Upload
molly-curtis
View
224
Download
1
Embed Size (px)
Citation preview
Needs vs. Wants• Needs: things NECESSARY for survival
• Wants: things we desire but are NOT ESSENTIAL to survival
Factors of Production• Land• Labor• Capital
–Human–Physical
Remember these!You will hear them a
lot this semester!
Capital–Physical: Human made objects
used to create other goods and services
–Human: The skills and knowledge gained by a worker through education and experience
Entrepreneurs• Ambitious leaders who
combine land, labor, and capital to create and market new goods and services.
Trade-offs…options when you make a choice.
• Individuals
–work or free time
–study or sleep
• Business
–Goods or Services
–Produce or Sell
Alternatives
Sleep LateWake up early
to study
Benefits? ?
DecisionSleep Late
Wake up early to study
Opportunity Cost
? ?
Benefits forgone
? ?
Decision Making Grid
Thinking at the MarginOptions Benefit Opportunity
Cost
1st hour of extra study time
? ?
2nd hour of extra study time
? ?
3rd hour of extra study time
? ?
Coffee
Tea
50
50
Any production
in this
space is
inefficient…you
have the supplies
but aren’t making
the coffee or tea
Efficiency• Efficiency means using resources
in such a way as to maximize the production of goods and services. An economy producing output levels on the production possibilities frontier is operating efficiently.
Growth• Growth If more resources
become available, or if technology improves, an economy can increase its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right.”
Decide whether to work 2, 4, or 6 hours at an after-school job by comparing the opportunity cost and benefit of each alternative.
Benefit Cost2 hours4 hours6 hours