

19

loanable funds theory of interest

supply when rates high, demand when rates low