Ap macro study

Scarcity

Unlimited wants plus limited resources.

Opportunity cost

The next-best alternative given up.

Marginal

Means additional.

MB > MC

Indicates to do it.

MB < MC

Indicates don't do it.

Trade-off

All alternatives given up.

Productivity

Output divided by Input.

PPC

Combinations of goods an economy can produce.

Inside PPC

Indicates inefficiency.

On PPC

Indicates efficiency.

Outside PPC

Indicates unattainability.

Straight PPC

Indicates constant opportunity cost.

Bowed-out PPC

Indicates increasing opportunity cost.

Absolute advantage

More output with fewer inputs.

Comparative advantage

Lower opportunity cost.

Demand

Willing and able to buy.

Law of demand

Price rises leads to quantity demanded decreases.

Supply

Willing and able to sell.

Law of supply

Price rises leads to quantity supplied increases.

Equilibrium

Quantity demanded equals quantity supplied.

Positive

What IS.

Normative

What SHOULD be.

Profit

Revenue minus Costs.