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ECON 1BB3 (535)
Lecture

why are Norwegians better off than Ethiopians.docx

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Department
Economics
Course
ECON 1BB3
Professor
Bridget O' Shaughnessy
Semester
Fall

Description
why are Norwegians better off than Ethiopians? 10/4/2012 9:27:00 AM Productivity: the quality of goo=ds and services that a worker csn produce for each hour of work Determinates of productivity:  Physical capital  Human capital  Natural resources  Technological knowledge Production function: shows how we combine inputs to produce outputs. Y=AxF(K,L,H,N) Y=output A-technology F-function L-labour K-physical capital H- human capital N-natural resources If a production function exhibits constant return to scale, then doubling all inputs leads to doubling of output. 2Y=AxF(2K,2L,2H,2N) xY=AxF(xK,xL,xH,xN) Y/L=AxF(K/L,1,H/L,N/L) 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 19 th
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