Study Guides (238,613)
Canada (115,253)
Economics (3)
ECON202 (3)

Chapter 3 Econ 202 Notes Looking for notes in .doc form and not .ppt? This is what you're looking for. With diagrams and and pictures from the textbook as well as Vaughn's in-class notes, this is the perfect set of study notes

14 Pages
Unlock Document

University of Regina
Maryann Vaughan

National Income Where it Comes From and Where it Goes Outline of Model A closed economy marketclearing modelSupply side o factor markets supply demand price o determination of outputincomeDemand side o determinants of C I and GEquilibrium o goods market o loanable funds marketFactors of ProductionK capital tools machines and structures used in productionL labor the physical and mental efforts of workersThe Production FunctionYFKLshows how much output Ythe economy can produce from Kunits of capital and Lunits of labor reflects the economys level of technology assume some level of technologyexhibits constant returns to scale Returns to Scale A Review Initially Y F KL111Scale all inputs by the same factor z K zKandL zL 2121eg if z12 then all inputs are increased by 20 What happens to output YF K L222 If constant returns to scale YzY21 If increasing returns to scale YzY21 If decreasing returns to scale YzY21Constant Returns to ScaleMeaning If you change all inputs by any positive constant then output will change by the same constant Let z0 then zY FzKzLAssumptions 1 Technology is fixed andKKLL2 The economys supplies of capital and labor are fixed atDetermining GDPOutput is determined by the fixed factor supplies and the fixed state of technologyFixed inputsFixed outputs YFKL The Distribution of National Incomedetermined by factor prices the prices per unit firms pay for the factors of production o wageprice of Lo rental rateprice of KNotation Wnominal wage Rnominal rental rate Pprice of outputW Preal wage measured in units of output R Preal rental rate
More Less

Related notes for ECON202

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.