AP Microeconomics - Unit 1

0.0(0)
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/19

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

20 Terms

1
New cards

Scarcity

The fundamental economic problem arising from limited productive resources (land, labor, capital, entrepreneurship) needed to meet unlimited wants.

2
New cards

Economic Resources

Four types include land, labor, capital, and entrepreneurship, all of which are scarce.

3
New cards

Land

Natural resources used in production; payment for land use is called rent.

4
New cards

Labor

Human effort in production; payment for labor is called wages.

5
New cards

Capital

Machinery, tools, and equipment used in production; payment for capital is called interest.

6
New cards

Entrepreneurship

The ability to innovate and create ideas; payment for entrepreneurship is called profit.

7
New cards

Opportunity Cost

The value of the next best alternative that is forgone when making a decision.

8
New cards

PPC (Production Possibility Curve)

A graph illustrating all production options given current resources, showing efficiency and opportunity costs.

9
New cards

Market Economy

An economic system where production and distribution decisions are made by individuals based on supply and demand.

10
New cards

Command Economy

An economic system where the government makes all production and distribution decisions.

11
New cards

Mixed Economy

An economic system that combines elements of both market and command economies, with decisions made by both the government and individuals.

12
New cards

Law of Demand

The principle that there is an inverse relationship between price and quantity demanded.

13
New cards

Determinants of Demand

Factors that influence demand, including tastes and preferences, number of consumers, price of related goods, and income.

14
New cards

Law of Supply

The principle that there is a positive relationship between price and quantity supplied.

15
New cards

Determinants of Supply

Factors that influence supply, including prices of resources, number of producers, technology, government intervention, and expectations of future profits.

16
New cards

Double Shift Rule

A principle stating that when two curves (supply and demand) shift simultaneously, either price or quantity will be indeterminate.

17
New cards

O.O.O Rule

A method for calculating per unit opportunity cost for output questions by placing the opposite number on top.

18
New cards

I.O.U Rule

A method for calculating per unit opportunity cost for input questions by placing the opposite number on the bottom.

19
New cards

Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another country, leading to specialization and trade.

20
New cards

Increasing Opportunity Cost

A situation represented by a curved PPC, indicating that as production of one good increases, the opportunity cost of producing additional units rises.