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Econ 114-Lecture 10

# Econ 114-Lecture 10 - Lecture 10 Econ 114 Announcements...

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Econ 114 Lecture 10

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Announcements Problem set 4 due on Monday
Technology Not as tangible as capital…more like “Ideas” Non Rival The use of non rival good by one person does not prevent simultaneous consumption of the same good by other people. Only partially excludable Excludability: The degree to which an owner of a good can prevent others from using it without permission.

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One country model Production only with workers (no capital) since: γA = LA/L Output is Y=ALY, or in per capita units y=A(1-γA) Question: How can R&D increase output?
One country model Workers in R&D improve technology That is, technology changes when workers

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One country model Different notation from the book dA/dt = ALA / μ (dA/dt) / A is the growth rate of productivity and μ as the cost of innovation See it as (dA/dt) / A ~ [A(t+1)-A(t)] / A(t) We will use A^ = (dA/dt)/A
One Country Model A^ = L A /μ or A^ = (γ A /μ)L But consider output per worker, y=A(1- γ A

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