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ECON 1BB3 (535)
Lecture 11

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Department
Economics
Course
ECON 1BB3
Professor
Hannah Holmes
Semester
Winter

Description
Lecture 11 Productivity • the quantity of goods and services that a worker can produce for each hour of work • determinants of productivity: 1. physical capital 2. human capital 3. natural resources 4. technological knowledge Production function Y = A x F (K, L, H, N) Y = output A = technology K = physical capital L = labour H = human capital N = natural resources If a production function exhibits constant returns to scale, then doubling all inputs leads to a doubling of output. 2Y = A x F (2K, 2L, 2H, 2N) Diminishing marginal product • product: output • marginal product: the extra output produced by increasing an input by 1 unit • diminishing marginal product: the extra output produced by adding the 19th unit of labour is smaller
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