F5835 Labour demand, supply and wage determination

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Derived demand
demand for one item depending on the demand for another item
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Marginal revenue product (MRP)
the change in a firm's revenue resulting from employing one more worker
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Marginal product of labour (MPL)
the change in output that results from employing one more worker
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Flexible labour market
a labour market that adjusts quickly and smoothly to changes in the demand for and supply of labour
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Backward sloping labour supply curve
a labour supply curve showing the substitution effect dominating at low wages and the income effect dominating at high wages
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Income effect of a wage rise
the effect on the supply of labour caused by the change in the ability of leisure
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Substitution effect of a wage rise
the effect of on the supply of labour caused by a change in the opportunity cost of leisure
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Elasticity of supply of labour
the responsiveness of the supply of labour to a change in the wage rate
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Human capital
the skills, knowledge and experience that workers process
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Economic rent
a surplus paid to a factor of a production above what is needed to keep it in its current occupation
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Transfer earnings
the amount a factor of production could earn in its best alternative occupation, the minimum amount that has to be paid to ensure a worker stays in their present job, if the wage falls below this level, they will transfer to alternative employment
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Other cards in this set

Card 2

Front

the change in a firm's revenue resulting from employing one more worker

Back

Marginal revenue product (MRP)

Card 3

Front

the change in output that results from employing one more worker

Back

Preview of the back of card 3

Card 4

Front

a labour market that adjusts quickly and smoothly to changes in the demand for and supply of labour

Back

Preview of the back of card 4

Card 5

Front

a labour supply curve showing the substitution effect dominating at low wages and the income effect dominating at high wages

Back

Preview of the back of card 5
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