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

Indiana toll road at the rate of two per minute, Automobiles arrive at the ...

Automobiles arrive at the Elkhart exit of the Indiana Toll Road at the rate of two per minute. The distribution of arrivals approximates a Poisson distribution. A) What is the prob

A spiral approach and a waterfall approach, What is the difference in chang...

What is the difference in changing the scope between a spiral approach and a waterfall approach? Ans) The scope of needs changes in Waterfall model is less than that in Spiral M

Estimate kilograms of lobster must he catch per day, A lobster catcher spen...

A lobster catcher spends $12 500 per month to maintain a lobster boat.  He plans to catch an average of 20 days per month during lobster season.  For each day, he must allow approx

Diseconomies of scale, What are the four managerial factors that lead to di...

What are the four managerial factors that lead to diseconomies of scale

Determine the exchange rate, Q. Determine the Exchange rate? Exchange r...

Q. Determine the Exchange rate? Exchange rate is determined by the ratio of domestic price level to the foreign price level. If, for instance domestic prices increase by 10% wh

Business cycles, Elplain the casual factors of the traditional business cyc...

Elplain the casual factors of the traditional business cycle and its effects on sectors of the economy

Business economics, Critically evaluate measures used by governments and ce...

Critically evaluate measures used by governments and central banks to manage the economies of their countries. By critical evaluation use convincing arguments for or against measur

Calculate the overall efficiency and operating cost, A company is consideri...

A company is considering investing in power generation. It wants to setup a 1000 MW power generation system. The company hired you as a consultant to explore different options for

Explain demand management of keynesian economists, Explain demand managemen...

Explain demand management of Keynesian economists The demand management of Keynesian economists of 50's and 60's is attacked by free-marketers for ignoring the importance of s

Budget, what are the function of budget

what are the function of budget

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