AP Microecon., Unit 1: All Key Terms

Economics

Study of scarcity and choice

Trade-Off

When you give something to get something else

Individual Choices

decisions by individuals about what to do and what not to do

Resource/Factor of Production

Anything that can be used to produce something else

CELL:
Capital
Entrepreneurship
Land
Labour

Capital (Resource/Factor of Production)

Refers to manufactured goods used to make other goods and services

Ex.: Buildings, machinery, and tools 

Entrepreneurship (Resource/Factor of Production)

Describes the efforts taken for organising resources for production, taking risks, and innovation

Ex.: create new enterprises, develop new products, and production processes

Land (Resource/Factor of Production)

All resources that come from nature

Ex.: Timber, wind, and petroleum

Labour (Resource/Factor of Production)

Effort of workers 

Marginal Benefit

The gain from doing something one more time

Marginal Cost

The cost of doing something one more time

Marginal Analysis

Study of the costs and benefits of doing a little bit more of an activity vs a little bit less

Opportunity Cost

The value of the next best alternative that you must give up in order to get the good or service

Microeconomics

Study of how individuals, household, and firms make decisions and how those decisions interact

Household

Person or group of people who share their income

Firm

Any organisation that produces goods or services for sale

Macroeconomics

Concerned with the overall ups and downs of the economy

Positive Economics

What is observed or expected if a course of actions is taken

Normative Economics

What should be done to achieve desired ends