Econ 240 1st Edition Lecture 2Outline of Last Lecture I. What,How, and for whom?a. What do we produce?a.i. We divide that vast array of goods and services produce into:a.ii. In 2011 the U.S produces:a.iii. In 2011 the top 6 types of services produced: b. How do we produce?b.i. Factors of production are the productive resources used to productive resources used to produce goods and servicesb.ii. Factors of production 4 categories:b.ii.1. Landb.ii.2. Laborb.ii.3. Capitalb.ii.4. Entrepreneurship b.iii. Land b.iv. Laborb.iv.1. Human capital the knowledge and skill that people obtain from education, on the job training and work experienceOutline of Current Lecture II. (Continuation of factors of production) a.i. Capital a.ii. EntrepreneurshipIII. For Whom Do We Produce?a. Factors of production are paid incomes:These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. Functional distributionc. Personal distributionIV. The Global EconomyCurrent LectureCapital - Consists of tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and servicesEntrepreneurship- Human resources that organize labor, land, and capital- Come up with new ideas about what and how to produce, make business decisions, and bear risks that arise from these decisionsFor Whom Do We Produce?- Factors of production are paid incomes: Rent income paid for the use of land Wages income paid for the services of labor Interest income paid for the use of capital Profit ( or loss) income earned by an entrepreneur for running a business - Functional distribution of income is the distribution of incomes among the factors of production 2010 functional distribution of income: ▪ Wages 69%▪ Rent, interest, and profit 31%- Personal distribution of income distribution of income among households 2010 personal distribution of income:▪ The poorest 20% earned only 3% of total income 2▪ The richest 20% earned 51% of total income The Global Economy- In 2010, global economy produced about $70 trillion of goods and services  U.S. 20% Other 18% Euro area 15% China 13% Other Asia developing 10% Western hemisphere 10% Emerging markets 7%- In 2010, U.S. average income was $129 a day  In China it was $12 a day; in Africa $4 a day; and in India $3 a