Chapter 3 - Witte
• Supply Side Model = Production Function – (constant returns to scale)
• Factor Prices
Chapter 3 - Witte
• Firms = Profit Maximizers
• Diminishing Marginal Returns, MPK, MPL
Chapter 3 - Witte
• Real Economic Profit
• Euler’s Theorem
• Labor Productivity
Chapter 3 - Witte
• Cobb-Douglas Production Function
Chapter 3 - Witte
• Demand Side Economics: Y = C + I + G + NX
• C = A + MPC(Y-T)
• I = I(r)
Chapter 3 - Witte
• G = G(?)
• Budget Balance
• Y =
Chapter 3 - Witte
• National Savings = S
• Market for Loanable Funds