Chapter 1-2: Scarcity, Factors of Production & Production Possibilities Graphs
What is Macroeconomics?
- the study of economy as a whole
- the BIG picture
- "Can't see the forest because of trees"
Ex: Supply & Demand
International Trade
Minimum Wage
What is Microeconomics?
- study of individual or specific unit of the economy
Ex: Market Structure
Business Organization
What is Positive Economics?
- it attempts to describe the world as is.
- very descriptive, collects and presents facts
- "What is" = facts
What is Normative Economics?
- it attempts to prescribe how the world should be
- very perspective
- "ought to be", "should be" = opinion based
What are Needs?
- basic requirements for survival
ex: Food, Water, Shelter, Clothes
What are Wants?
- Desire of citizens
What are Goods?
- A tangible commodities (touch/feel)
-can be bought, sold, produce
ex: Capital Goods - items used in a creation of other goods.
( trucks, factory, machine)
Consumer Goods - goods that are introduced for final use of the consumer.
What are Services?
- work that is performed for someone
ex: haircut, concert, going to school
ex: haircut, concert, going to school
What is Scarcity?
- the most fundamental economics problem facing all society
- how to satisfy unlimited wants with limited resources
- involves a choice
What are Shortage?
- where we have quantity demanded is greater than quality service
What are the Factors of Production?
- Land - natural resources
- Labor - work force, how much work is exerted
- Capital - physical capital tools, buildings, machines, trucks
- Entrepreneurship - innovative and risk taker (owning your own business)
What causes the PPC/PPF to shift?
- Technological change
- Δ in resources
- Δ in labor force
- Economic growth
- Natural disaster/war
- More education on training
What is Trade-off?
-alternative that we give up whenever we choose one course of action over another
What is Opportunity Cost?
-the next big alternative
ex: travel, flight attendance
Production Possibilities Curve (PPC)
Production Possibilities Frontier (PPF)
Production Possibilities Graph (PPG)
-to show alternative ways to use an economic resources
Inside the Curve: Underutilization
Attainable
(A) Inefficient
On the Curve: Attainable
(B,D,C) Efficient
Outside the curve:Unattainable
(x) Efficient
What are the Four Consumptions of PPG?
- 2 resources (goods)
- Fixed resources (factors of production)
- Fixed technology
- Full employment of resources
What is Efficiency?
- using the resources in such a way to maximize the production of goods and services
What is Allocative Efficiency?
- products being produced and the ones most by society
What is Productive Efficiency?
-products are being produced in the least costly way (any point on the PPC)
What is Underutilization?
- using fewer resources than an economy is capable of using
Great job Charlotte!!
ReplyDeleteMs. McCartney
Hey thanks for the visual representation and the details. Also that acronym for the factors of production will really help on the test. One tip is that to remember shortage and scarcity is that scarcity is based on natural occurring limitations.
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