Land, Labor, Capital (Physical and Human), Entrepreneurship
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Capital Goods
goods made for indirect consumption or that help to make consumer goods (ex. machinery)
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Human Capital
skills, knowledge, traits, and experience that make workers more productive (ex. education)
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Trade-offs
ALL the options given up when an action is taken
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Opportunity
the specific next best alternative
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PPC/PPF
Production Possibility Curve (PPC)/Production Possibility Frontier (PPF)
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What does the PPC show?
there are a limited number of goods that can be produced due to scarcity; when more of one good is produced, less of the other good is produced
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PPC, efficient point
somewhere on the curve/line
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PPC, inefficient point
inside of the curve/line
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PPC, unattainable point
outside of the curve/line
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PPC Shifters
change in resources: quantity or quality, change in technology, increase/decrease in population
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Law of Demand
that there is an indirect relationship between price and quantity demanded
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5 Shifters of Demand
tastes and preferences, number of consumers, price of related goods, income, future expectations
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Law of Supply
that there is a direct (or positive) relationship between price and quantity supplied (as price increases, quantity increases/as price decreases, quantity decreases)
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5 Shifters of Supply
price/availability of inputs (resources), number of sellers, technology, government action: taxes and subsidies, expectations of future profit
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Double Shift Rule
when 2 curves shift at the same time either price or quantity will be indeterminate
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Shortage
when the quantity demanded is greater than the quantity supplied (caused by a decrease in price)
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Surplus
when the quantity demanded is less than the quantity supplied (caused by an increase in price)
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Absolute Advantage
the producer that can produce the most output OR requires the least amount of inputs (resources)
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Comparative Advantage
the producer with the lowest opportunity cost
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Output Problems
OOO = Output: Other goes Over
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Input Problems
IOU = Input: Other goes Under
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Capital Goods & Future Growth
companies that produce more capital goods will have more growth in the future
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Normal Goods
as income increases, demand increases/as income falls, demand falls
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Inferior Goods
as income increases, demand falls/as income falls, demand increases
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Change in Price
DOESN'T SHIFT THE CURVE, it only causes a movement along the curve
Studied by 15 people
