5 constant returns to scale imply that if all inputs

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Unformatted text preview: supply in the labor market (recall that we, households, supply labor in the labor market. Firms demand labor): minimum wages, unions, efficiency wages. Chapter 15 – additional material 1. Recall that is the NRU is not constant and moves closely with actual, observed unemployment, the cyclical unemployment is very small and transitory shocks do not have a large effect on the economy (or unemployment). 2. Review the job- search model seen in class. Work on question 6 from the MCPQ. 3. Work on question 7 from the MCPQ. 4. The Shapiro- Stiglitz model shows the minimum level that firms will give to workers so that they exert effort voluntarily (by making the value of working hard greater than the value of shirking). Chapter 12 1. Recall the two facts about growth: there is big variations in income per capita and growth rates in the world. 2. Productivity is the main determining of economic growth and physical capital, natural resources, human capital and technological knowledge determine productivity. 3. Recall that, in economic growth, we care about per capita variables. 4. The difference between human capital and technological knowledge is that the latter is a public good and, thus, once a discovery is made, we all benefit from it (this is why we don’t talk about technological knowledge per capita). 5. Constant returns to scale imply that if ALL inputs double, then output doubles. 6. Understand the difference between foreign direct investment and foreign portfolio investment. 7. The government plays an important role in enforcing property rights. If not, there is no incentive for firms to invest. 8. Inward- oriented policies (implemented basically in Latin American in the 1970s) have not been successful. Outward- oriented policies (implemented in South East Asia in the 1970s) have been successful. Recall that people (or firms) respond to incentives. 9. Population growth could decrease economic growth (by stretching natural resources and diluting capital) or could increase economic growth (because it means there are more researchers). However, the data suggest that the negative...
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This document was uploaded on 02/20/2014 for the course ECON 1002 at University of Minnesota Duluth.

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