ECON111 Lecture Notes - Lecture 2: Capital Accumulation, Comparative Advantage, Opportunity Cost
Week 2 The Economic Problem
Factors of production
- Are the productive resources used to produce goods and services
- Land (minerals, energy, water, air, plants, animals)
- Labour (work time and work effort)
- Capital (produced to produce something else e.g. tools, instruments, buildings
and training)
- Entrepreneurship (ideas, risk taking, organisation of land, labour and capital)
Types of income
Rent - paid for land
Wages - paid for services
Interest - paid for the use of capital
Profit - income earned by an entrepreneur
Circular Flow Model
- A model of the economy that shows the circular flow of expenditures and
incomes that result from decision makers’ choices and the way those choices
interact to determine what, how and for whom goods/services are produced
Advanced Economies
- The richest 29 countries or areas.
- Includes Australia, Us, Japan, Italy, Germany, France, UK, Canada
- Industrial economies including Hong Kong, South Korea, Singapore, Taiwan
- Much higher levels of human capital
- Well developed transportation systems
- About 15% of the world’s population lives in advanced economies
Emerging Market Economies
- Include 28 countries in Central and Eastern Europe and Asia
- Moving from a system of state-owned production and heavily regulated
markets to a system of free enterprise and unregulated markets
- 500 million people live in these countries
Developing Economies
- Include 119 countries in Africa, Asia, Middle East, Europe and Central and
South America
- On-job training and experience much lower
- Vary in size, average income and rate of growth
- More than 5.5 billion people live in developing countries
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Document Summary
Are the productive resources used to produce goods and services. Land (minerals, energy, water, air, plants, animals) Capital (produced to produce something else e. g. tools, instruments, buildings and training) Entrepreneurship (ideas, risk taking, organisation of land, labour and capital) Interest - paid for the use of capital. A model of the economy that shows the circular flow of expenditures and incomes that result from decision makers" choices and the way those choices interact to determine what, how and for whom goods/services are produced. Includes australia, us, japan, italy, germany, france, uk, canada. Industrial economies including hong kong, south korea, singapore, taiwan. About 15% of the world"s population lives in advanced economies. Include 28 countries in central and eastern europe and asia. Moving from a system of state-owned production and heavily regulated markets to a system of free enterprise and unregulated markets. 500 million people live in these countries. Include 119 countries in africa, asia, middle east, europe and central and.