ECON 202 Lecture Notes - Lecture 5: Shortage, Excess Supply, Demand Curve

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7 Feb 2016
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CHAPTER 3: AGGREGATE PRODUCTION and PRODUCTIVITY
1. Determinants of Aggregate Production
Factors of Production
Production Function
Cobb-Douglas Production Function
Application: Why Some Countries Rich and Others
Poor?
Cobb-Douglas Production Function Characteristics
-Constant Returns to Scale
-Diminishing Returns
Calculating The Marginal Product of Capital and Labor
Changes in the Production Function: Supply Shocks
Types of Supply Shocks
a. Technology shocks
b. Natural Environmental shocks
c. Energy shocks
E'ect of A Supply Shock
2. Determinants of factor Prices
Demand for Capital and Labor
-Economic Pro)ts
-Demand curve analysis
Supply of Capital and Labor
Factor Market Equilibrium
' -Excess supply
'- Excess demand
'3. Distribution of National Income
' Application: Explaining Real Wage Growth
' Application: Oil Shocks, Real Wages, and the Stock
Market
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