M Describe the production function approach to analyzing the sources of economic growth Flashcards
1
Q
Production function and econ Growth (prod. F exhibits DMR so sustainable econ growth can’t be easily achieved via ‘capital deepening investment’; increasing physical capital per worker over time. Prod. gains and growth of labor force are necessary for LT sust. growth)
A
Production function Y= A*f(K,L);economic output (the amounts of labor and capital that are available and their productivity which depends on the lvel of technology available
PRod. func as per work Y/L = Axf(K/L)
Y/L = Output per worker (labor productivity) K/L = Physical capital per worker
Prod. Func per worker suggests that labor prod. can be increased by either improving tech or increasing physical capital per worker.
