1-6-16
Factors of production-resources required to produce goods and services.
-physical capital-tools, machines, fActories, robots etc
-human capital-knowledge, skill, ability and talents gained through education and work experience
-tradeoffs-alternatives that we give up when we choose one course of action over the other.
-Opportunity cost-next best alternative
-production possibility graphs-alternative ways to use and economy's resources. (Ppg,ppf,ppc)
4 assumption of ppg
1.two goods
2. Fixed resources (land,labor,capital,
3.fixed technology
4.full employment of resources
Efficiency-using resources in such a way as to maximize production of goods and services
Allocative Efficiency-products being produced are those most required by society
Productive efficiency-products are being produced in the least costly way. Any point on ppc
Underutilization-using fewer resources than an economy is capable of using
3 types of movement that occur within the ppc
1.inside the curve, resources are unemployed or underemployed no productive efficiency
2.along the ppc, move form B to C or C to B
3.shifts of the ppc,can shift out or in
https://www.youtube.com/watch?v=g9aDizJpd_s <------------open video for more information
Jan.7-2016
What causes ppc to shift
1.technological changes
2.economic growth
3.change in resources
4.change in labor force
5.natural disasters/war/famine
6.education/training(human capital)
Jan.21
1.Peak-highest point of GDP. Greatest spending and lowest unemployment in this phase inflation becomes a problem.
2.Expansion/ recovery stage- real GDP is increasing due to increase in spending and decrease in unemployment
3. Contraction/Recession-real GDP declines for 6 months due to reduction in spending and increase in unemployment
4.Trough-lowest point of real GDP least amount of spending and highest unemployment.
