This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: o Land o Capital (buildings & machines used in production plus intellectual capital) The Circular-Flow Diagram Households. o Own the factors of production, sell/rent them to firms for income o Buy and consume goods & services Firms o Buy/hire factors of production, use them to produce goods and services. o Sell goods & services. The Production Possibilities Frontier The Production Possibilities Frontier: a graph that shows the compinations of two goods the economy can possibly produce given the available resources and the available technology Examples o Two goods: computers and wheat o One resource: labor (measured in hours) The Economist as Policy Advisor As scientists, economists make Positive statements-attempt to describe the world as it is. As policy advisors, economists make Normative Statements- how the world should be....
View Full Document
- Fall '08