ECO 1001 Lecture Notes - Lecture 2: Full Employment
20 Sep 2016
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Scarcity products are not infinitely abundant, but human wants are: scarcity is not poverty, scarcity is not temporary shortages. Resource anything used in making something else: types of resources: Labor and human capital: cashier, teacher, truck driver, etc. Three economic questions a society must answer: what will be produced? (determined by demand, how will it be produced, who will get what is produced? (affects politics because it determines how things are distributed) Opportunity costs includes a direct cost of an activity plus the loss of the best alternative one gives up: before making any decision, one must weigh the opportunity costs. Production possibilities curve (ppc: assumptions: full employment, resources and technology are fixed at each moment in time, choices imply trade-offs. In order to make more of one product, you must give up some production of the other product. Increasing cost (sacrifice) as you shift resources it costs more and more to produce the same amount of another good.
