1. Factors of Production Opportunity Costs Marginal Analysis

2. Money and Markets Market: Anywhere in which exchange takes place
Money… look at it this way:
What do you “want”???
What is the role of money?

3. Factors of Production Basic elements used to produce
goods and services (aka Resources)
Natural Resources (land)
Human Resources (Labor)
Capital Resources
4* Entrepreneurship

5. Land (Natural resources)
Any materials found in nature That people use to make, or produce, goods and/or services

7. Labor (Human Resources)
Human efforts in the production of goods and services

9. Capital Resources
Physical Capital: Human-made things that is used to produce goods/services
Human Capital: The knowledge and skills a worker gains through education and experience.

12. Entrepreneurship
People who organize the factors of production – they decide how to combine resources to create new Goods/services
Risk-takers

14. Opportunity Cost
“Most desirable alternative somebody gives up as the result of a decision.”
The second best alternative of any choice
The COST of a trade-off

15. Trade-Off
The act of giving up one benefit in order to gain another greater benefit
In other words: when you make a decision, you must sacrifice something – for example, to come to class today you traded away (sacrificed) some other activity such as staying at home and taking a nap

16. “Guns and Butter”
Guns 20 10 50 25
Butter

17. Marginal Analysis Cost/Benefit analysis:
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Marginal Cost: Extra cost of adding one unit
Marginal Benefit: Extra benefit of adding one unit

18. Marginal Analysis MB MC Quantity High MC MB=MC Rational Choice! Low MB50 25
Quantity