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The Economizing Problem--Scarcity

The Economizing Problem--Scarcity. Chapter 2. Fundamental fact: Scarce Resources Economic resources are limited relative to wants Economic resources are called the factors of production: land, labor, capital and entrepreneur. Efficiency. Full production implies two types of efficiency

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The Economizing Problem--Scarcity

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  1. The Economizing Problem--Scarcity Chapter 2

  2. Fundamental fact: Scarce Resources • Economic resources are limited relative to wants • Economic resources are called the factors of production: land, labor, capital and entrepreneur

  3. Efficiency • Full production implies two types of efficiency • ALLOCATIVE efficiency means that resources are used for producing the combination of goods and services most wanted by society • PRODUCTIVE efficiency means that least costly production techniques are used to produce wanted goods and services • Full production means producing the “right” goods (allocative efficiency) in the “right” way (productive efficiency)

  4. **4 Factors of Production 1. land Must be natural & is limited

  5. 2. capital Must be used for production

  6. 3. labor The work force (human capital)

  7. 4. Entrepreneurs Risk takers in search of a new business

  8. Mark Cuban Broadcast.com Phil Knight Nike Pierre Omidyar Ebay Chris DeWolfe & Tom Anderson My Space Mark Zuckerburg Facebook Warren Buffett--Berkshire Hathaway Sean Combs Bad Boy Records

  9. Production Possibility Frontier or Curve • See graph

  10. Circular Flow • See document manager or board

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