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AP Macro
Unit 1 flashcards
| Term | Definition |
|---|---|
| Scarce/scarcity | Resources (anything that can be used to produce something else) aren't unlimited and aren't available in sufficient quantities to satisfy all various ways a society wants to use them Examples: money, food, time |
| Opportunity Cost -Increasing vs -Constant | The real cost of an item, what you must give up in order to get it. -When you have to give up more of one thing to obtain one more unit of another -When you give up one unit of an item to obtain one unit of another |
| Consumer goods | Goods designed for use by final consumer Example: cars, pizza, shirt, etc. |
| Capital goods | Goods intended to use in the production of other goods or services, than final consumption Ex: Oil drilling, equipment, pizza oven, etc. |
| Concave VS Convex | -Surfaces that's curved INWARD in the middle -Surface that's curved OUTWARD in the middle |
| Normative VS Positive economics | -Makes prescriptions about the way the eco. should work, value judgements (We SHOULD decrease taxes to encourage businesses to grow) -Branch of eco. analysis that describes the way the eco. actually works, FACT based statements Ex: Unemployment is at 8% |
| Allocative Efficiency | Resouces and goods are distributed in a way that consumers are as well off possible. Resources are being used to make the goods and provide services that society needs and wants |
| Productive Efficiency | Resources and goods are being utilized to their maximum so that the most goods and services that are capable of being made are actually made. (Can be identified as a point along a PPF/PPC curve) |
| Resource market | Marketplace for exchange for labor, capital, or raw materials |
| Produce market | Marketplace that a final or finished goods/services is bought by consumers |
| Free market economies | An eco. system based on supply and demand with little or no gov. control Buyers and sellers are allowed to transact freely based on mutual agreement |
| Centrally planned economies | Eco. system where eco. decisions are made by the state or gov. than interactoin between consumers and businesses |
| Circular Flow Model | Model that shows flow of goods and services through the eco. -in model producers are known as firms while consumers are referred as hosueholds -Firms supply goods and services, households consume them |
| PPC/PPF | Shows tradeoffs facing an eco. that produces only 2 goods. It shows the maximum quantity of one good that can be produced for each possible quantity of the other good produces |
| Absolute advantage | An individual/country is able to produce more total outputs of a good/service with a given amount of time/resources |
| Comparative advantage | An individual/country that's able to produce a good/service at a lower opportunity than that of another person/conutry |
| Factors of production -land -labor -capital -entrepreneurship | -all resources come from nature -Effort of workers -Manufactured goods used to make other goods and services (pizza ovens, robots etc) -describes efforts of those that organize resources for productionm take risks to create new enterprises |
| Gains from trade or mutually advantageous trade | People can get more of what they want through trade than they could if they tried to be self-sufficient This increase is due to specialization each person/country specializes in a particular task they're good at doing |
| Law of Demand | The higher the price for a good/service, all other things being equal, leads people to demand a smaller quantity of that good/service Shown as an inverse/negative relationship |
| Law of Supply | The higher the price for a good/service, all other things being equal, leads suppliers to supply a greater quantity of that good/service. Shown as a direct/positive relationship |
| Substitute goods | If a rise in the price of one of the goods leads to a decrease for the other, or vice versa Ex: peanut butter and jelly |
| Normal goods | When a rise in income increases the demand for a good |
| Shifters of Demand (Changes) | 1. Tastes/Preferences 2. # of Consumers 3. Price of Related Goods 4. Income 5. Future Expectations Change in PRICE doesn't affect curve! It only moves along the curve |
| Shifters of Supply (Changes) | 1.Prices/Availability of inputs (resources) 2. # of Sellers 3. Technology 4. Gov. action: taxes and subsidies 5. Expectations of Future Profit Changes in PRICE don't shift the curve! It only moves along the curve |
Created by:
aly01
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