Unit I

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