Ben-Gad__EC2015_Week_3_Teaching_Slides

Marginal Product of Labour (MPL)

The extra amount of output a firm gets from one additional unit of labour while holding the amount of capital constant.

Cobb-Douglas Production Function

A production function that assumes a specific functional form, where the output is a function of labor and capital, showing constant factor shares.

Real Wage

The payment to labor measured in units of output rather than in currency.

Diminishing Marginal Returns

The phenomenon where increasing one input while keeping others constant results in smaller and smaller increases in output.

Equilibrium Interest Rate

The interest rate at which the quantity of loanable funds supplied equals the quantity demanded.

Aggregate Demand

The total demand for goods and services within an economy at a given overall price level and in a given time period.

Total Factor Productivity (TFP)

A measure of the efficiency of all inputs to a production process.

Real Rental Price of Capital

The rent paid for capital, adjusted for inflation, representing the cost of hiring a unit of capital.

Marginal Propensity to Consume (MPC)

The fraction of additional income that a household consumes rather than saves.

Factor Prices

The amounts paid to each unit of the factors of production, which include wages for labor and rent for capital.