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AP Macroeconomics unit 1 flashcards
Economics
The social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants / Scarcity
Microeconomics
The part of economics concerned with such individual units / Ex: The sand, water, fish, etc
Macroeconomics
The part of economics concerned with the economy as a whole / Ex: The beach
Economic Resources
Land, Labor, Capital, Entrep.
Capital
Tools, Equipment used to make the product. Ex: Building, factory
Land
Resources Ex: Tree
Labor
Ex: Lumber Jack
Entrep.
Store Ex: Staples / Office Depot
Full Employment
The use of all available resources to produce want-satisfying goods and services. On the PPC
Allocative Efficiency
On the Curve
PPC
Graph with supply and demand (Be able to draw and label graph correctly)
Market System (Capitalism)
Invisible Hand
Circular Flow Model
Model / Drawing - See Power Point / Be able to draw and label correctly
Full Production
Employment of available resources so that the maximum amount of goods and services is produced / On the PPC
PPF
Chart / Table
Economic Growth
Outward shift on the PPC due to resources or technology
Command System
Communism
Factors of Production
Land, labor, capital, entrep.
Productive Efficiency
The production of a good in the least costly way
Opportunity Cost
Next best thing / Sacrifice one good to get more of another / What you lose
Economic System
A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem
Product Market
A market in which products are sold by firms and bought by households
Medium of Exchange
Any item sellers generally accept and buyers generally use to pay for a good or service / Ex: Money
3 Fundamental Questions
1) What to produce 2) How to Produce it 3) For whom to produce it for
Invisible Hand
Consumers / Adam Smith / Circular Flow Model
Durable Goods
Last longer than 3 years / Ex: Car
Nondurable Goods
Last less than 3 years / Ex: Bread
Property Taxes
A tax on the value of property
Monopoly
A single supplier or seller with no competition (Ex: Electric = Comed)
Sales Tax
A tax levied on the cost of an item
Free-Rider Program
Free to all / Ex: Parks
Services
Ex: Oil Change
Payroll Taxes
Tax taken out of your paycheck
Coarse Theorem
The idea that spillover problems may be resolved through private negotiations of the affected parties
Utility
The satisfaction of buying something
Demand Schedule
Table that shows the quantity demanded of a good at a set price (Chart/Table)
Law of Demand
Change in price results in a change in quantity demand - inverse (movement along the curve)
Demand Curve
Be able to draw and label graph correctly
Determinants of Demand
TRIBE
Supply Schedule
Quantity of a good at a set price (Chart/Table)
Law of Supply
Change in price results in a change in quantity supply - positive (movement along the curve)
Supply Curve
Graph
Determinants of Supply
ROTTEN
Surplus
Too much
Shortage
Too little
Equilibrium Price
The price at which demand and supply intersect
Equilibrium Quantity
Quantity demand meets quantity supply (=)
Ceteris Paribus
Other things equal - limit the influence of other factors when making a generalization
Comparative Advantage
The producer with the lowest opportunity cost /
Same as Opportunity Cost
Absolute Advantage
The producer that can produce the most output OR requires the least amount of inputs
Note 
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