UNIT 1 1/5/16

·         Factors of Production:

1.       Capital: 2 types( Human and Physical)

•        Human capital: knowledge, skills, abilities and talent
•        Physical capital: tools, machine, factory and robots

2.       Entrepreneurship ( innovative and risk taker)

“Your boss”

3.       Land: think about the natural resources

“Ingredients of the food you make”

4.       Labor: work force

“Employee”

·         Trade Off: alternatives that we give up when we choice one course over the action of the other one

·         Opportunity Cost: the next best alternatives

Ex: You’re riding on an airplane when all of a sudden you had the urge to drink something. You then ask the flight attendant if she had water and she said no. Then you ask if she had ice tea and once again she said no. Finally you ask if they ask coca- cola and she said yes. It wasn’t your first or the next choice.

·         Productive Possibilities Graphs( PPG): shows alternative ways to use economy resource

“The entire graph”

-          Productive Possibilities curve( PPC)

-          Productive Possibilities frontier( PPF)

·         4 Assumption of  the PPG 

1.       Two goods ( WAFFLES AND WIDGETS)

2.       Fixed resource

-          Land

-          Labor

-          Capital

-          Entrepreneurship

3.       Fixed technology

4.       Full employment of resource

-          Using our resource how were supposed to