Flashcards in Chapter 3 Deck (21):
How is value created
-Scarcity of resources
-Production & trade
Turns inputs into consumable outputs
What're the Categories of Resources
-Price of land is called rent
-Tangible but cannot be produced
-Already produced means of production
Example: Printing press, Farm Tractors
-risk taking/risk bearing
Connects info about preferences and resource scarcity and provides incentives for working together
Production Process, Who does Bastiat say are NOT middleman?
What are Consumable Outputs?
Goods and Services
Physical and mental talents applied to production
The way inputs are combined to produce outputs
Make Work Fallacy
The idea that jobs are valuable, whether or not the labor's of production adds value
Production Possibilities Frontier Model
2 goods are produced using a fixed amount of resources and you one get one or the other not both
PPF would be a straight line if
All resources were equally productive
What is the most likely shape of PPF? Why?
Bowed outward due to Law of Increasing Opportunity Cost
Which point on the PPF is best?
It shows possibilities but you need to know preferences for different outputs produced
How is the point on the PPF chosen?
In market economies through spontaneous order
Could and economy have healthcare that is "too good"?
No, because something must be sacrificed for this healthcare
What is the relevance of points beyond the PPF curve?
Beyond is with excess resources and technology and is almost impossible to attain
What is the relevance of points inside the PPF curve?
Inside is because of inefficient resources or production technology