ECON 1BB3 Lecture Notes - Lecture 5: Accounting Software, Marginal Product, Production Function

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

The quantity of goods and services that a worker can produce for each hour of work. Physical capital: human capital knowledge (actually acquiring it, not just the resources, natural resources renewable, non-renewable. Y = a * f (k, l, h, n) Shows how we combine inputs to produce output. If a production function exhibits constant returns of scale, then doubling all inputs leads to a doubling of. 2y = a * f (2k, 2l, 2h, 2n) output. 100y = a * f (100k, 100l, 100h, 100n) xy = a * f (xk, xl, xh, xn) Y/l = a * f (k/l, 1, h/l, n/l) 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 than the extra output produced by adding the 18th unit labour. Poor countries tend to grow faster than rich countries.