Ap macro study

  1. Scarcity = unlimited wants + limited resources

  2. Opportunity cost = next-best alternative given up

  3. Marginal = additional

  4. MB > MC → do it

  5. MB < MC → don’t do it

  6. Trade-off = all alternatives given up

  7. Opportunity cost = best alternative given up

  8. Land, Labor, Capital, Entrepreneurship = factors of production

  9. Productivity = Output ÷ Input

  10. PPC = combinations of goods an economy can produce

  11. Inside PPC = inefficient

  12. On PPC = efficient

  13. Outside PPC = unattainable

  14. Straight PPC = constant opportunity cost

  15. Bowed-out PPC = increasing opportunity cost

  16. Absolute advantage = more output / fewer inputs

  17. Comparative advantage = lower opportunity cost

  18. Comparative advantage determines specialization

  19. Demand = willing + able to buy

  20. Law of demand = price ↑ → Qd ↓

  21. Demand shifters = T-R-I-P-E
    Tastes, Related goods, Income, Population/# consumers, Expectations

  22. Supply = willing + able to sell

  23. Law of supply = price ↑ → Qs ↑

  24. Supply shifters = Resources, Sellers, Technology, Government, Expectations

  25. Equilibrium = Qd = Qs

  26. Qd > Qs = shortage

  27. Qs > Qd = surplus

  28. Positive = what IS

  29. Normative = what SHOULD be

  30. Profit = Revenue − Costs