Econ unit 6

Here are 30 flashcards for AP Economics Unit 6:

Flashcard 1

Term: Value of the Marginal Product (VMPL)
Definition: The additional revenue from employing one more unit of labor, calculated as Marginal Product (MP) × Price of Output.

Flashcard 2

Term: Marginal Revenue Product (MRPL)
Definition: The additional revenue from employing one more unit of labor, calculated as Marginal Revenue × Marginal Product of Labor (MPL).

Flashcard 3

Term: Marginal Product (MP)
Definition: The additional output produced by adding one more unit of input, holding all other inputs constant.

Flashcard 4

Term: Diminishing Marginal Returns
Definition: A principle where adding more of an input leads to smaller increases in output after a certain point.

Flashcard 5

Term: Marginal Factor Cost (MFC)
Definition: The cost of employing one more unit of a factor, such as labor or capital.

Flashcard 6

Term: Profit Maximization Rule in Factor Markets
Definition: Hire factors up to the point where MRP = MFC.

Flashcard 7

Term: Derived Demand
Definition: Demand for a factor of production that depends on the demand for the goods and services it helps produce.

Flashcard 8

Term: Shifts in Factor Demand Curve
Definition: Factor demand shifts due to changes in product price, productivity of the factor, or availability of complementary and substitute factors.

Flashcard 9

Term: Shifts in Factor Supply Curve
Definition: Factor supply shifts due to changes in population, education, preferences, or alternative employment opportunities.

Flashcard 10

Term: Human Capital
Definition: The skills, knowledge, and experience possessed by an individual or workforce, enhancing productivity.

Flashcard 11

Term: Physical Capital
Definition: Tangible assets like machinery, tools, and buildings used in production.

Flashcard 12

Term: Wage Rate
Definition: The price of labor, typically expressed as payment per unit of time (hourly, daily, etc.).

Flashcard 13

Term: Equilibrium Wage
Definition: The wage rate at which the quantity of labor demanded equals the quantity of labor supplied.

Flashcard 14

Term: Labor Market
Definition: A market where employers and workers interact, determining wage rates and employment levels.

Flashcard 15

Term: Minimum Wage
Definition: A government-imposed floor on the wage rate that employers must pay workers.

Flashcard 16

Term: Labor Union
Definition: An organization of workers formed to protect their rights and interests, often negotiating wages and working conditions.

Flashcard 17

Term: Monopsony
Definition: A labor market where a single employer has significant market power in hiring workers.

Flashcard 18

Term: Marginal Revenue
Definition: The additional revenue generated from selling one more unit of output.

Flashcard 19

Term: Marginal Cost
Definition: The additional cost of producing one more unit of output.

Flashcard 20

Term: Cost-Minimization Rule
Definition: Firms minimize costs when the Marginal Product per Dollar Spent is equal for all inputs:
MPLWage=MPKRental Rate\frac{\text{MP}_L}{\text{Wage}} = \frac{\text{MP}_K}{\text{Rental Rate}}WageMPL​​=Rental RateMPK​​.

Flashcard 21

Term: Productivity
Definition: The amount of output produced per unit of input.

Flashcard 22

Term: Capital-Intensive Production
Definition: A production process requiring relatively high levels of capital investment compared to labor.

Flashcard 23

Term: Labor-Intensive Production
Definition: A production process requiring relatively high levels of labor compared to capital investment.

Flashcard 24

Term: Technology's Impact on Factor Markets
Definition: Technological advancements increase productivity, often shifting factor demand curves.

Flashcard 25

Term: Elasticity of Labor Supply
Definition: The responsiveness of labor supply to changes in the wage rate.

Flashcard 26

Term: Elasticity of Labor Demand
Definition: The responsiveness of labor demand to changes in the wage rate.

Flashcard 27

Term: Outsourcing
Definition: The practice of hiring external firms or workers to perform tasks traditionally done in-house, often to reduce costs.

Flashcard 28

Term: Economic Rent
Definition: The payment to a factor of production above its opportunity cost.

Flashcard 29

Term: Factor Intensity
Definition: The relative proportion of labor, capital, or other factors used in production.

Flashcard 30

Term: Opportunity Cost in Factor Markets
Definition: The value of the next best alternative forgone when a factor is used in a particular activity.