AP Gov/Micro Vocabulary

economics

the study of scarcity and choice

individual choice

decisions by individuals about what to do, which necessarily involve decisions about what not to do

economy

a system for coordinating a society’s productive and consumptive activities

market economy

in a ______ _______, the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions

command economy

in a _______ _______, industry is publicly owned and a central authority makes production and consumption decisions

incentives

rewards or punishments that motivate particular choices

property rights

establish ownership and grant individuals the right to trade goods and services with each other

marginal analysis

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

resource

anything that can be used to produce something else

land

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

labor

the effort of workers

capital

manufactured goods used to make other goods and services

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

scarce resource

a resource that is not available in sufficient quantities to satisfy all the various ways a society wants to use it

oppurtunity cost

the real cost of an item is its ___________ ____; what you must give up in order to get it

microeconomics

the study of how individuals, households, and firms make decisions and how those decisions interact

macroeconomics

the study of the overall ups and downs of the economy

economic aggregates

economic measures that summarize data across many different markets

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

trade-off

when you give up something in order to have something else

production possibilities curve

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

efficient

an economy is _________ if there is no way to make anyone better off without making at least one person worse off

productive efficiency

an economy achieves __________ __________ if it produces at a point on its production possibilities curve

allocative efficiency

an economy achieves __________ __________ if it produces at the point along its production possibilities curve that makes consumers as well off as possible

technology

the technical means for producing goods and services