ECON 1BB3 Lecture Notes - Free Trade, Physical Capital, Human Capital Flight
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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:
Production function: shows how we combine inputs to produce outputs.
H- human capital
If a production function exhibits constant return to scale, then doubling all
inputs leads to doubling of output.
Diminishing Marginal Product:
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 of labour.
Poor countries tend to grow faster than rich countries
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