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Unit 1

  • Positive: facts; claims that attempt to describe world as is; very descriptive. Ex: minimum wage laws cause unemployment
  • Normative: opinions; claims that attempt to prescribe how world should be. Ex: government should raise minimum wage
  • Wants: desires of the citizens
  • Needs: basic requirements for survival
  • Scarcity: problem unlimited wants and needs with limited resources; fundamental problem that all societies face
  • Shortage: quantity demanded > quantity supplied
  • Surplus: quantity supplied > quantity demanded
  • Factors of Production:
Capital- human: knowledge and skills workers gain through education and experiences // physical: human made objects used to create other goods and services
Entrepreneurship- risk taker and innovative
Land- natural resources
Labor- work exhorted
  • Production Possibilities Graphs (PPG, PPC, PPF): shows alternate ways to use resources, shows most that society can produce if it uses every available resource to best of its ability
  • Six Key Functions of PPC:
  1. Fool employment- 80-90% factory capacity, 4-5% unemployment
  2. Productive efficiency
  3. Fixed resources: land, labor, capital
  4. Fixed state of of technology
  5. No international trade
  6. Two goods produced
Point D: inside curve; attainable and inefficient, underutilized, unemployment, underemployment, war, famine, recession and depression
Point A, B, C: on the line; efficient and attainable
Point E: outside curve; unattainable due to technology and economic growth

*Bowed out = Concave // Same = Constant

Comments

  1. Phuonganh NFebruary 5, 2018 at 2:23 PM

    know that for the shortage because quantity demand is more than the supply, it results in an increase in price. Vice versa for the surplus it is a decrease in price

    ReplyDelete

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