AP MICRO ECON SUMMER QUIZ

the study of scarcity and choice

economics

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

Individual Choice

the decisions of individual producers and consumers largely determine what, how, and for whom to produce with little government decision

market economy

industry is publicly owned and a central authority makes production and consumption decisions

command economy

are rewards or punishments that motivate particular choices

incentives

establish ownership and grant individuals rights the right to trade goods and services with each other

property rights

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

marginal analysis

anything that can be used to produce something else

resources

refers to all resources that comes from nature, such as mineral, timber, and petroleum

land

is the effort of workers

labor

refers to manufactured goods used to make other goods and services

capital

describes the efforts of entrepreneurs to organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.

entrepreneurship

resources is not available in a sufficient quantities to satisfy all the various ways a society wants to use it

scarcity

The real cost of an item; what you must give up in order to get

opportunity cost

the study of how individuals, households, and firms make decisions and how those decisions interact with each other

microeconomics

 is concerned with the overall ups and downs of the economy

macroeconomics

are economic measures that summarize data across many different markets

economic agregates

the individual actions and market outcomes

greater than the sum

is the branch of economic analysis that describes the way the economy actually works 

positive economics

makes prescriptions about the way the economy should work

normative economics

you can make a trade off when you give up something in order to have something else

trade off

illustrates the trade offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for each possible quantity of other goods produced,

Production Possible Curve (PPC)

an economy can achieves __________ ________ if it produces at a point on its production curve

Productive Efficiency

an economy achieves an __________ _________ if it produces at a point along its production possibilities curve that makes consumers as well off as possible

Allocative Efficiency

The process a firm uses to turn inputs into outputs

Technology

an individual has a ______________ __________ in producing a good or service if the opportunity cost of producing the good or service is lower for that individual than for other people

comparative advantage

an individual has an ___________ _____ in producing a good service if he or she can make more of it with a given amount of time and resources. Having an __________ ___________ is not the same thing as having a comparative advantage

absolute advantage

indicates the rate at which one good can be exchanged for another

terms of trade