lecture 2

Question 1

what is GDP?

Answer 1

gross domestic product that is the total value of all the goods and services produced by a country in a particular year

Question 2

what is PPP?

Answer 2

people, process and product

Question 3

what caused the “kink”(more GDP per capita)?

Answer 3

technological process, energy, new way to organize transactions

Question 4

what is a technology?

Answer 4

is defined by the way inputs are combined to obtain outpus

Question 5

how do we model a technology?

Answer 5

as a way to obtain outputs from inputs. by a production function

Question 6

what is a production function?

Answer 6

amount of output that will be produced for one or more combinations of input and describes different technologies capable of producing the same thing

Question 7

how is a production function represented?

Answer 7

(output) y= f(x) (x- input)

Question 8

What is average output?

Answer 8

Average output is the output per unit of input (Y/X)
The Average product of labour
APL= output / labour = Q/L

Question 9

What is the marginal ouput

Answer 9

Margina output is the change in output corresponding to one unit change in input.
continuous data: f’(x) or dY/dx
discrete data: (y2-y1)/(x2-x1)
Marginal product of labour
APL=(dQ/dL) = d(output)/d(labour)
it is measured by the slope of the production function at each point

Question 10

what is the properties of MPL?

Answer 10

output is increasing in input (f’(x)>0) and decreasing marginal returns (f’‘(x)<0)

Question 11

How does techology be connected to the KINK?

Answer 11

To have a continued increase in living standards, technological progress needs to happen at a faster rate than population growth.
If technology grows faster than the population, the diminishing average product of labor (APL) effect can be offset (meaning thatvthen we expect economic growth)