lecture 4

Question 1

what is the aggregate production function?

Answer 1

it is an assumed relation between the amount of labour (L), physical capital (K) and human capital (H) that are employed

Question 2

what is the law of diminishing returns?

Answer 2

the addition to output of each worker will fall thus the marginal product of labour (MPL) will decline

Question 3

what is returns to scale?

Answer 3

suppose all inputs double and all outputs double then there is said to be constant returns to scale