- Land
- Labor
- Capital
- Entrepreneurship
- Land- Resources required to make the product
- Labor- People required to make the product
- Capital-
- Human- skills, abilities, knowledge
- Physical- Tools, buildings, machine
- Entrepreneurship- Innovative, risk takers
Trade Offs- Alternative that we give up whenever we choose one course of action over another
Opportunity Cost- The next best alternative
Production Possibilities Curve (PPC)- to show alternative way to use society economy
- PPC- Production Possibilities Frontier (PPF)
- PPC- Production Possibilities Graph (PPG)
4 Assumptions of Production Possibilities Graph (PPG)
- 2 Goods
- Fixed Resources
- Fixed Technology
- Full Employment of Resources
Allocate Efficiency- Product being produced are the ones most desired by society
Productive Efficiency- Product being produced in the cheapest way possible
To elaborate on the factors of production, one can think of things in terms of a coffee shop. The entrepreneurship would of course be the owner of the shop itself. The land would be things such as electricity, water, and coffee beans. The human capital would be one's knowledge on how to make coffee, while the physical capital would be technology such as the cash register or the coffee maker machine. Finally, we would use waiters as labor in order to utilize all the resources to their full potential in order to produce the coffee efficiently.
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