Economics Assignment
Module 5 Assignment
1. What is a production function?
Production function is equations used to show the relationship between quantities of capital, labor and other factor inputs that are used in production and output quantity of goods and services (GDP) from production.
Write an equation for a typical production function, and explain what each of the terms represents. K (physical capital)/ L (quantity of labor) This equation shows you how much physical capital (equipment/structures) is used per worker.
2. Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labor productivity.
Productivity and standard of living are related because the quantity of goods and services produced from each unit of labor (productivity) determines how well or how comfortable we live (standard of living). Productivity plays a key role as a determining factor in living standards.
Human capital, Physical capital, knowledge of technology and natural resources determine labor productivity.
3. Use the data on U.S. real GDP below to compute real GDP per person for each year. Then use these numbers to compute the percentage increase in real GDP per person from 1987 to 2005.
Year
Real GDP (2000 prices)
Population
1987
$6,435,000 million
243 million
2005
$11,092,000 million
296.6 million
1987 real GDP per person = $6,435,000/243 = $26,481.50 2005 real GDP per person = $11,092,000/296.6 = $37,397.20 Increase in real GDP per person from 1987 to 2005 = $37,397.20 - $26,481.50/$26,481.50 x 100 = 41.22%
1. What are the basic differences between bonds and stocks? Stocks differ from bonds in that stocks are equity finance and bonds are debt finance. Additionally, stocks give you partial ownership in a company whereas with bonds you do not have ownership. A bond is an IOU with the company as a lender whereas stocks are not.
1. What is a production function?
Production function is equations used to show the relationship between quantities of capital, labor and other factor inputs that are used in production and output quantity of goods and services (GDP) from production.
Write an equation for a typical production function, and explain what each of the terms represents. K (physical capital)/ L (quantity of labor) This equation shows you how much physical capital (equipment/structures) is used per worker.
2. Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living mean. Make a list of things that determine labor productivity.
Productivity and standard of living are related because the quantity of goods and services produced from each unit of labor (productivity) determines how well or how comfortable we live (standard of living). Productivity plays a key role as a determining factor in living standards.
Human capital, Physical capital, knowledge of technology and natural resources determine labor productivity.
3. Use the data on U.S. real GDP below to compute real GDP per person for each year. Then use these numbers to compute the percentage increase in real GDP per person from 1987 to 2005.
Year
Real GDP (2000 prices)
Population
1987
$6,435,000 million
243 million
2005
$11,092,000 million
296.6 million
1987 real GDP per person = $6,435,000/243 = $26,481.50 2005 real GDP per person = $11,092,000/296.6 = $37,397.20 Increase in real GDP per person from 1987 to 2005 = $37,397.20 - $26,481.50/$26,481.50 x 100 = 41.22%
1. What are the basic differences between bonds and stocks? Stocks differ from bonds in that stocks are equity finance and bonds are debt finance. Additionally, stocks give you partial ownership in a company whereas with bonds you do not have ownership. A bond is an IOU with the company as a lender whereas stocks are not.