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Macro chp 2
Resource Utilization
| Term | Definition |
|---|---|
| Economics | The efficient allocation of the scarce means of production toward the satisfaction of human wants/needs. |
| The four economic resources | 1)Land 2)Labor 3)Capital-man-made goods used to produce other goods(equipment) 4)Entrepreneurial ability- ability to recognize a business opportunity and successfully set up a business firm to take advantage of it. |
| Economic problem | We have limited resources available to satisfy unlimited human wants. |
| Opportunity cost | the value of the next best alternative. |
| Full Employment | When resources are all being used with maximum efficiency. |
| Full production | When resources are all being allocated with maximum efficiency |
| Underemployment | The failure to use our resources efficiently |
| Production possibilities frontier | Represents our economy at full employment and full production |
| Production possibilities curve | A hypothetical model of an economy that produces only two products |
| Law of increasing costs | As the output of one good increases, the opportunity cost increases. |
| 3 concepts of Law of increasing costs | 1) The law of diminishing returns 2) Diseconomies of scale and 3) Factor suitability |
| Diminishing returns | If units of a resource are added to a fixed proportion of other resources, eventually marginal output will decline: "If we're inc gun production, we will need more and more- land, labor. But these may run out. |
| Diseconomies of scale | an increase in average total cost as output rises. |
Created by:
ltameirao
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