AP Micro Unit 5 Factor Markets Terms

Vocabulary flashcards related to Factor Markets in AP Microeconomics.

Derived Demand

The demand placed on one good or service as a result of changes in the price for some other related good or service.

Diminishing Marginal Utility

The value of, or satisfaction gained from, a good to a consumer declines with each additional unit acquired or consumed.

Factor Market

Refers to markets where services of the factors of production (Land, labor, capital & entrepreneurship) are bought and sold.

Factors of Production

The inputs that are used in the production of goods or services in the attempt to make an economic profit, which include land, labor, capital, and entrepreneurship.

Land

The part of the earth's surface that is not covered by water, as opposed to the sea or the air.

Labor

Work, especially hard physical work.

Marginal Factor Cost (MFC)

A rate expressed in currency units per unit of input, such as labor; similar but not identical to a wage rate.

Marginal Private Costs (MPC)

Cost incurred solely by the manufacturer; additional cost incurred by the producer through the production or use of a single extra unit.

Marginal Product of Labor

The change in output from hiring one additional unit of labor; the increase in output added by the last unit of labor.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to price.

Marginal Revenue Product (MRP)

The additional revenue generated by the additional unit of labor (worker).

Progressive Tax

A tax in which people with more income pay a larger percentage in taxes.

Minimum Wage

The lowest wage permitted by law or by a special agreement (such as one with a labor union).

Monopsonistic Markets

A market with a single buyer of labor, commonly found in small towns with one large firm providing the majority of employment.

Rent

Payments received in exchange for temporary use of a particular good or property.

Resources

A stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization.

Wage

A factor payment to the owner of labor for using labor services in the production of goods and services.

Wage Taker

Demand for labor increases market wages and more workers enter the market. But this higher cost of labor will mean that employers will use less labor because it's more expensive.