AP Micro Vocab 1

Economics

The social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants

Ceteris Paribus

If all other relevant things, factors, or elements remain unaltered

Macroeconomics

The part of economics concerned with the economy as a whole with such major aggregates as the household, businesses and government sectors; and with measures of the total economy

Microeconomics

The part of economics concerned with such individual units as industries, firms, and households with individual markets, specific goods and services, and product and resource prices

Economic Resources

The land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; factors of production

Factors of Production

land, labor, capital, entrepreneurship

Investment

Spending for the production and accumulation of capital and addition to inventories

Full employment

The use of all available resources to produce want-satisfying goods and services

Full production

Employment of available resources so that the maximum amount of goods and services is produced; occurs when both productive efficiency and allocative efficiency are realized

Utility

The want satisfying power of a good or service

Marginal analysis

the sompation of marginal cost and marginal benefit; usually for decision making

Allocative effiiciency

The apportionment of resources among firms and industries to obtain the production of the products most wanted by society

Productive Efficiency

The production of a good in the cheapest way

Consumer goods

Products and goods that satisfy human wants directly

Captial goods

goods or services that are made for indriect consumption

Production Possibilities Curve

A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where th available supplies of resources and technology are fixed

(Total) Net benefit/gain

the total benefit or gain of an action or project minus its total cost

Terms of trade

the rate at which the units of one product can be exchanged of units of another product; the amount of a good or service in exchange for 1 unit of another good or service

Opportunity cost

the amount of other products that must be forgone or sacrificed in order to produce a unit of a product

Market economy

an economy in which only the decisions of private consumers, resource supplies, or firms determine how resources are allocated

Command economy

A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct economic activity

Mixed economy

an economy in which some companies are owned by the government and some are not

Resource(factor) market

a market in which households sell and firms buy resources or the services of the resources

Product market

The arena where households and firms interact to determine the price and quantity of the products they buy and sell

Increasing opportunity cost

the economic principle where the opportunity cost of producing one good increases as more of that good is produced

Constant opportunity cost

the trade off between producing two or more goods services remains the same regardless of quantity produced

Decreasing opportunity cost

the cost of producing one more unit of a good or service decreases as more units are produced

circular flow model

the flow of resources from households to firms and products from firms to households

Economic growth

an outward shift in the production possibilities curve that results from an increase in resource supplies, quality, or improvement in technology

Scarcity

the limited quantities of human wants that exceed resources

Comparative advantage

the lower relative or comparative cost of that another producer

Absolute advantage

the ability of an individual, company,or country to produce a greater quantity of a good or service than another entity using the same amount of resources

Specialization

The use of resources of an individual to concentrate production on a small number of goods and services

Marginal benefit/utility

the extra benefit of consuming 1 more unit of some good or service

Marginal cost

the extra cost of producing 1 more unit of output

Utility maximizing rule

the principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility