LECTURE 1

The fundamental economic problem is

Scarcity is

• finite resources

• unlimited demand

• how companies/firms decide what and how to produce using the limited resources

• how firms determine a retail price for the item based on purchase demand

Microeconomics is

Macroeconomics is

Opportunity cost

• To determine what you could lose by not choosing another option

• has a straight line on the PPC graph

• the value of what you lose when choosing between two or more options

The production possibility curve portrays

• cost of society's choice between two different goods

• as it is producing as much as it can using its resources

• the most efficient production of a pair of goods

• operates at the production possibility frontier

Assumptions of PPC graph

• only 2 goods

• resources are inadequate

• more of one good can be produced by sacrificing one or more goods

• only shows the attainable combinations

PPC graph is

• sloping downward

• sloping upwards

• concave shaped

• convex shaped

The factors of production

• labour

• land

• capital

• consumer

• entrepreneur

How does land generate income?