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CIRCULAR FLOW: The continuous movement of production, income, and resources between producers and consumers. This flow moves through product markets as the gross domestic product of our economy and is then the revenue received by the business sector in payment for this production. This stream of revenue then flows through resource markets as payments by businesses for the resources employed in production. The payments received by resource owners, however, is nothing more than the income of the household sector. The resource owners of the household sector use this income to purchase goods and services through the product markets, coming full circle to where we began.
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Lesson 4: Production Possibilities | Unit 5: Investment
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Page: 22 of 24
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Topic:
Bundle Choices: I
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Now with bundle I (270 jogging shoes and 8 calibrators).- Producing 8 calibrators has added even more to the economy's capital.
- The cost of these 8 calibrators is 180 pairs of shoes compared to A, and the extra 4 calibrators compared to bundle E is 140 pairs of shoes.
- These 8 calibrators have increased the quantity of resources even more than bundle E, leading to an even greater shift of production possibilities curve.
- Tomorrow's production possibilities curve is even farther out than today's curve. There is more growth and a bigger shift in the curve.
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RATIONAL IGNORANCE The decision NOT to become informed about a topic (such as what a political candidate wants to do) because the cost of acquiring the information is more than the expected benefit. The rational decision to remain ignorant about a subject is a straightforward application of utility maximization and along with the related notion of rational abstention, is a source of voter apathy and government inefficiency.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time strolling through a department store seeking to buy either a tall storage cabinet with five shelves and a secure lock or a birthday greeting card for your grandmother. Be on the lookout for deranged pelicans.
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This isn't me! What am I?
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Mark Twain said "I wonder how much it would take to buy soap buble if there was only one in the world."
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"Nobody can be successful unless he loves his work. " -- David Sarnoff, TV pioneer
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CPI-W
Consumer Price Index-Urban Wage Earners and Clerical Workers
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