Class Lecture #20 - 10/19

1.) Ex: Why do we have so much confidence that our packages will be delivered without any kinks by FedEx?...... Feedback Loops. FedEx punishes employees who do a bad job and rewards employees who do a good job (both incentives to do a good job). Also, competition (between institutions) plays a role because if another company delivers a package more effectively, FedEx will lose customers.

2.) Trade and Exchange
      - What gets produced? How do you produce it? How do you get it to the consumer?
                         black
      - inputs --> box  ---> "stuff"
           2 ways: self-sufficient OR specialization and exchange (!!!)
      - Factors of Production include:
           (1) Land - pre-existing stuff
           (2) Labor - # of people and their innate abilities
           (3) Capital - physical and human
                  --> physical = produced for the purpose of producing something else
                  --> human = improve our economic stock of skills by augmenting our abilities
      - Economic Activity --> PSST (Patterns of Sustainable Specialization and Trade)
            1. self-sufficiency    2. specialization and exchange     3. discovery (takes more time)

3.) Wealth = whatever we value
     Economic Growth occurs when same inputs --> more stuff
     Exchange can only happen when values DIFFER (ex: Kirby Puckett vs. Buddy Brancalana)