Unit 1 - Jan 9

Factor of Production

1.     Land- natural resources.

2.     Labor- work force.

3.     Capital- 1.)Human Capital- knowledge and skill a worker gain through experience and education. 2.)Physical Capital- human made object used to create other goods and services.

4.     Entrepreneurship- risk-takers and inventive.

Opportunity Cost- the most desirable alternative given up by making a decision. 

Production Possibilities Graph (PPG)-  show all alternative ways to use resources. The graph as a whole.

Production Possibilities Frontiers (PPF) &Production Possibilities Curve (PPC) are the same.

Productive Efficiency vs. Allocative Efficiency

• Productive Efficiency- produce resources at the lowest cost. Any points on the curve.
• Allocative Efficiency- combination most desire by society, where to produce on the curve.