AP Microeconomics full review

Scarcity

The condition of having unlimited wants but limited resources.

Factors of Production

Resources used to produce goods and services, including land, labor, capital, and entrepreneurship.

Opportunity Cost

The value of the next best alternative that is forgone when making a decision.

Trade-off

The alternative choice that is given up when making a decision.

Positive Economics

The branch of economics that deals with factual statements and cause-and-effect relationships.

Normative Economics

The branch of economics that reflects subjective opinions and value judgments.

Production Possibilities Curve (PPC)

A graph that shows the maximum feasible amounts of two goods that a country can produce with available resources.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Absolute Advantage

The ability of an individual or group to carry out a particular economic activity better than another individual or group.

Marginal Analysis

The examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Demand

The quantity of a good that consumers are willing and able to purchase at different prices.

Supply

The quantity of a good that producers are willing and able to offer for sale at different prices.

Law of Demand

As the price of a good increases, the quantity demanded decreases, and vice versa.

Law of Supply

As the price of a good increases, the quantity supplied also increases.

Price Elasticity of Demand

A measure of how the quantity demanded of a good changes in response to a change in its price.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good and the actual price they receive.

Market Failure

A situation in which the allocation of goods and services is not efficient, often due to externalities or market power.

Externalities

Costs or benefits of a market activity borne by a third party.

Public Goods

Goods that are non-rivalrous and non-excludable, often provided by the government.

Income Inequality

The unequal distribution of income and opportunity between different groups in society.

Gini Coefficient

A measure of statistical dispersion that represents the income or wealth distribution of a nation's residents.