Economics notes

Factors of productions- resources required to produce goods and services

Capital

Physical Capital- tools machines factories robots

Human Capital- knowledge skills abilities and talents that are gained through education and work experience

Trade offs and opportunity costs

Trade offs- alternatives that we give up when we choose one course of action over another

Opportunity cost- the next best alternative

Ex. 1st choice water 2nd ice tea 3rd coke no water and no iced tea cause no water so get coke. Coke is the opportunity cost.

Production Possibility Graphs (PPG)-It shows alternative ways to use an economy's resources

PPF- Frontier

PPC- Curve

4 assumptions of a PPG

1.      Two goods

2.      Fixed resources (land, labor, capital, and entrepreneurship)

3.      Fixed Technology

4.      Full employment of resources

4 Vocabulary Terms

Efficiency- using resources in such a way as to maximize the production of goods and services

Allocative Efficiency- products being produced are the ones most desired by society

Productive Efficiency- Products are being produced in the least costly way, any point on the Production possibility curve

Under utilization- Using fewer resources that an economy is capable of using

Insert Graph Here

PPG- 3 types of movement that occur within the PPC

1.      Inside of the curve- incurs when resources are unemployed or underemployed

2.      Along The PPC- can move on the curve

3.      Shifts of the PPC-

Ex. The curve moves inside or outside of the original curve due to issues or possible advancement in technology and such

What causes the PPC/PPF to shift?

1.      Technological Changes

2.      Economic Growth

3.      Change in Resources

4.      Change in the Labor Force

5.      Natural Disasters / War / Famine

6.      More Education and Training (Human Capital)

*Supply and Demand needs to have change as Delta Sign

Quiz

Opportunity Cost

Difference between Scarcity and Shortage

Factors of Production C.E.L.L. (capital, entrepreneurship, land, and labor)

What is a ppg?

3 points and movements on a graph

10-15 questions

Problems last week (how much you lose if you increase production of the other)

Several multiple choice and 3-4 short answers

Positive vs normative economics= (positive-fact) (normative-opinions)