Exam #1 Cheat Sheet - 4 basic economic resources labor...

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4 basic economic resources: labor, natural resource, capital goods, and entrepreneurial skills. Scarce economic resources – even when resources are fully employed & used efficiently, not enough will be produced to satisfy the wants of people & institutions. Natural resources as a type of economic resource – whatever nature had provided that is usable in production (land suitable for farming, forests, oil, mineral deposits, etc.) Capital goods – manufactured aids to production Productive efficiency : produce goods/ services in least costly way. Allocative efficiency : produce goods/services that people most need/want. *By reducing unemployment or by reducing inefficiency, it is possible to simultaneously increase output of both capital goods and consumer goods. Production Possibilities Curve (PPC): any point outside the PPC is impossible to reach. PPC is always drawn assuming full employment, productive efficiency, and existing levels of capital goods and technology. Simple production : output such that the economy will have the same production possibilities next year as it has this year.
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