Labor Market and Capital Markets Flashcards

Vocabulary flashcards based on lecture notes about labor and capital markets.

Supply of Labor

The number of hours an individual is willing to work at various wage rates.

Reservation Wage

The lowest wage at which an individual is willing to work.

Substitution Effect

Workers choose more hours as wages increase (opportunity cost of leisure increases).

Income Effect

Workers choose fewer hours as wages increase and more hours when wages decrease.

Marginal Revenue Product (MRPL)

Amount of additional revenue one worker earns for the firm: MRPL= MPPL× MR

Marginal Physical Product of Labor (MPPL)

The additional output from adding one more worker.

Elasticity of Demand for Labor

Measures responsiveness of quantity of labor demanded to changes in wages.

Economic Discrimination

Workers of equal ability and productivity are paid different wages or are otherwise discriminated against.

Segmented Labor Markets

Occur when labor markets split into separate parts, leading to wage differentials.

Equal Pay Act of 1963

Requires that women and men receive equal pay for equal work.

Civil Rights Act of 1964

Prohibits discrimination based on race, color, sex, religion, or nationality.

Executive Order 11246

Established affirmative action.

Age Discrimination in Employment Act of 1967

Protects workers over age 40 from age discrimination.

Americans with Disabilities Act (1990)

Prohibits discrimination based on physical or mental disabilities.

Equality Act (Proposed)

Would prohibit discrimination based on sexual orientation or gender identity.

Unions

Associations of employees that bargain with employers over the terms and conditions of work.

Craft Union

Represents members of a specific craft or occupation.

Industrial Union

Represents all workers employed in a specific industry.

Closed Shop

Only union members are hired.

Union Shop

Nonunion workers can be hired but must join the union within a specified time.

Agency Shop

Nonunion workers may be hired but must pay dues for the union’s services.

Wagner Act (1935)

Prohibited a variety of unfair labor practices, including firing workers for engaging in union activities and required employers to bargain in good faith.

Taft-Hartley Act (1947)

Prohibits unfair labor practices by unions, outlawing closed shops and permitting states to pass right-to-work laws.

Land

Payment for its use (rent) is determined entirely by demand.

Industrial Agglomeration

Occurs when firms in one industry choose to locate in close proximity with each other. This increases the demand for land.

Physical Capital

Includes all manufactured products that are used in the production of goods and services

Marginal Revenue Product of Capital (MRPK)

The amount of additional revenue earned when a firm uses one more unit of capital.

Present Value (PV)

The value of an investment (future stream of income) today.

Bond

A debt instrument that promises to pay back a certain amount over time.

Stocks

Shares of ownership in a company that provides voting rights and profit sharing.

Venture Capital

Investment in startup companies with potentially profitable ideas.

Private Equity

Investment in struggling firms to make them more profitable.

Human Capital

Investments, such as education and training, lead to more job opportunities and greater potential earnings.

Intellectual Property Rights

A set of exclusive rights granted to an inventor or a producer of creative work, allowing the originator to earn profit over a fixed period.

Patent

Protects Inventions

Copyright

Protects writings, music, and other creative works.

Trademark

Protects company names and logos.