ECON 1BB3 Lecture Notes - Free Trade, Physical Capital, Human Capital Flight

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ECON 1BB3 Full Course Notes
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ECON 1BB3 Full Course Notes
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Document Summary

Productivity: the quality of goo=ds and services that a worker csn produce for each hour of work. Production function: shows how we combine inputs to produce outputs. If a production function exhibits constant return to scale, then doubling all inputs leads to doubling of output. 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. Encourage saving (k: consume less and save more, eg. Spend on education (h: more educated individuals= more ideas for society, brain drain problem: emigration of highly educated people to rich country. Improve property rights and reduce political instability (k,a) Free trade (a: can be a substitute for technology.

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