Limited time offer 20% OFF StudySoup Subscription details

UGA - ECON 2105 - Class Notes - Chapters 12 and 13 Notes

Created by: Rachel Moore Elite Notetaker

> > > > UGA - ECON 2105 - Class Notes - Chapters 12 and 13 Notes

UGA - ECON 2105 - Class Notes - Chapters 12 and 13 Notes

0 5 3 50 Reviews
This preview shows pages 1 - 2 of a 5 page document. to view the rest of the content
background image Created By: Rachel Moore    Not for redistribution.     ECON 2105 March 23, 2016 – March 30, 2016 Chapter 12
You’re fired! activity
8 “workers” try to get ping-pong balls from one box to the other.







Workers TP  MP 1 16 16 2 14 -2 3 13 -1 4 16 3 5 14 -2 6 13 -1 7 12 -1 8 4 -8 Production Functions:
𝑞 = 𝑓(𝐾, 𝐿) K = capital L = labor

Aggregate Production Function:
𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 = 𝑓(𝐾, 𝐿, 𝑁𝑎𝑡. 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠) - Large stocks of capital, labor, or N.R. à Inc. Real
GDP
- What does adding one more unit of K add to Real
GDP?
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 = 𝑀𝑃 ! = ∆𝑄
∆𝐾
  Diminishing Marginal Product à MP falls as input
(K) increases; total product (TP) can still be (+).

For labor (K fixed) 0-L* à increasing MP (+) *L-L^ à decreasing MP (+) L^ – infinity à decreasing MP (-)
background image Created By: Rachel Moore    Not for redistribution.     Convergence: “steady state;” theory was that every country in the world was going
to become like the United States.
-  Is this what we observe in the world? NO!
-  Why? Invention; change in technology.








 
- What happens to investment? (I)
People want to invest more. - What happens in the loanable funds market? People want to borrow more. - What happens to per capita GDP? We’re better off; per capita GDP increases because of increased productivity.














Technology à Å
Increase technology à Ä
𝑅𝑒𝑎𝑙 𝐺𝐷𝑃  =  Åƒ(𝐾, 𝐿, 𝑁𝑅)
MP
K à increases
Increase in education level (all workers; K fixed)
1. Education increases
What happens to the marginal product of
the last worker hired? Increases; makes
them more valuable.

2. MP
L à increases 3. What do firms do? Hire more labor (L).
4. D
L shifts right 5. W increases
6. Real GDP increases because more can be
produced.

This is the end of the preview. Please to view the rest of the content
Join more than 18,000+ college students at University of Georgia who use StudySoup to get ahead
School: University of Georgia
Department: Economics
Course: Macroeconomics
Professor: McWhite
Term: Summer 2015
Tags: ECON2105, McWhite, Macroeconomics, Chapter 13, and Chapter12
Name: Chapters 12 and 13 Notes
Description: These notes cover chapters 12 and 13 which was discussed in class March 23 - April 1.
Uploaded: 04/18/2016
5 Pages 45 Views 36 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
Join StudySoup for FREE
Get Full Access to UGA - ECON 2105 - Class Notes - Week 6
Join with Email
Already have an account? Login here
×
Log in to StudySoup
Get Full Access to UGA - ECON 2105 - Class Notes - Week 6

Forgot password? Reset password here

Reset your password

I don't want to reset my password

Need help? Contact support

Need an Account? Is not associated with an account
Sign up
We're here to help

Having trouble accessing your account? Let us help you, contact support at +1(510) 944-1054 or support@studysoup.com

Got it, thanks!
Password Reset Request Sent An email has been sent to the email address associated to your account. Follow the link in the email to reset your password. If you're having trouble finding our email please check your spam folder
Got it, thanks!
Already have an Account? Is already in use
Log in
Incorrect Password The password used to log in with this account is incorrect
Try Again

Forgot password? Reset it here