Aggregate production function, Macroeconomics

Assignment Help:

The aggregate production function

Definition

Imagine the national economy during a short period of time (say one week). We refer: 

  • L: total amount of work used during this period (by all individuals in the economy).
  • K: total amount of capital used.
  • Y: total amount of finished goods produced during this period (real).

It is still the case that Y and L are flows whereas K is a stock. During a short period of time, we can presume that amount of capital is constant. 

Aggregate production function, or simply production function is a function which relates L, K and Y. Precisely, we presume that Y is a function of L and K: 

Y = f (L, K)

In most cases, we won't specify exactly what the function f looks like. Though we always presume that f is increasing in L and K, which is, when we use more labour and/or more capital, we would produce more goods.


Related Discussions:- Aggregate production function

Analysis of direct material, What is most likely to go wrong in the analysi...

What is most likely to go wrong in the analysis of direct material and other direct costs and what could be done about it.

Define the term- inflation, Define the term- inflation Inflation betwee...

Define the term- inflation Inflation between two points in time is defined as the percentage increase of price index between these two points in time.

Elucidate raising the price profitable., George has been selling 5,000 T-sh...

George has been selling 5,000 T-shirts per month for $8.50. When he increased the price t0 $9.50 he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is

Propensity, different determinants of propensity to consume

different determinants of propensity to consume

About assignment, i have assignment due within less than 24 hours if i sub...

i have assignment due within less than 24 hours if i submit assignment can i get it back before 24 hours?

Firm''s output at various levels of employment, Use the following data for ...

Use the following data for a firm's output at various levels of employment (L) to calculate: a) its marginal physical product of labor (MPPL) schedule; (b) its (MPPL/MRCL) schedule

Price to the government of buying unsold units firms, Consider a market whe...

Consider a market where supply and demand are given by QXS = -12 + PX and QXd = 78 - 2PX. Suppose the government imposes a price floor of $35, and agrees to purchase any and all un

Utility function that is consistent, Suppose that midterm grades determine ...

Suppose that midterm grades determine your nal course grade putting the Midterm 1 grade on the horizontal axis and the Midterm 2 grade on the vertical axis, draw indifference curve

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd