AP MICRO ECON SUMMER QUIZ

Economics →is the study or scarcity and choice

Individual Choice →decisions by individuals about what to do and what not to do 

Economy →is a system for coordinating a society’s productive and concumptive activities

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

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

Incentives → are rewards or punishments that motivate particular choices

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

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

Resources →anything that can be used to produce something else

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

Labor →is the effort of workers

Capital →refers to manufactured goods used to make other goods and services

Entrepreneurship →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.

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

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

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

Macroeconomics → is concerned with the overall ups and downs of the economy 

economic aggregates →are economic measures that summarize data across many different markets

Greater than the sum →

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

Normative Economics →makes prescriptions about the way the economy should work

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

Production Possibilities Curve(PPC) →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,

Productive Efficiency →an economy can achieves productive efficiency if it produces at a point on its production curve

Allocative Efficiency →an economy achieves an allocative efficiency if it produces at a point along its production possibilities curve that makes consumers as well off as possible

Technology???? →the body of knowledge applied to how goods and

comparative advantage →an individual has a comparative advantage 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

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

terms of trade → indicates the rate at which one good can be exchanged for another