COMM 220 Study Guide - Final Guide: Variable Cost, Marginal Revenue, Marginal Product
18 Apr 2015
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Chapter 4 overview of the labor market. Adult working population (awp) = labor force (lf) + not in the labor force (nlf) Lf = e + u = over 16 years old, employed or unemployed (u) but looking for job. Nlf: not looking for job, waiting to be recalled from layoff. A scale or output effect the reduction in the scale of production or output due to the reduction in employment. A substitution effect capital is substituted for labor in the production process. Economic rents: difference between the wage workers are actually paid on a job and the workers" reservation wages. The labor supply curve: reservation wages (each worker has a different reservation wage, so rents will differ for each) The reservation wage of a worker: wage below which the worker would refuse (or quit) the job in question. (opportunity cost to the individual worker for giving up hours of leisure for market work. )
