Factor of Production:

1. Land: natural resources

2. Labor: work force

3. Capital: - Human Capital: knowledge and skills a worker gains through education and experience.
   - Physical Capital: human made objects used to create other goods and services.

4. Entrepreneurship: inventive and risk taker.

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

- Production Possibility Graph (PPG): shows all alternative ways to use resources

- Production Possibility Front & Production Possibility Curve: is a graph that shows the various combinations of amounts of two commodities that could be produced using the same fixed total amount.

- Production Possibility Efficiency: producing resources at lowest cost; at any point on "Red" line

- Allocative Efficiency: combination must be desired by society (where to produce on curve)