unit 1 ap econ Flashcards Set

Econ Unit 1 Study Guide

Textbook Chapters 1, 2, 3 (93-99, 767-769 Fig 37.6)

Principles of thinking like an economist

Scarcity 

Opportunity Cost

Marginal Thinking 

MB=MC (Marginal Benefits equal Marginal Costs)

Modeling

Positive vs. Normative Economics

Basic Economic Models 

Circular Flow Model

Product Markets vs. Resource Markets.

Budget Line

Production Possibilities Frontier

Factors of Production

Land, labor, Capital, Entrepreneurship 

Law of Increasing Opportunity Cost

Supply and Demand

Demand Schedule/Curve

Supply Schedule/Curve

Causes/Results of various S&D curve shifts

Market Equilibrium

Surplus/Shortage

Efficient Allocation

Substitutes

Complements

Income Effect

Substitution Effect

Normal Goods

Inferior Goods

Consumer Surplus

Producer Surplus

Total Surplus

Deadweight Loss

Applications of Supply and Demand

Price Ceiling

Price Floor

International Trade and Tariffs

World Price 

Tariff Price

Government Tax Revenue

By the end of this unit you should be able to draw, label, and interpret the following graphs:

Production possibilities curve

Budget Line

Supply and Demand 

 with Market Equilibrium,

with a supply shift

with a demand shift

showing producer, consumer, and total surplus

price ceilings and price floors

international trade and tariffs--tariff revenue

You should be prepared to write short answer responses that:

Categorize a product into land, labor, capital, and entrepreneurship.

Identify real world examples of scarcity, market equilibrium, shifts of supply and demand.

Explain the difference between product and resource(factor) markets.

Explain what is meant by “efficient allocation.”