Unit 1 AP econ Witt

Choices

needed due to scarcity

Opportunity cost

MOST IMPORTANT loss when making a decision

Trade offs

ALL the things you’re losing from making a specific choice

Price

How much the BUYER pays

Cost

How much a PRODUCER pays to create a good

Normative economic statements

NON facts, speculative statements

Positive economic statements

FACT statements

Consumer Goods

Goods that are produced for a buyer (IE sandwich)

Capital Goods

Goods used to produce other goods (IE panini press for making Paninis)

Allocative efficiency

Efficently making “what the people” want

Productive efficiency

Making the max amount of products

Law of increasing opportunity cost

When the opportunity cost increases with every good you increase the production of.

absolute advantage

producing more of a good (period.)

Comparative advantage

having a lower opportunity cost for producing the same amount of goods

Resource market

Market for companies to buy goods (amazon)

Product markets

For consumers to buy from (target)

Output method

Output other over

input method

input other under

Shifters of the PPC

Change in resource quantity or quality, change in technology, change in trade

Free market example

US

centrally planned market example

North Korea