Goods and services, and factors of production - Introduction to Economics

Notes:

Goods and Services

Goods are physical objects like cars and computers

Services are duties performed for people such as car repairs, and computer repairs.

Factors of Production

For goods and services to be produced, we need resources. These resources are called factors of production.

Factors of production has 4 categories:

1. Land: An area that is used to produce goods and services
2. Labor: Work time and effect that people commit
3. Capital: Tools, buildings, machines that businesses use
4. Entrepreneurship: Human resource that organizes land, labor, and capital. They come up with new plans on how to produce more, and what choices the business needs to make.

Self-Interest vs Social Interest

A choice is in your self-interest if that is the best option available for you.

A choice is in the social interest if the choice is the best for society.

Social interest has two variables to consider:

1. Efficiency: is achieved when the resources used to produce goods and services at the lowest cost possible and gives the best possible value
2. Equity (fairness)

Examples of self-interest vs social interest:

1. Globalization
2. Climate Change