The basic economics problem
Scarcity
Limited resources cannot satisfy human needs and wants
The process
Production process
Resources are inputs, goods and services produced are outputs
Consumption process
Using up goods and services to satisfy human needs and wants
Factors of production（FoP）
Labor
Human resources (with working age and able to work; both physical and mental)
Capital
Man-made resourses used to help production of other goods and services
Enterprise
business "know how" (skills/abilities) to bring other resourses together for production of G&S, takingrisks and make decisions
Factor rewards
Definiton
Payment to FoP's owners if producers want to obtain resource from FoP's owners
Factor mobility
Definition
The ease with which resourses or FoP's can be moved from one productive activity to another without incurring significant costs or less of output
Occupational mobility
The ability to more factors between different productive tasks
Geographic mobility
The ability to move factors of production to different locations
Labor mobility
Occupational labor mobility: the ease with a person is able to change between jobs (be affacted by education/skills)
Geographic labor mobility: the willingness and ability of a person to move from one area to another area for employment (be affected by family ties/cost of living between regions
Needs and Wants
Needs:essential for living, necessity (limited)
Wants: to improve living standards, desire (unlimited)
Causes of an decrease in the quntity and quality of FoP
Natural Disasters / Wars / Pollutions
Causes of an increase in the quntity and quality of FoP
Production Possibilty Currve (PPC)
Definition
The PPC of a firm/a country shows the maximum combination of output that can be produced with all existing resources and technology
showing productive ability/capacity
Why the shape of PPC is curve
Incerasing opportunity costs
PPC shows
Opportunity cost
points move along the curve caused by reallocation of recources, which can be used to explain opportunity costs
Scarcity
more resources are used in producing A, which will left less resources used in producting B
Economic growth/recession
Shift-out results in an increase in production capacity ----Economic growth
Shift-in results in a decrease in production capacity----Economics recession
The shift of PPC caused by
Changes in quantity of resources
Changes in quality of resources
Type of goods and services
Economics goods
Consumer goods: needed by consumers
satisfy consumers (consumption)
Capital goods: needed by productions
help production (investment)
Opportunity cost
Definition
ture cost of your choice; the value of next best alternative that be given up
eg.
consumption choice: spending or saving
workers choice: limited time time/skills
producers choice: what to produce
government choice: what to do
Tips: Money/Sawing/Shares/Stacks doesnot include in any FoPs
