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The Algebra for Theory of Natural Output

  1. May 10, 2013 #1
    When deriving the natural level of output i am confused as to how the leap is made in the last two lines.

    P = P(1+μ)F(1-Y/L,z) =>

    1 = (1+μ)F(1-Y/L,z) =>

    Yn = h(μ,L,z)

    I understand how the mark-up, Total Labour and variable factors are the factors of the natural level but how does this come from the above line?


  2. jcsd
  3. May 10, 2013 #2


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    Staff: Mentor

    This is homework, I assume.
  4. May 10, 2013 #3
    Nope, incorrect assumption :)

    The notes i am provided from the lecture have made this leap themselves.

    Would you like a picture of the notes?
  5. May 10, 2013 #4


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    Staff: Mentor

    No, just needed to clarify.
  6. May 13, 2013 #5
    Nearly all my Economics questions have gone unanswered, if i am missing something huge in terms of my poor question asking please let me know.
  7. May 13, 2013 #6


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    Staff: Mentor

    I don't believe that we have many people here that knowledgeable in economics.
  8. May 14, 2013 #7


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    I know nothing of economics, (If I did I would be retired already!)

    Just looking at it as a math problem, the second line is just the first with P canceled.

    The last line is simply a statement that Y is a function of mu , L and z.
  9. May 15, 2013 #8
    Thanks for your help, i'll try and post more relevant questions next time.
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