AP Economics Unit 1
1. Fundamentals of Economics
What to Produce: Decisions on goods and services based on needs and resources.
How to Produce: Methods and technologies used in production.
Who Will Buy: Distribution and target markets for the produced goods and services.
2. Factors of Production
Land: Natural resources used in production (e.g., water, oil).
Labor: Human effort in creating goods and services.
Capital: Machinery and tools used for production.
Entrepreneurship: Individuals who combine other factors to produce goods and services for profit.
3. Trade-offs and Opportunity Costs
Opportunity Cost: The loss of potential gain from other alternatives when one option is chosen.
4. Production Possibilities Curve (PPC)
Purpose: Illustrates production capabilities and opportunity costs.
Shifts: Can shift right (growth) with increased factors of production or left (shrinking) with decreased factors.
5. Factors Affecting Economic Growth
New Technology: Advancements like automation and robotics.
Increase in Labor Force: Immigration or demographic changes.
New Resources: Discovery or exploitation of resources.
6. The Law of Demand
Inverse Relationship: Price and quantity demanded have an inverse relationship.
Shifts in Demand Curve: Affected by changes in income, related goods, preferences, and expectations.
7. Supply
Law of Supply: Price and quantity supplied have a direct relationship.
Determinants of Supply:
Price of Related Goods: Influence on production decisions.
Technology: Advances can lower production costs.
Price of Resources: Affects overall production costs.
Number of Producers: More competition can affect supply.
Expectations: Future price expectations can impact current supply.
Government Policies: Regulations and taxes can influence production costs.
1. Fundamentals of Economics
What to Produce: Decisions on goods and services based on needs and resources.
How to Produce: Methods and technologies used in production.
Who Will Buy: Distribution and target markets for the produced goods and services.
2. Factors of Production
Land: Natural resources used in production (e.g., water, oil).
Labor: Human effort in creating goods and services.
Capital: Machinery and tools used for production.
Entrepreneurship: Individuals who combine other factors to produce goods and services for profit.
3. Trade-offs and Opportunity Costs
Opportunity Cost: The loss of potential gain from other alternatives when one option is chosen.
4. Production Possibilities Curve (PPC)
Purpose: Illustrates production capabilities and opportunity costs.
Shifts: Can shift right (growth) with increased factors of production or left (shrinking) with decreased factors.
5. Factors Affecting Economic Growth
New Technology: Advancements like automation and robotics.
Increase in Labor Force: Immigration or demographic changes.
New Resources: Discovery or exploitation of resources.
6. The Law of Demand
Inverse Relationship: Price and quantity demanded have an inverse relationship.
Shifts in Demand Curve: Affected by changes in income, related goods, preferences, and expectations.
7. Supply
Law of Supply: Price and quantity supplied have a direct relationship.
Determinants of Supply:
Price of Related Goods: Influence on production decisions.
Technology: Advances can lower production costs.
Price of Resources: Affects overall production costs.
Number of Producers: More competition can affect supply.
Expectations: Future price expectations can impact current supply.
Government Policies: Regulations and taxes can influence production costs.
