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Flashcards in Chapter 3 Deck (21):
1

How is value created

-Scarcity of resources
-Production & trade

2

Production Process

Turns inputs into consumable outputs

3

What're the Categories of Resources

-land
-labor
-capital
-entrepreneurship

4

Land

-Price of land is called rent
-Tangible but cannot be produced

5

Capital

-Already produced means of production
Example: Printing press, Farm Tractors

6

Entrepreneurship

-risk taking/risk bearing
-innovation

7

Price System

Connects info about preferences and resource scarcity and provides incentives for working together

8

Production Process, Who does Bastiat say are NOT middleman?

The Consumer

9

What are Consumable Outputs?

Goods and Services

10

Labor

Physical and mental talents applied to production

11

Technology

The way inputs are combined to produce outputs

12

Make Work Fallacy

The idea that jobs are valuable, whether or not the labor's of production adds value

13

Production Possibilities Frontier Model

2 goods are produced using a fixed amount of resources and you one get one or the other not both

14

PPF would be a straight line if

All resources were equally productive

15

What is the most likely shape of PPF? Why?

Bowed outward due to Law of Increasing Opportunity Cost

16

Which point on the PPF is best?

It shows possibilities but you need to know preferences for different outputs produced

17

How is the point on the PPF chosen?

In market economies through spontaneous order

18

Could and economy have healthcare that is "too good"?

No, because something must be sacrificed for this healthcare

19

What is the relevance of points beyond the PPF curve?

Beyond is with excess resources and technology and is almost impossible to attain

20

What is the relevance of points inside the PPF curve?

Inside is because of inefficient resources or production technology

21

What is an upgrade in ones Human Capital?

Becoming more productive through education/training