1.6 and 1.7 Flashcards
What is the relationship between the inputs and output called?
Production function
Why is labour combined with land productive?
More input = more output produced and APL falls
Who modelled the diminishing APL?
Malthus
Why did diminishing APL worry Malthus?
As production increases standards of living increases which causes an increase in population. New farmers would pick out bad land and not be productive which reduces APL even more. When the APL drops the amount of grain a person consumes drops.
What can a diminishing APL be caused by?
More labour devoted to a fixed quantity of land
More inferior land brought into cultivation
What was the second key idea of Malthus’s model?
Population expands if living standards increase
Explain the poverty trap
Living standards are low and technology improves
Average output increases
Population rises
Less land per farmer
Average output per farmed falls
Population is larger but living standards return to normal
Explain the equilibrium point in APL graph?
The equilibrium point is where the subsistence income meets the number of farmers that it takes to achieve that APL no growth or fall in population
If the number of farmers decreases the APL increases and population increases due to increased standards of living. As the population grow more farmers work the land and APL decreases so economy will return back to point E
If the the number of farmers increases the APL will drop and population will drop until subsistence level is reached
What happens to the E point when new technology is introduced ?
Productivity rises and point shifts up but as population increases due to higher standards in living APL drops and forms new E point on the same subsistence income at a higher population
What according to Malthus did improvements in technology not raise living standards ?
The APL diminishes as more labour is applied to a fixed quantity
Population grows in response to an increase in living standards
