Chapter3LectureNotesSakV

Chapter3LectureNotesSakV - Models Q1: Total Production Q2:...

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Unformatted text preview: Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Intermediate Macroeconomics, 321 Chapter 3 National Income Instructor Geoffrey Williams Rutgers University May 27, 2009 Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Outline 1 Models 2 Q1: Total Production 3 Q2: How is production divided? 4 Q3: What determines Demand? 5 Q4: Market Equilbria Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Now that we understand GDP... Lets look at some more specific questions: 1 What determines the total production and total income of a country? 2 Who gets the income from production? 3 What determines demand for national production? 4 What ensures that the demand for consumption, investment and government services equals the level of production? Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Our first model (by Hasbro) Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria A more realistic model Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Factors of Production Returns to Scale Assume the Solution Question 1 1 What determines the total production and total income of a country? 2 Who gets the income from production? 3 What determines demand for national production? 4 What ensures that the demand for consumption, investment and government services equals the level of production? Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Factors of Production Returns to Scale Assume the Solution Factors of production Factors of production is the economic term for inputs used in production Example: A local Starbucks uses the following factors of production: Labor: the hours it hires its employees to work Equipment Facilities Materials: coffee beans, cups, napkins Economists usually group the last three categories into one abstract category: capital Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided? Q3: What determines Demand? Q4: Market Equilbria Factors of Production Returns to Scale Assume the Solution Production in the eyes of an economist We reduce everything to a single function of capital and labor using the symbols: Y , our previous symbol for production (remember chapter 2) K for capital (think of Marxs Das Kapital) L for labor We get a basic production function : Y = F ( K , L ) Instructor Geoffrey Williams Chapter 3 Models Q1: Total Production Q2: How is production divided?...
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This note was uploaded on 02/29/2012 for the course 320 322 taught by Professor Macro-williams,micro-yoshi during the Fall '10 term at Rutgers.

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Chapter3LectureNotesSakV - Models Q1: Total Production Q2:...

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