3 - Sum zero game if I win you lose if you win I lose if I...

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Sum zero game – if I win you lose, if you win I lose – if I cut a pie, and eat five slices, you cannot eat five slices - try to promote growth Productivity - a country’s standard of living depends on its ability to produce goods and services - the average quantity of goods and services produce per unit of labor input Y = real GDP = quantity of output produced L = quantity of labor (or based on numbers of hours worked) PRODUCTIVITY = Y / L (output per worker) - What affects productivity? - Production function Y = A f(L, K, H, N) F is a function (boundary conditions, log function, square root function, power function, etc) Factors of production – labor, physical capital, human capital, natural resources A = technology – total factor of productivity Human capital – how skillful is your labor force Natural resources – some countries have a lot of natural resources Physical Capital per Worker - the stock of equipment and structures used to produce g&s is called [physical]] capital, denoted K - K / L = capital per worker o
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