5 factors of production

1. Land :natural resources 

2. Labor: work force

3. capital: 

•  Physical capitals : human made objects used to create other goods & services.  
• Human capital: knowledge & skills. Gains from education & experience

4. entrepreneurship : Risk taker

Trade off : alternative that we give up when we choose one course of action or another.

Opportunity cost: most desirable alternative given up by making a decision. 

 Production possibilities graph:
Shows alternative ways to use resources.

 Key:
- A: efficient producing more capital
-B: Efficient attainable
-C:Efficient but producing more consumer
-D: Underutilization, attainable but inefficient

•  recession
• war/famine
• unemployment
• population loss

-E: unattainable

• Economic growth 
• Technology
• Discover new resources.