Eco 202 ch 25 production and costs
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This document discusses key concepts related to economic growth and productivity including: - The five types of capital that contribute to wealth creation: cultural, human, physical, intellectual, and financial capital. - Global GDP per capita is around $10,000 according to World Bank data from 2017. - Productivity is defined as output divided by input, and is a major factor in improving standards of living over time. - Physical capital includes tools, machinery, and natural resources like land, water, and oil.
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Eco 202 ch 25 production and costs
- 4. Subsidize Petrol? Quantity Price Demand Supply - Market Qm Pm Supply - Subsidize Qs Ps Too much and too cheap
- 5. Profit attracts Innovation Time $ Innovation drops cost allowing price to also drop Price Innovation Innovation Innovation Innovation Cost
- 7. Intellectual Financial Physical Human Culture Entrepreneur trust knowledge skills personality health relationships natural resources time buildings equipment things than make things money and risk savers and borrowers time is money (1+r)n insurance limited liability corporations ideas technology methods
- 9. How do we go from this... to this?
- 10. 1800 2010 Change Population one billion seven billion 7x Life Expectancy 26 years 66 years 40 + GDP Per Capita Per Day $3 $30 10 x
- 11. GDP: $70,000,000,000,000 Population: 7,000,000,000 GDP Per Capita: $10,000 GDP Per Capita Source: https://www.google.com.sa/publicdata/explore? ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&tdim=true&dl=en&hl=en&q=world%20gdp#! ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_cd&scale_y=lin&ind_y=false&rdim=region&ifdim=regi on&tdim=true&hl=en_US&dl=en&ind=false
- 13. 0 8 16 24 32 40 48 56 64 1 2 3 4 5 6 2 4 8 16 32 64 2 4 6 8 10 12 Linear versus Exponential Adding versus Compounding + ^
- 14. Rule of 70s Years to Double 70 Rate of Growth 70 divided by the rate of growth
- 15. 1% 2% 3% 4% 5% Rate Years to Double 70 ÷ 1 = 70 70 ÷ 2 = 35 70 ÷ 3 = 23.3 70 ÷ 4 = 17.5 70 ÷ 5 = 14 Size in 70 years? 2 x 4 x 8 x 16 x 32 x
- 16. One word Productivity Why do Standards of Living differ?
- 18. What people want What is Wealth?
- 19. Anything that helps you create wealth What is Capital?
- 21. Cultural Capital
- 23. How people view and treat other people Expectations Cultural Capital
- 24. Property Rights Rule of Law Political Stability No peace ... No prosperity Cultural Capital
- 25. Lady Justice Weight of the evidence versus Status of the parties
- 26. Human Capital
- 27. I look for three things in hiring people. The first is personal integrity, the second is intelligence, and the third is a high energy level. But of you don’t have the first, the other two will kill you. - Warren Buffett, CEO, Berkshire Hathaway
- 29. Trust Knowledge and Skills Health and Nutrition Social Relationships Human Capital
- 31. Two types Tools Natural Resources Water, Oil, Minerals Physical Capital
- 32. Tools we use to make stuff Natural Resources Renewable Non-renewable Physical Capital
- 33. Technology How the world works How we make smart things and make things smart Intellectual Capital
- 34. Research and Development Patent System 20Year Monopoly on your idea
- 36. Money Allows us to store labor and shift time Financial Capital
- 38. Save instead of consume Investment in new capital Increase productivity Three Steps
- 39. Capital Allocation Right capital at the right time
- 42. Each year in school adds 10 percent to income Invest versus consume Education
- 43. More people Smaller slices Grow the pie faster than population GDP GDP per capita Population Growth
- 44. Population Growth A smaller slice of a larger pie is bigger than a larger slice of a smaller pie
- 45. How you slice the pie determines the size of the pie Culture Economy
- 46. U.S. Farmers 1800 - 90 percent
- 47. U.S. Farmers 1900 - 45 percent Gasoline engines replaced horses
- 48. U.S. Farmers 2012 - 2 percent
- 50. Productivity Growth More people More ideas More innovation More wealth
- 51. Quiz 1.What are the five types of capital? 2.What is global GDP per capita? 3. If a country is growing at 5 percent, how long will it take to double GDP? 4.What is productivity? 5. Name two types of physical capital.