Econ101 notes - I. World Poverty and Economics Two-thirds...

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I. World Poverty and Economics Two-thirds of the world’s population goes to sleep hungry at night. One-fifth of the world survives on less that $1 a day. Why is this happening? What are the causes? How can it be alleviated? I I. The Economic Problem Our Insatiable Wants Economic activity springs from human wants and desires. Once our basic needs are met (food, shelter, warmth) we then desire variety. Even after that condition is met, we see others with certain things that we do not have that would make our lives much better. We all want something better than we currently have. A. Goods and Services B. Resources The fundamental economic problem is the means available for satisfying wants are scarce or limited relative to extent of the wants. Limited because (1) resources to increase production cannot be increased by any great amount in a given year, (2) the technology available for production is limited to a degree of annual improvement. Resources = ingredients that into making a product, services Production = cooking those ingredients Technology is used to process these resources in certain way You then get the final good or service. The output is used to satisfy wants.
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Labor – consist of all the efforts of mind and muscle that can be used in production processes. Common characteristic is that they are human. Capital – consist of all the non-human ingredients that into the production of goods and services. Land – natural resources Technology – refers to the known means and methods available for combining resources to produce goods and services. The know-how. C. Insatiable Wants vs. Limited Means 1.) Scarcity – anything desirable, unlimited demand – limited resources and means of production I I I. The Capacity of the Economy to Produce A. Gross Domestic Product (GDP) Measures the total market value of all final goods and services produced within an economy during a specific time period. Products produced inside a given country are included within their GDP even if the company is based
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Econ101 notes - I. World Poverty and Economics Two-thirds...

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