3203 Model Letters Flashcards
1
Q
Y =
A
Output or income
2
Q
K =
A
Capital
3
Q
L =
A
Labor
4
Q
F(K,L)=
A
The Production Function
5
Q
A =
A
Total Factor Productivity (partly technology, partly institutions, partly…we don’t know)
6
Q
y =
A
=Y/L=output per worker
7
Q
k =
A
=K/L=capital per worker
8
Q
MPK =
A
Marginal Product of Capital
9
Q
MPL =
A
Marginal Product of Labor
10
Q
P =
A
the average price level of output
11
Q
R =
A
The Rental Price of Capital (i.e., the marginal factor cost of capital)
12
Q
W =
A
The Wage Rate (i.e., the marginal factor cost of labor)
13
Q
π =
A
(nominal) economic profit
14
Q
Π =
A
=π/P=real economic profit
15
Q
rc =
A
the real rental rate of capital (not the same as r, the real interest rate)
