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AP Macro test 1
Term | Definition |
---|---|
resources/factors of production | labor, land, capital, entrepreneurship |
opportunity cost | sacrifices, the real cost is what you have to give up |
macroeconomics | whole economy overall, focuses on economic aggregates |
microeconomics | individual parts of economy |
business cycle | the alternation between economic downturns and upturns in macroeconomy |
peak | when business activity reaches temporary maximum |
recession | decline in total output, income, employment (6 months) |
trough | bottom of recession period |
recovery | output and employment expanding |
inflation | rise in overall price level; food and gas not included |
deflation | fall in overall price level |
aggregate output | economy's total production of goods and services for given time periods |
economic growth | expansion of the economy's production possibilities: the economy can produce more (curve moves up) |
comparative advantage | producer can produce a good at a lower opportunity cost than your competitor (produce more efficiently) |
absolute advantage | producer #1 can make more than producer #2 |
demand | a schedule that shows how much of a product consumers are willing/able to buy at a series of possible prices |
law of demand | higher the price, less demand; lower the price, higher demand |
MERIT | market size, expectations, related prices, income, tastes |
Substitute | can be easily replaced with another |
complements | products which are bought and used together |
supply is ___________ on the graph | positive |
demand is _________on the graph | inverse |
supply | show amount a producer is willing/able to produce |
law of supply | as prices rise, quantity supplied rises, direct relationship between price and quantity supplied |
only thing that moves for supply and demand is what? | price |
TRICE | technology, related prices, input prices, competition, expectations |
equilibrium | where quantity supply and demand cross; stable |
surplus | more |
shortage | less |
calculate opportunity cost for PPC graph | x-axis=slope y axis=reciprocal |
calculate opportunity cost for comparative advantage | output: (a)=b/a input:(a)=a/b |