Economics

FACTORS OF PRODUCTION

Anything you do to make a product or provide a service

HUMAN RESOURCES:

Any human effort exerted in the human production process

·       Crossing Guard

·       Interpreting

·       Teacher

·       Construction

CAPITAL RESOURCE:

When you use property that you already own to make other products or provide services

·       Products

·       Money

·       Home Daycare

·       Desks

FINANCIAL CAPITAL

Money you can invest in a business

ENTREPRENEUR

Risk Taker, someone who is willing to go out on his or her own and take a risk.

ENTREPRENEURSHIP

            Start your own business

Fred Smith: Fed Ex

SECTION TWO

SCARCITY AND CHOICE
Not enough of something

SCARCITY

            Permanent lack of something, won’t get any more every again…

                        Example: dessert and water

            Scarcity is the most basic problem in economics.

SHORTAGE

            Temporary lack of something- will get more later on

3 BASIC ECONOMIC QUESTIONS

In allocating (distributing) your resources

1.     What to produce? (Make)

a.     What to make? Sunglasses, clothes, cars, restaurant

b.     Large or small

c.     High Quality or Cheap

2.     How to produce? (Make)

a.     By hand or with computerized machines

b.     Do you modernize your plant

3.     For Whom? Who are you going to sell it to?

a.     Who will get the products?

b.     Local or shipped out

c.     Upscale stores or discount

PRODUCTIVITY

The level of output that results from a level of input

(How much are you getting out of your effort?)

            EFFICIENCY

Using the smallest amount of resources for your largest output… eliminate waste

DIVISION OF LABOR

Instead of a single person making a complete product they make only part of it and pass it on. Assembly Line

You become an expert of what you do.

            SPECIALIZATION

                        Each employee becomes an expert at one specific task

SECTION THREE

TRADE OFF

            To choose one thing over another

            Having to make choices that are unavoidable (that must happen)

            Only you understand the importance of the thing that you gave up

OPPORTUNITY COSTS

            The cost or value of the next best alternative given up