Part 2. Matching: Match the Key terms in Column "A" with the definitions in Column "B" by writing the block (upper) case letter of your choice under column "A" and match the definitions in column "B" with the meanings or examples or real world applications in column "C" by writing the small (lower) case letter of your choice under column "B". Column "A" Column "B" Column "C" 1. Derived Demand A. A firm that can buy all of a factor it wants at a. The technique used by Human Resource department to the equilibrium price. It faces a horizontal (flat, eliminate candidates who do not meet the basic perfectly elastic) supply curve of factors. requirements of the position or who lack the desired 2. Marginal Revenue B. Demand that is the result of some other level of skills and competencies for a job. demand. For example, factor demand is b. The added value of the extra units of output that derived from the demand for the products that additional factor (such as labor) produces. This can be Product(MRP) the factors go to produce used to determine the optimal number of workers to C. The process employers use to increase the employ at the market wage rate. probability of choosing good employees based C. No one firm is large enough to manipulate the factor 3. Value Marginal Product(VMP) on certain criteria. (such as the labor) market. The firm can hire as many D. The additional revenue generated by workers as it wants at the market wage rate set by the industry. employing an additional factor unit. d. The addition to total costs as a result of employing one 4. Marginal Factor Cost (MFC) E. Rule that specifies the combination of more unit of a factor of production (such as labor). factors that minimizes costs and so requires e. Measures the degree to which employment or the that the following condition be demand for labor responds to changes in wages. 5. Factor Price Taker met: MPP,/P, = MPP /P2 = ... = MPP /PN, f. A theory that states wages are paid at a level equal to where the numbers stand for the different the marginal revenue product of labor, that is, the factors. additional revenues generated from the employment of 6. Least-Cost Rule F. The price of the good multiplied by the that labor input. marginal physical product of the factor: 9- The want for one good or service happens because of VMP = P x MPP. the want for another good or service. An example can G. The additional cost incurred by employing be increase in the need for wood because of the 7. Elasticity of Demand for Labor an additional factor unit increase in the need for furniture. h. Measures the increase in a firm's total revenue H. The percentage change in the quantity attributable to employing one more unit of that factor 8. Marginal Productivity Theory demanded of labor divided by the percentage (such as labor). change in the wage rate. i. The rule that requires the ratio of labor's marginal I. Firms in competitive or perfect product and product to its price equals the ratio of capital's marginal 9. Screening factor markets pay factors their marginal product to its price. That is, when the last dollar spent revenue products on each resource yields the same marginal product. 3
