ap econ module 69-71

Physical capital

—often referred to simply as “capital”—consists of manufactured productive resources such as equipment, buildings, tool

Human Capital

the improvement in labor created by education and knowledge that is embodied in the workforce.

derived demand

The demand for a factor; It results from (that is, it is derived from) the demand for the output being produced.

factor distribution of income

the division of total income among land, labor, capital, and entrepreneurship.

marginal revenue product

the additional revenue generated by employing one more unit of that factor.

marginal revenue product curve

shows how the marginal revenue product of that factor depends on the quantity of the factor employed.

rental rate

the cost, explicit or implicit, of using a unit of that asset for a given period of time.

equilibrium marginal revenue product

the additional revenue generated by the last unit of that factor employed in the factor market as a whole

Economic rent

the payment to a factor of production in excess of the minimum payment necessary to employ that factor.

marginal productivity theory of income distribution

every factor of production is paid the equilibrium marginal revenue product.

time allocation

how many hours to spend on different activities.

Leisure

time available for purposes other than earning money to buy marketed goods

individual labor supply curve

shows how the quantity of labor supplied by an individual depends on that individual’s wage rate.

marginal factor cost

the additional cost of employing an additional unit of a factor of production.

monopsonist

a single buyer in a factor market.

monopsony

A market in which there is a monopsonist