8' What is TINSTAAFL anyway

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8. What is TINSTAAFL anyway?

• Everything has a cost because somebody has to pay
  the costs somewhere.
• -example
• Chick-fil-A coupon for an IceDream
• you get a coupon for a free ice cream, but
  Chick-fil-A has paid the marketing costs for the
  coupons, which they in turn pass the cost on to
  you in their sandwiches. You think you are
  getting a free IceDream, but in reality you paid
  the costs.

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• WHAT TYPES OF THINGS ARE SCARCE?
• It is safe to say our resources natural and man
  made are all scarce.

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11. Factors of Production

• What are they?
• They are the resources that are used to make all
  goods and services.
• Often called Factor Resources

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Four Factors of Production

• 1.Land natural resources that are used to make
  goods and services.
• -trees, land, air, water, animals, etc.
• 2.Labor the effort that people devote to a task
  for which they are paid.
• 3.Capital any human made resource that is used
  to produce goods and services.
• -physical capital human made objects used to
  create other goods and services
• -human capital knowledge and skills a worker
  gains through education and experience.

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Four Factors of Production

• 4.Entrepreneurs the ambitious people who decide
  how to combine land, labor, and capital to create
  new goods and services. Risk Takers
• Goods physical objects such as clothes, shoes.
• Services actions or activities that one person
  performs for another haircut, tutoring.

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Types of Goods

• Durable Good Long lasting, such as a
  refrigerator, car, DVD player.
• Non-Durable Good Short lived items, such as
  running shoes, food, light bulbs.

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Four Factors of Production

• Scarcity returns
• All of the 4 Factors of Production are SCARCE.
  This makes all goods and services scarce as well.

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Minimizing the Effects of Scarcity

• All Economic activity is directed at minimizing
  the pervasive effects of scarcity.
• The progress made in minimizing scarcity has been
  mostly due to a more efficient use of productive
  resources in the production process.
• Ex Henry Ford, Microsoft