AP Macro - Unit 1 Vocab

Economics

the study of societies distribution of scarce resources

Scarcity

human's infinite wants for finite resources

Economy

a country or region's wealth and resources, especially in terms with the production/consumption of goods

economic resource

the factors that are used to produce goods or provide services

factors of production

the resources used in the production of goods and services in order to make an economic profit

Land

the resource that include all natural resources that are used in the production of goods and services

Labor

the amount of work and effort used to produce goods and services

Capital

wealth in the form of cash or liquid assets

Entrepreneurship

the act of creating a business or businesses, bearing the financial risks in the hopes for a successful business

Efficiency

using all of the resources without wasting any materials

Inefficiency

not achieving the maximum potential

opportunity cost

the potential gain that is needed to be sacrificed in order to better gains in the future

Tradeoffs

a compromise between two desirable features

underutilized resources

not using resources to the maximum production capacity

economic growth

the increase in the production of goods and services per head of the population

economic model

a model that tests for hypotheses of economic behavior

ceteris paribus

everything else being equal

Productivity

the amount of goods/services produced in a unit of labor

Technology

the application of scientific knowledge in the industry for practical purposes

Trade

to give goods in exchange for another forms of commodity

capital stock

all common and preferred stocks that a company is allowed to issue

Accumulation

the overall increase of a item or quantity over a period of time

Specialization

the process of becoming a expert in a specific subject/skill

gains from trade

the net benefits from being allowed to voluntarily trade with other economic agents

terms of trade

the ratio of a country's export prices to its import prices

absolute advantage

the ability to produce specific quantities better than other countries

Comparative advantage

the ability to produce items more efficiently than other countries

competitive market

a marketplace where buyers and sellers compete over prices of products and services

supply and demand

the amount of available products/services and the amount a consumer wants

Model

an example that imitates how the economy behaves in various different scenarios

law of demand

the price of a good increases, the quantity demanded of the consumers decreases if the other factors stay constant

Price

the amount of money needed to pay for products or services

quantity demanded

the total amount of a product or service that a consumer desires

demand schedule

a table that shows a good or service at different prices

demand curve

a graph that shows the relationship between price and demand

movement along the demand curve

shows the changes in the prices and demand on the curve

shift in demand

an economic factor other than the price caused a change in the demanded quantity at different price

determinants of demand

the factors that determine the demand of the products or services

Complementary

products that would emphasize their qualities when correctly paired together

good/service

the products of an economic system

substitute good/service

a good or service that replaces other goods or services because the consumers sees them as having the same or similar characteristics

normal good

a product that increases in demand due to an increase in the income of the consumers

inferior good

a product that decreases in demand due to an increase in the income of the consumers

law of supply

as the prices of products/services increase, suppliers would increase the quantity of products/services if other factors stay constant

quantity supplied

the number of products/services that suppliers would sell at a particular market price

supply schedule

a table that depict the quantity of products/services at various prices

supply curve

a graph that shows the relationship between price and quantity

movement along the supply curve

a change in the quantity that is caused by a change in the price

shift in supply

a change in the quantity that causes a shift in the curve which is then corrected by changing the price of the quantity supplied

determinants of supply

factors that determine the supply of products

Equilibrium

when the supply and demand equal to each other

equilibrium price

the price that both consumers and the producers agree on

equilibrium quantity

when there is no shortage or surplus of a item in the market

Surplus

excess amount of the item

Shortage

the quantity of the item supplied at market price is less than the quantity demanded

indeterminate price

when both the demand and supply shift simultaneously, the change in price/quantity in the market is unknown

indeterminate quantity

a quantity that has no fixed value but can be varied depending on the proposed condition