The Factors of Production - chapter 16

Factors of production

the ingredients that go into making a good or service.

monopsonist

A(n) ________ has the market power to push wages below market equilibrium.

joint labour

Workers can also gain market power, by banding together to make ________ supply decisions and push their wages above equilibrium.

Economic rent

the gains that workers and owners of capital receive from supplying their labour or machinery in factor markets.

Human capital

the set of skills, knowledge, experience, and talent that determine the productivity of workers.

Efficiency wage

a wage that is deliberately set above the market rate to increase worker productivity.

Factors of production

________ are rented, bought, and sold in markets, at prices and in quantities that are determined by supply an demand.

Monopsony

a market in which there is only one buyer but many sellers.

Capital

manufactured goods that are used to produce new goods

value of the marginal product

the marginal revenue generated by an additional unit of input times the price of the output

human capital

the set of skills, knowledge, experience, and talent that determine the productivity of workers

rental price

the price paid to use a factor of production for a certain period or task

purchase price

the price paid to gain permanent ownership of a factor of production

economic rent

the gains that workers and owners of capital receive from supplying their labour or machinery in factor markets

minimum wages and efficiency wages

There are two common reasons for a wage to rise above the market equilibrium