Chap 3 Flashcards
What is the production process?
inputs —> outputs
What are the consumable outputs?
goods and services
What are the four resources/inputs?
Natural Resources, Labor, Capital, Entrepreneurship
What are natural resources (chart)?
tangible but not produced by anybody
What is labor (chart)?
physical and mental talents applied to production
What is capital (chart)?
produced means of production
What is entrepreneurship (chart)?
risk taking and innovation
What is the price of natural resources?
rent
What is the price of labor?
wage
What is the price of capital?
interest
What is the price of entrepreneurship?
profit
Do middlemen change the value of the product?
Yes, (value=willingness to sacrifice or pay) without them we would not have the product and we value their labor
What is technology?
Inputs plus Outputs
What is make work fallacy?
the idea that jobs are valuable
PPF is…
the Production Possibilities Frontier
What does the PPF assume?
- fixed resources 2. two good produced over some period of time 3. a given technology
In PPF when has economic growth occured?
when the economy has better/more efficient technologies
On the PPF for coconuts and fish, what is the best combination?
we can’t know because the PPF only shows possibilities
If the cost of one good in terms of another good rises, the PPF
bows outwards
What do income and wealth depend on (3)?
- quantity of resources 2. quality of resources 3. freedom to use resources
How do people upgrade their labor?
human capital
