unit 1 flashcards micro

Absolutely! Here's a solid vocabulary list for Unit 1: Basic Economic Concepts in AP Microeconomics, with brief definitions:

Unit 1 Vocabulary – Basic Economic Concepts

Scarcity – The condition that arises because wants exceed the limited resources available to satisfy them.
Opportunity Cost – The value of the next best alternative that is given up when making a choice.
Trade-off – All the alternatives that must be given up when one choice is made over another.
Factors of Production – Resources used to produce goods and services:
- Land,
- Labor,
- Capital (physical & human),
- Entrepreneurship.
Economic System – A method used by a society to allocate resources and distribute goods and services.
Market Economy – An economy where decisions are made by individuals and businesses based on supply and demand.
Command Economy – An economy where the government makes all economic decisions.
Mixed Economy – A blend of market and command economy features.
Incentives – Factors that motivate individuals and firms to make decisions in their best interest.
Production Possibilities Curve (PPC) – A graph showing all possible combinations of two goods that can be produced given fixed resources and technology.
Efficiency – Using resources in such a way as to maximize the production of goods and services.
Underutilization – When an economy is not using all of its resources efficiently (inside the PPC).
Economic Growth – An increase in output or PPC shifting outward.
Absolute Advantage – The ability to produce more of a good with the same resources than another producer.
Comparative Advantage – The ability to produce a good at a lower opportunity cost than another producer.
Specialization – Focusing resources on the production of one or a few goods to gain efficiency.
Terms of Trade – The rate at which one good can be exchanged for another between two parties.
Cost-Benefit Analysis – A process of comparing the benefits and costs of a decision.
Marginal Analysis – Decision-making that compares additional benefits and additional costs.
Marginal Benefit (MB) – The additional satisfaction gained from consuming one more unit of a good or service.
Marginal Cost (MC) – The additional cost of producing one more unit of a good or service.
Utility – Satisfaction or benefit received from consuming a good or service.
Law of Diminishing Marginal Utility – As a person consumes more of a good, the additional satisfaction from each additional unit decreases.
Consumer Choice – The decision-making process of individuals in allocating their income among various goods and services.
Rational Behavior – The assumption that individuals make decisions that maximize their utility.