ECON 203 Lecture Notes - Lecture 2: Production Function, Use Tax, Virtuous Circle And Vicious Circle
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Productivity: the a(cid:373)ou(cid:374)t of goods a(cid:374)d se(cid:396)(cid:448)i(cid:272)es p(cid:396)odu(cid:272)ed fo(cid:396) ea(cid:272)h hou(cid:396) of a (cid:449)o(cid:396)ke(cid:396)"s ti(cid:373)e. Wo(cid:396)ld"s (cid:396)i(cid:272)hest (cid:272)ou(cid:374)t(cid:396)ies ha(cid:448)e (cid:374)o gua(cid:396)a(cid:374)tee the(cid:455) (cid:449)ill sta(cid:455) the (cid:396)i(cid:272)hest a(cid:374)d that the (cid:449)o(cid:396)ld"s poorest countries are not doomed forever to remain in poverty. Why productivity is so important: productivity is the key determinant of living standards and that growth in productivity is the key determinant of growth in living standards, the more you produced, the more goods you enjoy. I(cid:374)deed, stude(cid:374)ts (cid:272)a(cid:374) (cid:271)e (cid:448)ie(cid:449)ed as (cid:862)(cid:449)o(cid:396)ke(cid:396)s(cid:863) (cid:449)ho ha(cid:448)e the i(cid:373)po(cid:396)ta(cid:374)t jo(cid:271) of producing the human capital that will be used in future production. Te(cid:272)h(cid:374)ologi(cid:272)al k(cid:374)o(cid:449)ledge (cid:396)efe(cid:396)s to so(cid:272)iet(cid:455)"s u(cid:374)de(cid:396)sta(cid:374)di(cid:374)g a(cid:271)out ho(cid:449) the (cid:449)o(cid:396)ld (cid:449)o(cid:396)ks. Human capital refers to the resources expended transmitting this understanding to the labour force. if a production function has constant returns to scale, then a doubling of all the inputs causes the amount of output to double as well. Y/l is output per worker: measure pf productivity.