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28 Cards in this Set
- Front
- Back
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What do we produce? |
Consumption goods and services + Capital goods |
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What are Consumption goods and services? |
Good and services that are bought by individuals and used to provide personal enjoyment and contribute to a persons standard of living. Example: Movies and Laundromats |
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What are Capital goods? |
Goods that are bought by businesses to increase their productive resources. Example: Cranes and Trucks. |
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How do we produce? What are the factors of production? |
They are the productive resources used to produce goods and services. The categories are Land, Labour, Capital and Entrepreneurship |
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What is Land? |
Natural resources used to produce goods and services. This includes minerals, water, air, wild plants, animals, birds and fish. |
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What is Labour? |
The work time and work effort that people devote to producing goods and services. |
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What is Human Capital? |
The knowledge and skill that people obtain from education and work experience. |
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What is Capital? |
The tools, instruments, machines building and other items that have been produced in the past and that businesses now use to produce goods and services. |
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What does Capital NOT include? |
Stocks and bonds |
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What is Entrepreneurship? |
The human rsource that organizes labour, land and Capital. |
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For whom do we produce? |
Factors of production are paid incomes including Rent, wages, interest and Profit (or loss) |
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What is the Functional distribution of income? |
The distribution of income among the factors of production. |
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What is the Personal Distribution of income? |
The distribution of income among households. |
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What are the tiers of the Global economy? |
Advanced Economies, Emerging Market Economies, Developing economies |
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Who had the biggest global production figure in 2014? |
USA (19%) |
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What are the biggest differences in Human Capital between advanced and emerging economies? |
Education, training and experience Physical ability and health |
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What are the biggest differences in Physical Capital between advanced and emerging economies? |
Transportation, logistics and Agricultural Technology. |
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What is the production possibilities frontier? |
The boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
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What are the three features of production possibilities? |
Attainable and unattainable combinations Efficient and inefficient production Tradeoffs and Free lunches |
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What are attainable and unattainable combinations? |
Because the PPF shows the limits to production, it seperates attainable combinations and unattainable ones |
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What is production efficiency? |
A situation in which we cannot produce more o one good or service without producing less of something else |
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What is a Trade off? |
Giving up one thing to get something else |
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What is a free lunch? |
Getting something without giving up something else |
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How do you meansure Opportunity cost? |
By the magnitude of the slope of the PPF |
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How is an opportunity cost calculated? |
Via Ratios. The cost of product A is the quantity of product B's forgone divided by the increase in the quantity of Product A gained. |
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What is economic growth? |
The sustained expansion of production possibilities It grows when it develops better technology, improves labour or increases the quantity of capital |
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What is the Absolute advantage? |
When one individual is more productive than another. |
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What is comparative advantage? |
The ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else. |
