Lecture 21: Capital Supply and Markets I

author: Jonathan Gruber, Department of Economics, Massachusetts Institute of Technology, MIT
recorded by: Massachusetts Institute of Technology, MIT
published: Dec. 3, 2012,   recorded: February 2012,   views: 1860
released under terms of: Creative Commons Attribution Non-Commercial Share Alike (CC-BY-NC-SA)

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During most of our discussion of consumer decisions and the production decisions of firms, we have focused on only labor and the decisions that individuals make about whether or not to work. We know from our study of production functions that firms also use capital to produce output. Where does capital come from? Not surprisingly, it is the result of another consumer decision, the decision of whether or not to save. This lecture analyzes the decisions consumers and firms make in the capital market.

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