1. Need vs. Want
Need- food, water, shelter
Want-all else that you desire

2. Goods and Services Goods- physical objects
Services- activities done for another
What is the service in the picture?
Are there any goods?

3. Scarcity and the Factors of Production
Scarcity-there are ALWAYS limited resources for unlimited wants

4. Shortage-producers can’t make enough of a good or service for consumers

5. Factors of Production-the stuff producers use to make goods/services
Land
Labor
Capital
Entrepreneurship

6. Land-(Natural Resources) ALL materials found in nature
Not just this…
But this stuff too.

7. Labor=Work

8. Capital- man made stuff USED FOR WORK!
Physical Capital
Human Capital

9. Financial Capital

10. Entrepreneurship
The key ingredient of production, CREATIVITY

11. Entrepreneurs
Start new businesses
Invent new ways of doing things
Make businesses grow
But most of all, TAKE RISKS!!!

12. Trade-Offs and Opportunity Cost
Trade-offs- ALL of the things we give up when we make a choice
Opportunity Cost- the NEXT BEST thing we give up when we make a choice

13. The Production Possibilities Frontier
Looks like this…

14. Characteristics of the PPF

15. More stuff to understand…

16. The “Low Hanging Fruit” concept

17. Calculating Opportunity Cost

18. What has happened when the curve shifts inward?