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# note_3 - Econ 102 Spring 2011 TA Note for Week 3 Sangyup...

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Econ 102 Spring 2011 TA Note for Week 3 Sangyup Choi([email protected]) Brief Review for the 1st Midterm 1. GDP(Gross Domestic Product) market value(not unpaid housework), newly produced(not used car but commission for selling a used car), &nal good and service(to avoid double counting) within a coun- try(not GM factory in Mexico) GDP=C+I+G+NX(EX-IM) Remember some tricky questions with multiple choices(Look at previous TA note)! 2. Production and Labor Market y = A f ( K;L ) real output is a function of capital stock, labor, and total factor productivity Property of Cobb-Douglas Production Function ( y = AK L 1 a (a) Constant Return to Scale(double all input ! output doubled) (b) Relationship between MPL,MPK,APL,APK(need to derive) MPL = (1 ± ) APL MPK = (c) Law of Diminishing Marginal Returns: as L increase y increases but MPL decreases ( MPL > 0 but @MPL @L < 0) (d) Need to distinguish between shift variable and movement along the line(on (L,y) graph) We need two graphs:1st is labor on x axis and output is on y axis(given A and K) 2nd is labor on x axis and MPL on y axis (e) Labor Market Equilibrium

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note_3 - Econ 102 Spring 2011 TA Note for Week 3 Sangyup...

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