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firms buy
resources (land, labor, capital)
inputs produce
units of output
marginal product
output from each unit of input
Marginal Revenue Product (MRP)
marginal product x price
Marginal Factor Cost
supply of labor
MRP in labor markets
demand for labor
perfectly competitive factor market
firm can purchase each new unit of labor for the same cost (flat MFC)
monopsony
market with one employer
costs a lot of money to hire new employees
Lorenz Curve
illustrates income distribution by quintile
Gini Coefficient
area between curves vs entire area
quintiles
20% blocks to measure income distribution
higher Gini coefficient
less evenly distributed income
lower Gini coefficient
more evenly distributed income
progressive marginal tax rates
higher incomes pay a higher tax rates
income redistribution
Social Security, welfare, subsidized healthcare (Medicare/Medicaid)
optimal mix
MP/W = MP/R
Note 
Flashcard (45)