AP Economics – 12/18/18

I.  Bellwork

Is Slow Wage Growth a Sign of Monopsony Power?

1. -Explain why some economists believe that slow wage growth indicates widespread monopsony power by employers?
2. -What other factors could be the cause of slow wage growth?
3. -If the slow wage growth is a result of monopsony power, is there a role for the government to address this?

II.  Objectives

• Explain the labor market applications of the marginal productivity theory of income distribution
• Identify and describe sources of wage disparities and the role of discrimination through examination of the text and completion of an outline

III.  Discussion  Pages 720-726

A.  The Marginal Productivity Theory of Income Distribution:  the division of income among the economy’s factors of production is determined by each factor’s marginal productivity at the market equilibrium

1. Marginal Productivity and Wage Inequality
2. Market Power
3. Efficiency Wages
4. Discrimination

B,  Is the Marginal Productivity Theory of Income Distribution Really True?

1. Does Marginal Productivity Theory Work?

IV.  Claswork on iLearn

• Worksheet 73.1: Efficiency Wages on iLearn
• For each number in the outline above explain the concept and provide a real life example

AP Economics