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58 Cards in this Set
- Front
- Back
Demand for Labor (DL) |
BF demand Labor |
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Derived Demand |
demand for other good and services |
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Bush Tax on Business Firms |
Policy that went against the demand for labor. The only reason you hire people is because households demand products |
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Marginal Product of Labor (MPL) |
Change in output from one additional unit of labor |
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Marginal Revenue Product of Labor (MRPL) |
Change in revenue from one additional unit of laborMPL x Price |
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Effects of Demand for Labor |
Output Effect and Input Substitution Effect |
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Output Effect |
As wages increase, prices will increase, demand decreases. Thus, the demand for labor goes down and unemployment goes up. |
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Input Substitution Effect |
As wages go up, it becomes easier for BF to substitute facts of product or other labor for current labor. (labor out-pricing itself.) Ex. Monitors taking your order at restaurants |
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Supply of Labor |
shows the relationships between quantity of labor supplied and leisure. Ex. work vs. leisure time |
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Effects of Supply for Labor |
Substitution Effect Income Effect *Substitution outweighs income |
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Substitution Effect |
Wages increase, the opportunity cost of not working increase. Thus we work more. |
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Income Effect |
As wages increase, the desire for leisure increase, thus we work less. |
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Driving Factor for Wages |
Supply because of the household |
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Low Supply |
Natural God Given Ability High Training Cost Undesirable Working Conditions Dangerous Jobs Artificial Professional Barriers |
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Natural God Given Ability |
something that becomes natural to you. ex. professional athletes- born with it |
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High Training Cost |
Start to finish process- lowers supply. Ex. Doctors |
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Undesirable Working Conditions |
Ex. Trash Collector |
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Dangerous Jobs |
Electrician, Deadliest Catch |
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Artificial Professional Barriers |
LSAT, CPE, BAR |
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Minimum Wage |
Price Floor |
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College Premium |
College students tend to earn over twice what non-college students earn. |
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2 Reasons for the College Premium |
Learning Effect Signaling Effect |
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Learning Effect |
Receiving information and knowledge that the employer will have to teach you. |
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Signaling Effect |
Able to handle multiple tasks at one time and still complete the task or class |
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Labor Unions |
Groups of organized workers who's purpose is to improve working conditions and increase benefits |
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2 Main Labor Unions |
Craft Union Industrial Union |
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Craft Union |
Organization of workers from particular occupations ex. plumbers, electricians |
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Industrial Union |
Semi-skilled workers from a particular industry ex. assembly lines, steel mills |
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3 Main Labor Laws |
Wagner Act Taft Hartley Act Landrum Griffith Act |
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Wagner Act |
Guaranteed workers the right to join a union- set up the National Labor Relations Board. |
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Taft Hartley Act |
Stops a strike, allowed states to set up as right to work states- do not have to join union for employment. |
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Landrum Act |
Guaranteed workers the right to fair and private elections |
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Feather Bedding |
Unionized industries. Requiring more labor to complete a task |
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How feather bedding works |
you have a quantity restriction. this causes an increase cost to the consumer- like taxi medallion |
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Finance |
More Macro |
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International Trade |
More Micro |
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Trade benefits |
Society as a whole |
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Autarky |
Absence of trade |
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Comparative Advantage |
the ability of a person, business firm, or government to produce at a lower opportunity cost. |
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Terms of Trade |
Equilibrium Price Ratio at which trade occurs |
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Trade Barriers |
Tariff or Non-Tariff |
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Tariff Barriers |
Tariff Quota VER |
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Tariff |
Tax on import, makes imports more expensive.
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Quota |
limit of imports- happens in developing economies |
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VER (Voluntary Export Restraint) |
Trade agreement between two nations to voluntary restrict exports |
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Non-Tariff Barriers |
Dumping Export Subsidies Export Promotion |
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Dumping |
selling a product too cheap. you must be able to prove intent. (explicitly illegal) |
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Export Susidies |
subsidizing a business base on per unit export. this allows and encourages dumping |
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Export Promotion |
Encourage domestic exporters to become more efficient (Legal) ex. Cheabols- large businesses that operate like the mafia |
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Reasons for Protectionist Policies |
Infant Industry Protection National Defense and Security Income Distribution Discourage Consumption of a Certain Good |
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Infant Industry Protection |
New industry in a nation can't compete to protect the industry. Since they aren't competing they are never able to protect themselves |
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National Defense and Security |
Importing all goods from one nation. But if you make them mad, that is an issue. Making sure you have a domestic industry- Farming industry |
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Income Distribution |
Barriers to protect workers in a certain industry US and Canada- Truck industry |
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Discourage Consumption of a Certain Good |
Barriers to trade so you do not consume a certain good |
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International Institutions |
Bretton Woods Accord World Bank IMF |
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Bretton Woods Accord |
GATT- General Agreement on Tariffs and Trade. helped reduced trade barriers. WTO- World Trade Organization. observed trade treaties, not enforcement mechanisms. |
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World Bank |
Originally developed to reconstruct nations after WW2. Change purpose to infrastructural improvements (roads, bridges, power plants, streets) |
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IMF- International Monetary Fund |
Helps nations when invited, when there is a financial crisis (debt) |