ap micro vocab

microeconomics

the branch of economics that studies how people make decisions and how those decisions interact

macroeconomics

the branch of economics that is concerned with the overall ups and downs in the economy

demand schedule

a list or table showing how much of a good or service consumers will want to buy at different prices

law of demand

the principle that a higher price for a good or service, other things equal, leads people to demand a smaller quantity of that good or service

law of supply

other things being equal, the price and quantity supplied of a good are positively related

scarce, scarcity

in short supply; when there is not enough of the resource available to satisfy all the various ways a society wants to use it

land

all resources that come from nature, such as minerals, timber, and petroleum

labor

the effort of workers

capital

manufactured goods used to make goods and services

resource

anything that can be used to produce something else; includes natural and human types

entrepreneurship

the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes

marginal analysis

the study of marginal decisions

positive economics

the branch of economic analysis that describes the way the economy actually works

normative economics

the branch of economic analysis that makes prescriptions about the way the economy should work

production possibilities curve

illustrates the trade-offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced

trade-off

when you give something up in order to have something else

gains from trade

an economic principle that states the by dividing tasks and trading, people can get more of what they want through trade than they could if they tried to be self-sufficient

absolute advantage

the advantage conferred by the ability to produce more of a good or service with a given amount of time and resources

comparative advantage

the advantage conferred if the opportunity cost of producing the good or service is lower for another producer

quantity demanded

the actual amount of a good or service consumers are willing to buy at some specific price

quantity supplied

the actual amount of a good or service producers are willing to sell at some specific price

change in demand

a shift of the demand curve, which changed the quantity demanded at any given price

substitutes

pairs of goods for which a rise in the price of one of the goods leads to an increase in the demand for the other good

complements

pairs of goods for which a rise in the price of one good leads to a decrease in the demand for the other good

normal good

a good for which a rise in income increases the demand for that good

price floor

the minimum price buyers are required to pay for a god or service; a form of price control

price ceiling

the maximum price sellers are allowed to charge for a good or service; a form of price control

input

a good or service used to produce another good or service

surplus

the excess of a good or service that occurs when the quantity supplied exceeds the quantity demanded; occurs when the price is above the price equilibrium

shortage

the insufficiency of a good or service that occurs when the quantity demanded exceeds the quantity supplied; occurs when the price is below the equilibrium price