Info

consumer goods Products and services that satisfy human wants directly.

capitaL goods Goods that do not directly satisfy human wants.

production possibilities table A table showing the different combinations of two products that can be produced with a specific set of resources in a full-employment, full-production economy.

• Full employment and productive efficiency The economy is employing all its available resources (full employment) and is producing goods and services at least cost (productive efficiency).

• Fixed resources The available supplies of the factors of production are fixed in both quantity and quality. Nevertheless, they can be reallocated, within limits, among different uses; for example, land can be used either for factory sites or for food production.

• Fixed technology The state of technology does not change during our analysis. This assumption and the previous one imply that we are looking at an economy at a certain point in time or over a very short period of time.

• Two goods The economy is producing only two goods: pizzas and industrial robots. Pizzas symbolize consumer goods, products that satisfy our wants directly; industrial robots symbolize capital goods, products that satisfy our wants indirectly by making possible more efficient production of consumer goods.

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