McConnell_Brue_Chapter02

McConnell_Brue_Chapter02

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Unformatted text preview: nition of productivity is an increase in outputs while employing no more inputs. Secondarily the development and use of capital goods represents a significant contributor to efficiency in market systems, too. Making initial investments in capital goods prevents us from having to continually seek to produce goods with no specialized tools or equipment. Imagine how inefficient digging a hole with your hands would be when compared to using a ditch digging machine. From this analogy you get an idea of how crucial the development of capital goods is to an economic system. Incidentally, gains in technology lead to improvements in capital goods and that is the source of the majority of our productivity gains therefore technology and capital goods naturally accompany one another. 5 Chapter 2: The Market System and The Circular Flow Slide 12 Specialization Specialization is also a critical component of a market system in that resources (human and otherwise) are most often better suited to producing a single good or small range of goods than producing everything. Therefore we gai...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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