AP Micro - Unit 1 Vocab

economics (1)

study of scarcity and choice

economy (1)

system that coordinates choices for production then consumption. distributes goods and services to people who seek them

market economy (1)

production and consumption are made by the result of shared decisions by many firms/individuals

command economy (1)

industry is publicly owned and central authority in charge of production and consumption decisions

marginal analysis (1)

study of the costs and benefits of doing a little bit more of an activity versus a little less

marginal benefit (1)

the gain of doing something one more time

marginal cost (1)

the cost of repeating something

resource (1)

anything that can be used to make something else

factors of production (1)

land, labor, capital, entrepreneurship

land (1)

materials from nature

labor (1)

effort of workers

capital (1)

machinery, buildings, tools, + manufactured goods to make other goods/services

entrepreneurship (1)

efforts of entrepreneurs in organizing resources for production, taking business risks, inovating new products

scarcity (1)

not enough to satisfy consumers

opportunity cost (1)

real cost of item, what you must give up in order to have it

microeconomics (1)

choices made by smaller groups = make up whole economy

macroeconomics (1)

overall status (ups and downs) of the economy

aggregate (1)

economic measures (unemployment rate, inflation rate, etc) that summarize data across markets

positive economics (1)

branch of economic analysis that shows how economy actually works

normative economics (1)

analysis on how the world should work

production possibilities curve (PPC) (3)

imporves understanding of trade-offs by making a simplified economy that makes 2 goods

efficient (3)

no missed opportunities, no way to make some benefit while others are put at a disadvantage

allocate (3)

how scarce resources are distributed to satisfy various ways of consumers

increasing opportunity cost (3)

principle opportunity cost of producing 1 item and increasing as you make more of it

economic growth (3)

results in outword shift in production possibilities curve which leads to production possibilities expanding

trade (4)

provide good/services to others and receive goods and services in return

specialication (4)

each person specializes in the task that he/she is good at preforming

comparative advantage (4)

gained by producing a good/service if the opportunity cost of producing the good or service is lower for that person than for other people

absolute advantage (4)

gained by producing a good/service if he/she can make more of it with a given amount of time and resources. NOT the same as comparative advantage

productivity (4)

how many outputs (goods/services) can be produced with a number of inputs (resources)