ECON 102 Lecture Notes - Lecture 4: Intermediate Good
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ECON 102 Full Course Notes
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Ex: higher inflation causes lower unemployment in the us. Change hypot or the period of time. Assumption: simplifies the complex world so it is easier to understand. Ex. to study international trade assume two countries and two goods. Model: a very simplified representation of a more complicated reality. Economists use it to study economic issues. Ex; a road map, a model of human teeth. The circular flow diagram: a visual model of the economy. Shows how the money flows through households and firms. Factors of production: the resources used to produce the final good. Physical and mental ability (education, experience, training) Capital (buildings/machine used in production)- capital cannot equal money. Previously produced goods which are used to produce the final product. Buy/hire factors of production, use them to produce goods/services. Own the factors of production, buy/sell them to firms for income. Goods and services market: hh are buyers while f are the sellers.
