Chapter 3 - Value Creation Through Production

Question 1

Production Process

Answer 1

Turns inputs into consumable outputs

Question 2

Consumable Outputs

Answer 2

Are goods and services

Question 3

Resources/Inputs:

Answer 3

Natural Resources/land: tangible, but not produced by anyone. Cost: Rent
Labor: physical and mental talents, applied to production. Cost: Wage
Capital: produced means of production. Cost: Interest
Entrepreneurship: risk taking/risk bearing and innovation. Cost: Profit

Question 4

Bastiat - Chapter 6: Middlemen

Answer 4

Add more

Question 5

Technology

Answer 5

The way inputs are combined to produce output

Question 6

Make Work Fallacy

Answer 6

Idea that jobs are valuable

Question 7

Law of Increasing Opportunity Cost (LIOC)

Answer 7

Applying the POA (principal of optimal arrangement) to production of two goods where resources are not all the same, results in the law of increasing opportunity cost (LIOC)—as more of one good is produced, the opportunity cost of producing a unit of that good rises, in terms of the other good which must be sacrificed