Economics 2H03 - Macro IChapter 3 National Income
Factors of Production
INPUTS
Consit of
capital
tools used in production
labour
time people spend working
used to produce goods and services
denoted by
K
capital
L
labour
Production Functions
determinant of output
based on input
labour
capital
available technology will determine the function
more produced with better technology
available technology is expressed by the function
Constant returns to scale
an increase in inputs = an increase output
if inputs are doubled, output is doubled
2 more people with two more machines
give twice as much output