CAS EC 101 Lecture Notes - Human Capital, Automobile Repair Shop, Capital Good

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

The entire production process is a series of transformations in which the primary factors of production (basic inputs) Gradually become the final goods* and services** desired by households: *goods are physical: apples, sewing machines, shirts, **services are intangible: haircuts, medical exam, university lecture. The primary factors of production are services that households provide as input into the productive process. The primary factors are services (but we often omit the word. The availability of labor is determined by the population of working-age people and by the labor-force participation rate. The availability of land is mainly determined by nature. Capital formation (the creation of tools) is an economic process that we should understand. There was a cave woman who hunted rabbits for a living. When she saw a rabbit she would dive and try to grab it. But when she caught the rabbit, she would kill it and it the raw meat.