ECN 104 Lecture Notes - Lecture 2: Financial Capital, Physical Capital, Fallacy
Document Summary
Is education the cause of higher income? ie lower prices and higher sales: correlation causation. Society"s economic problem: scare resources: property resources ie education and income, land/natural resources, capital, physical capital, tools, equipment, machinery, buildings, roads, financial capital, money, human capital, skills, knowledge, education, social capital, human resources, labour. Institutions (legal system, education system: skilled/unskilled, entrepreneurial ability, takes initiative, makes policy decisions. Interest: wages, rent, profit/loss, methods of production, production process is defined by the technology available, outputs, goods, services. Efficiency in production: technical efficiency (quantity, cannot produce more output without more input, economic efficiency (value, cost of producing a given output is as low as possible, takes input prices into account. Production possibilities frontier (ppf: assumptions, fixed supply of resources, full employment, full production, constant technology, more of one good less of another. Scarcity and choice for a single firm: example: black shoes vs brown shoes, total output = 50, black (y) + brown (x) = 50.
