January 10, 2017 - Macroeconomics Quiz Notes
9:07 AM
(Just as a disclaimer, these are not notes that were given in the AP class, these are just notes I typed and prepared for a quiz)
Macroeconomics Notes - Quiz (1/10/17)
Factors of Production - Land, Labor, Capital and Entrepreneurship
- Land - Includes any natural resource used to produce goods and services. Includes not just land, but anything that comes from land like water,oil, coal.
- Labor - The effort that people contribute to the production of goods and services. Like being paid for a service or creation of something.
- Capital - The machinery, tools and buildings that humans use to contribute to the production of goods and services.
- Entrepreneurship - A person who combines the other factors of production (land, labor, capital) to earn a profit.The most successful are innovators who find new goods and services to bring to the market.
Normative vs. Positive Statements
Positive - The attempt to describe the world as it is and is very descriptive and collects/presents facts.
Normative - Attempts to prescribe how the world should be and is opinion based, so it cannot be proved or disproved.
Scarcity vs. Shortage
Scarcity - A naturally occurring limitation on the resource that cannot be replenished. The most fundamental economics problem facing all societies.
Shortage - A market condition/state of a particular good at a particular price. When demand exceeds quantity available.
Trade-off vs. Opportunity Cost
Trade Off - Involves a sacrifice that must be made to get a certain product or experience
Opportunity Cost - When the most potential alternative is lost as a result of a decision
Law of Increasing Opportunity Costs - A principle that states that once all factors of production (land, labor, capital) are at maximum output and efficiency, producing more will cost more than average. As production increases, the opportunity cost does as well.
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ReplyDeleteGreat post, really helpful recap of everything for a quick overview of the basic concepts and stuff.
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