Chapter 2 Economizing Scarce Resources
I. The factors of production (economic resources) and resulting income
An entrepreneur risks their own resources to
make a profit while an intrapreneur
|I. The Production Possibility Frontier (Curve)|
A. Measures how many of two types of goods can
1. The cost of A measured in terms of what must be foregone of B.
2. When considering doing A, we consider the highest valued
alternative as .limited resources means we can't afford both.
3. For more information visit the Production Possibilities Curve
4. Politicians seldom talk of the opportunity cost of what they
plan to do.
a. The opportunity cost of good grades is the value which could
have been received by spending time with family and friends.
College students video explores this example.
b. The opportunity costs of more capital goods is the value which
could have been received from having more consumer goods.
c. The Guide to Country Profiles of the CIA World Factbook, 2007
1. U.S. military spending was an about 4.06% of its 2005 GDP.
2. Here is a rank order of country percentages.
3. What are the opportunity costs of high military spending?
4. CIA, Latest "The World Factbook
5. Opportunity Cost Video 5 min
6. Opportunity Cost Podcast from the St. Louis FED
D. Law of increasing opportunity costs
Alternative Production Possibilities
2. Readings and Videos
|Chapter 2 Class Discussion Questions|
|Chapter 2 Homework Questions|
|Table of Contents|
|Economics Internet Library|