ECON 103 Lecture 3: Division of Labor

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ECON 103 Full Course Notes
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ECON 103 Full Course Notes
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Why the neoclassical supply curve is wrong and division of labor: supply cannot be separated from demand. We are richer because we are more productive. Higher productivity comes from the division of labor, and greater labor intensity. Capitalism promotes productivity growth by maintaining clear link between productivity gains and profits. Division of labor and learning by doing lead to discovery of new and better technologies. In the long run, where no inputs are fixed, marginal productivity is constant or increasing, therefore, the long-run supply curve is flat or downward sloping. Higher productivity does not always mean workers are paid more: capitalism combines authority with incentive. Competition between capitalists give incentive to find new ways to increase production. In capitalist societies, status is not prescribed by birth, but depends on wealth, encouraging competition while opening careers to talent. Increased productivity - 3 ways - division of labor. 1: save time commonly lost in passing from one species of work to another.

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