Production Possibilities and Opportunity Costs生产可能性和机会成本.pptVIP

This chapter discusses principles associated with What are the Factors of Production? Labor Capital Land Entrepreneurship What is Labor? The physical and intellectual effort of people engaged in producing goods and services What is Capital? Manufactured goods used to make and/or market other goods and services What is Human Capital? The knowledge and skills acquired by labor, principally through education and training What is Land? A natural-state resource such as real estate, grasses and forests, and metals and minerals Who is an Entrepreneur? A person who alone assumes the risks and uncertainties of a business He is also the person who takes the initiative and comes up with the essential idea of the business. What is Production Possibilities? In order to understand what is meant by PPF, we would first consider a hypothetical economy. Production Possibilities? The combinations of goods that can be produced when resources and technology are used fully efficiently Production Possibilities Curve What is true along the Production Possibilities Curve? available resources are used fully most efficient combination of resources What choices are made along the Production Possibilities curve? To have more of one product, units of the other product have to be given up Opportunity Cost: The quantity of other goods that must be given up to obtain a good Law of Increasing Costs: The opportunity cost of producing a good increases as more of the good is produced How do we have more of everything? By increasing our resources Increased Resources What other ways can we increase our PPF? Innovations - an idea that takes the form of new applied technology Technology - an improvement in capital Innovations Does division of labor increase productivity? Yes. People become more proficient in one activity which results in greater output per person Absolute Advantage: A country’s ability to produce a good using fewer resources than the country with which it trades Compara