The Economizing Problem Economic Systems Lecture 3 & 4 Dominika Milczarek-Andrzejewska.
The Economizing Problem--Scarcity Chapter 2. Objectives Define the economizing problem,...
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Transcript of The Economizing Problem--Scarcity Chapter 2. Objectives Define the economizing problem,...
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
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 Factors of Production1. land
Must benatural & is limited
2. capital
Must be usedfor production
3. labor
The work force (humancapital)
4. Entrepreneurs
Risk takers insearch of anew business
Chris DeWolfe & Tom AndersonMy Space Mark Zuckerburg
FacebookWarren Buffett--Berkshire Hathaway
Phil KnightNike
Mark CubanBroadcast.com
Sean CombsBad Boy Records
Pierre OmidyarEbay
Production Possibility Frontier or Curve See graph
Circular Flow See document manager or board