Scarcity- The most fundamental economic problem that all societies face. It is trying to satisfy unlimited wants with limited resources. This is prominent.
Ex: Oil, Water,
Shortage- Where quantity demanded is greater than quantity supplied. This is temporary.
Ex: Food items,
Goods- Tangible commodities
2 types of goods: Consumer and Capital.
Consumer goods- Goods that are intended for final use by the consumer.
Ex: Candy Bar
Capital goods- Items used in the creation of other goods. Such as factory machinery, trucks, tools.
Services- Work that is performed for someone else. Ex: Barber,
Factors of Production:
Land- Natural Resources
Labor- The workforce
Capital- 2 types: Human and Physical
Human- Any knowledge and skills gained through education and experience.
Physical- Human made objects used to create other goods and services.
Entrepreneurship - Innovative, risk taker,
Trade offs- Alternatives that we give up when we choose one course of action over another
Opportunity Cost- a form of a trade off. The most desirable alternative given up by making a decision
Concept of guns or butter- trade offs. Where does the government spend its money. Money or agriculture?
Production possibility graph- It shows alternative ways to use resources
PPC- Production Possibility Curve
PPF- Production Possibility Frontier
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| Picture of the graph featuring Selena's head! |
Point A- efficient and attainable
Point B- efficient but producing more cars
Point C- efficient but producing more trucks
Points A, B, and C- on the curve( efficient)
Point D- underutilization, under the curve, attainable but inefficient. Recession, war/famine, underemployment/unemployment of resources, decrease in population
Point E- unattainable, outside of curve, economic growth, technology, discovering new resources.
Unit I also includes supply and demand. Supply is defined as the quantities that producers/sellers are willing and able to produce/sell at various prices and has a direct relationship with price/quantity, whereas demand is the quantities that people are willing and able to buy at various prices and has an inverse relationship with price/quantity. So where supply is affected by the producers, demand is affected by the consumers.
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