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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
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
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.
- Spring '09