Flashcards
Chapter#2 Labour Economics
Cards in this deck (24)
- 1What is the Labour Force Participation rate formula?LFPR= (LF / WAPop)
- 2What is the Labour Force?People who are actively seeking work
- 3What is the formula for the employment rate?Employment rate= E/ WaPop
- 4What is the formula for the Unemployment rate?Unemployment rate= U / LF
- 5What is the extensive margin?The choice of whether to work or not to work
- 6What is the intensive margin?The choice of how many hours to work, conditional on working
- 7What is the starting point in a Basic Labour Supply Model?- the would be individual worker (assume that they are motivated by greed)
- 8What are we seeking in a Basic Labour Supply model?- We are seeking to maximize a utility function
- 9What are Convex preferences?This means that the workers prefer averages to extremes
- 10What does T= ℓ+h mean?Time endowment= hours of leisure+ hours of work
- 11What does Y= Yn+ W*(T- ℓ) mean?Total income= non-market income+ wages*hours worked
- 12What does MRS=MRS= MUleisure / MUincome
- 13When income decreases, what happens to MUincome?MuIncome rises
- 14When leisure increases, what happens to MUleisure?MUleisure falls
- 15What is the sequential procedure in the labour force?First, we analyze whether the individual participates or not in the labour force. Then we determine the length of time he/she works.
- 16Where are income and leisure placed on the indifference curve?- income is the good placed on the vertical axis
- Leisure is placed on the horizontal axis - 17What does the indifference curve represent?- The locus of all combinations of two goods which generate an equal amount of total utility
- 18What is the slope of the indifference curve called?- The marginal rate of substitution (MRS) between income and leisure
- 19What does the marginal rate of substitution (MRS) between income and leisure equal to?- It is equal to the negative of the marginal utility of income
- 20Where is the indifference curve?- curved away from the origin
- never curved toward the origin - 21What is the budget constraint?-A linear function of the levels of the same goods: income and leisure, and it reflects the tradeoff between them
- 22What is the equation of the budget line?Y= Yn+ W*(T- ℓ)
- 23The slope of the budget line is given by the negative of what?- W(wage)
- 24—
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- Business/Economics Flashcards on Chapter#2 Labour Economics, created by Abdi Yusuf on 04/10/2017.
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- Abdi Yusuf
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