Factors of Production- January 4, 2017

Factors of Production

1. Land
   -natural resources
2. Labor
   -work exerted
3. Capital
   1) Human Capital: people acquire skills and knowledge through experience + education
   2) Physical Capital: money, tools, buildings, and machines. 
4. Entrepreneurship 
   -risk taker, combines factors of production in order to become successful

• Trade offs: an alternative that we sacrifice when we make a decision
• Opportunity cost: The most desirable alternative given up as a result of a decision (the next big thing)
•  Guns or Butter: Refers to the trade-offs that nations face when choosing whether to produce more or less military/ consumer goods.
• Thinking at the Margins: Deciding whether to add or subtract an additional unit of some resource.