Transcript Chapter 1
Chapter One Homework
• Numbers 4, 6, and 8
Appendix for
Chapter 1
Graphing and
Algebra Review
Figure 1A.4 The Effect of a Change in
Intercept on the Curve
Figure 1A.5 The Effect of a Change in
Slope on the Curve
Figure 1A.6
Lines with Zero and Infinite Slopes
Figure 1A.7
Graphing a Nonlinear Relationship
Slope of a curve
• Take the first derivative of the equation
• OR….
Choose two points along the curve
Draw a tangent line between them
Find the slope of the tangent line
This will APPROXIMATE the slope
Appendix 1 Homework
• Numbers 2, 6, 8, and 10
Chapter 2
Efficiency and
Allocation in the
Global Economy
Introduction
• Because of scarcity we cannot produce
everything.
We have to choose what to produce.
Security or education ?
• How are those choices made?
• What are the consequences of our
choices?
Factors of Production
• Four basic types of resources, or inputs.
Land, labor, capital, and entrepreneurship
• Together, these are known as factors of
production.
What and how a nation produces is
determined by its factor endowment.
• How much of each “we” have.
Land
• Natural resource used for agriculture,
housing, industrial production, and
recreation.
Also includes other natural resources:
•
•
•
•
•
Water
Gas
Oil Deposits
Minerals
Forests
Labor
• Physical and mental talents available to
produce goods and services.
Labor Force—the number of people over the
age of 16 that are willing and able to work.
Human Capital—the knowledge, experience,
and innate ability of individuals.
Capital
• Buildings and equipment that can be used to
produce other goods and services.
Also called capital goods or physical capital
Consumption goods cannot be used to produce other
goods and services.
• Financial capital is the money that firms spend
on buildings and equipment.
Entrepreneurship
• Entrepreneurs organize, operate, and
assume the risk of business ventures.
The people with the big ideas
Production Technology
• The way in which an economy employs the
factors of production.
Production function
• Q = f(K, L)
The Production Possibilities Frontier (PPF)
• Graphical representation of the
combinations of goods and services
that an economy can produce in a given
time period.
Gross Domestic Product
• Market value of all final goods and services
produced in a given period in an economy.
• GDP per capita measures output
per person.
GDP divided by the population
Used when comparing economies of different
sizes
Figure 2.1(a) The Production Possibilities
Frontier (PPF)
Figure 2.1(b) The Production Possibilities
Frontier (PPF)
PPF assumptions
• Fixed level of resources
• All resources fully employed
• Constant level of technology and human
capital
• What is another name for the slope of the
PPF?
Opportunity cost
Where can we be on the PPF??
• Can we be
On the curve??
• Yes efficient
Under the curve??
• Yes inefficient
Over the curve??
• No not enough resources