FINAL ECONOMICS
● factors of production/ money
● opportunity cost
● production possibility curve
● types of goods (excludability and rivalry)
● economic system
● supply, demand and market equilibrium
● changes in the market equilibrium
● PES and PED
FACTORS OF PRODUCTION
things/resources we have to allocate to decide what to produce
➔ LAND: raw materials/natural resources - owners receive rent (for literally
land/territory)
➔ LABOR: human resources - important its quantity and quality for economic growth -
workers are paid through wages/earnings
➔ CAPITAL: anything that can be regarded made by humans to ade production
(example:machinery, tools) - financial reward/interest if you owe it
◆ physical capital: machines, tools, etc.
◆ human capital: quality of labor, their skills, knowledge, etc.
➔ ENTERPRISE: the entrepreneur, the one who decides and takes the risk to start
producing/organizes the factors of production - gains profit
Specialization: situation were someone concentrates in producing some goods or services
rather than other
Division of labor: the breaking down of the production process into different steps and
tasks.
MONEY
➔ People need a double coincidence of needs so that an exchange can occur. We need
to have what the other part wants
➔ Characteristics of money:
◆ Acceptable: that people accept certain objects to exchange things on a daily
basis and recognize it as money.
◆ Durable
◆ Portable:
➔ Functions of money:
◆ medium of exchange
◆ unit of account: as a way of measuring the value and price of things. The
measurements are clear and we can easily compare prices.
◆ store of wealth: it should store its value through time, it should be durable.
, ◆ standard for deferred payment: we know we can pay with this coin in the
future
OPPORTUNITY COST
➔ the best option you are leaving behind when choosing something.
PRODUCTION POSSIBILITY CURVE
➔ definition: Will show us the different combinations of output/ production if
we use all the available resources → a simple representation of the
maximum level of output that a economy can achieve → its a model it has
to be constant
➔ If its inside the curve/line you are using the maximum level of output →
outside of it is less (it can be also more but its not possible in real life)
➔ to make some good you may have to give up the other → opportunity cost:
the thing you live behind for other option
➔ to find the opportunity cost we can make an equation were the thing we want to found
is our x and its value is part of the equation
◆ example:
s → if we want to know the value of one car our x is cars
➔ We need to take resources from one and take it from another → if they
use the same resources or similar we will have a constant opportunity cost
→ if they are not similar we will have an increasing opportunity cost --
PRODUCTION POSSIBILITY CURVE
● factors of production/ money
● opportunity cost
● production possibility curve
● types of goods (excludability and rivalry)
● economic system
● supply, demand and market equilibrium
● changes in the market equilibrium
● PES and PED
FACTORS OF PRODUCTION
things/resources we have to allocate to decide what to produce
➔ LAND: raw materials/natural resources - owners receive rent (for literally
land/territory)
➔ LABOR: human resources - important its quantity and quality for economic growth -
workers are paid through wages/earnings
➔ CAPITAL: anything that can be regarded made by humans to ade production
(example:machinery, tools) - financial reward/interest if you owe it
◆ physical capital: machines, tools, etc.
◆ human capital: quality of labor, their skills, knowledge, etc.
➔ ENTERPRISE: the entrepreneur, the one who decides and takes the risk to start
producing/organizes the factors of production - gains profit
Specialization: situation were someone concentrates in producing some goods or services
rather than other
Division of labor: the breaking down of the production process into different steps and
tasks.
MONEY
➔ People need a double coincidence of needs so that an exchange can occur. We need
to have what the other part wants
➔ Characteristics of money:
◆ Acceptable: that people accept certain objects to exchange things on a daily
basis and recognize it as money.
◆ Durable
◆ Portable:
➔ Functions of money:
◆ medium of exchange
◆ unit of account: as a way of measuring the value and price of things. The
measurements are clear and we can easily compare prices.
◆ store of wealth: it should store its value through time, it should be durable.
, ◆ standard for deferred payment: we know we can pay with this coin in the
future
OPPORTUNITY COST
➔ the best option you are leaving behind when choosing something.
PRODUCTION POSSIBILITY CURVE
➔ definition: Will show us the different combinations of output/ production if
we use all the available resources → a simple representation of the
maximum level of output that a economy can achieve → its a model it has
to be constant
➔ If its inside the curve/line you are using the maximum level of output →
outside of it is less (it can be also more but its not possible in real life)
➔ to make some good you may have to give up the other → opportunity cost:
the thing you live behind for other option
➔ to find the opportunity cost we can make an equation were the thing we want to found
is our x and its value is part of the equation
◆ example:
s → if we want to know the value of one car our x is cars
➔ We need to take resources from one and take it from another → if they
use the same resources or similar we will have a constant opportunity cost
→ if they are not similar we will have an increasing opportunity cost --
PRODUCTION POSSIBILITY CURVE
