9-22-09 - ECONOMICS 100B Professor Martha Olney 9/22/09...

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ECONOMICS 100B Professor Martha Olney 9/22/09 Lecture 8 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ANNOUNCEMENTS On Thursday we will have class at the same place and at the same time. Several guests will be here to talk about the current state of the economy. This will be a discussion between the students and guest lecturers. It will not be podcasted. LECTURE Outline Review: Equations & Graphs Equilibrium: o When g=0 o When g>0 Effects of Δ s, Δ n, Δδ Please write down at least one question about the economic model that we have been developing. By the end of this lecture, I should have answered almost all of these questions. Student: Are we covering chapter 5? We will be implicitly covering chapter 5 on Thursday. Review: Equations & Graphs Let us review our model. Here is our production function: ܻ ܮ ൌ ൬ ܭ ܮ ൈܧ ଵିఈ The production function tells us the level of output per worker at full employment , when given the level of capital per worker and efficiency. Note that we have diminishing returns. From this graph, we can see that at K/L1, output per worker will be at Y/L1 if the economy is at full employment. However, the current economy is not at full employment. This suggests that we are sitting somewhere inside of the production function. Student: When the labor force grows, does that factor in population growth? Yes. An increase in labor force is not from an increase in employment, but from an increase in population through immigration and births. This production function is equivalent to: ܻ ܮ ൌ ൬ ܭ ܻ ଵିఈ ൈܧ
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Economics 100B ASUC Lecture Notes Online: Approved by the UC Board of Regents 9/22/09 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. 2 Here is the derivation: ܻ ܮ ൌ ൬ ܭ ܮ ൈܧ ଵିఈ ൌ ൬ ܻ ܮ ܭ ܮ ൈܧ ଵିఈ ܻ ܮ ൌ ൬ ܭ ܻ ൈ ൬ ܻ ܮ ൈܧ ଵିఈ Divide by (Y/L) α : ܻ ܮ ଵିఈ ൌ ൬ ܭ ܻ ൈܧ ଵିఈ Raise the equation to the (1/1- α ) power: ቈ൬ ܻ ܮ ଵିఈ ൌ ൬ ܭ ܻ ൈܧ ଵିఈ ଵିఈ ܻ ܮ ൌ ൬ ܭ ܻ
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This note was uploaded on 02/04/2011 for the course ECON 100B taught by Professor Wood during the Fall '08 term at University of California, Berkeley.

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9-22-09 - ECONOMICS 100B Professor Martha Olney 9/22/09...

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