Economics Basics

The Factors of Production are land, labor, capital, human capital, and entrepreneurship.

In the short run, usually less than a year, capital is fixed; so to increase output we can only hire more workers. In the long run, a time greater than one year, we can reduce human workers and automate systems. However economists cannot agree on what time period constitutes the long run (2,4,7 years). An old economics jokes states in the long run we are all dead.

The more workers we hire out put increases until the point of diminishing marginal returns to scale. Ie workers get in each others way and out put decreases. Economics is the science of delicate balances.