ECON 103 Lecture Notes - Lecture 4: Apple Pie, Bulldozer, Capital Good
28 Jul 2016
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Consumption goods: goods meant for ultimate consumption: ex: bananas, fish, milkshakes, vacations, wine, etc. Capital goods (tools): not meant to be consumed; has value because it is useful in producing consumption goods: ex: net, bulldozer (has value because it helps produce goods) Savings: transform capital goods into consumption goods for higher consumption later on. Money has value to us because it can be traded for goods and services: it is a medium of exchange. Double coincidence of wants: occurs in a world of trade where both people are looking for what the other is offering: ex: i have apples and want fish. Barter: exchange that takes place without money: ex: fish exchanged directly for bananas. Production possibilities curve (curve shows tradeoff: shows various possibilities of what can be produced. Tanstaafl: there ain"t no such thing as a free lunch: you can"t get by without giving something up, something can be free for a person, but not society.
