AP Macroeconics Unit I

119531246	Economics	study of how society allocates (distributes) scarce (limited) resources
119531247	Factors of Production	inputs of resources that go into the production function to produce goods and services (land, labor, & capital)
119531248	Inputs	factors of production (resources) used to make goods and services
119531249	Capital	man made goods used in the production of other goods (the tools needed to do the job)
119531250	Microeconomics	the study of choices made by individual units (households, firms, or an industry) and with individual markets, specific goods and services, and product and resource prices (the "trees" instead of the forest)
119531251	Macroeconomics	the study of the economy as a whole (the "forest" instead of the trees)
119531252	Positive economics	the analysis of facts or data to establish scientific generalizations about economic behavior
119531253	Normative economics	involves value judgements about what the economy should be like; policy economics
119531254	Ceteris paribus	assumption that all factors other than those being considered are held constant (the control in an experiment)
119531255	Fallacy of composition	false notion that what is true for the individual (or part) is necessarily true for the group (or whole)
119531256	Scarcity	limited resources to meet unlimited wants and needs
119531257	Opportunity cost	the most desirable alternative given up when making a decision
119531259	Production Possibilities Curve	shows the alternative ways an economy can use its resources
119531260	Production Possilibilities Frontier	edge of production possibilities for an economy; efficient use of resources
119531261	Efficient	using everything availalbe with nothing left over
119531262	Inefficient	Left over, unused, resources (ex: unemployment, idle factory, idle equipment, idle oil wells, etc...)
119531263	Underutilization	inefficient
119531264	Goods	tangible products available for individuals, firms or governments to buy, sell, and trade (ex: desks, books, computers, etc...)
119531265	Services	an intangible act or use for which a consumer, firm or government is willing to pay (ex: hair cut, banking services, education, etc...)
119531266	Constant opportunity cost	an opportunity cost that remails the same for each additional unit as a consumer (or society) shifts puraches (production) from one product to another along a straight-line (ex: for every additional bicycle made, it will cost us two computers)
119531267	Law of increasing opportunity cost	principle that as the production of a good increases, the opportunity cost of producing an addtional unit rises (ex: computers & pizzas - since the resources needed to produce these two goods are very different making more of either will will divert more & more resources to that option & away from the other because resources aren't readily interchangeable)
119531268	Absolute advantage	ability to produce more of a good than all other producers
119531269	Comparative advantage	ability to produce a good at a lower opportunity cost than all other producers
119531270	Specialization	production of goods, or performance of tasks, based upon comparative advantage (ex: Henry Ford's assembly line)
119531271	Terms of trade	rate at which units of one product can be exchanged for units of another product
119531295	Tarrifs	tax imposed by a nation on imports to its country
119531296	Quotas	maximum amount of a good that can be imported
119531297	Subsidies	government transfer (payment), either to consumers or producers, on the consumption or production of a good
119531298	Trade barriers	any restrictions a nation imposes on other nations importing goods to that country
119531299	Free-trade agreements/zones	a group of nations that lower or abolish trade barriers amount members (ex: European Union EU, North American Free Trade Agreement NAFTA, Oil Producing and Exporting Countries OPEC, et...)
119531300	Land	any natural resource
119531301	Labor	effort for pay
119531302	Human capital	education, training or skills that make you a more in demand employee
119531303	Trade-off	giving up some of one thing to get more of another; compromise
119531304	Shortage	temporary unavailabilty of a good or service
119531305	Entrepreneurs	people that put together the factors of production (land, labor, capital) to sell goods and services to individuals, government, or firms
119531306	Rational choice	when faced with options, it is the one you choose
119531307	Growth	an increase in real GDP (GDPr) per capita (per person); usually brought on by new technology
198086150	Demand	desire & ability to buy a good/service
198086151	Law of demand	lower the price, the more consumers buy
198086152	Quantity demanded	amount of a good/service consumers are willing to purchase at a certain price
198086153	Complements	Goods used together
198086154	Substitutes	Goods used in place of another
198086155	Normal goods	goods you buy more of as income increases
198086156	Inferior goods	goods you buy more of as income decreases
198086157	Supply	amount of a good/service available
198086158	Law of supply	producers supply more of a good/service as price increases
198086159	Quantity supplied	amount of good/service producers are willing to supply at each price level
198086160	Market equilibrium	point at which quantity supplied & quantity demanded are equal (requires a price & quantity)
198086161	Equilibrium price	price at which quantity supplied & quantity demanded are equal
198086162	Equilibrium quantity	amount of a good/service that buyers are willing to consume and producers are willing to sell so there's not a shortage/surplus
198086163	North American Free Trade Agreement (NAFTA)	agreement between Canada, the United States, and Mexico to eliminate trade barriers between the three North American countries to promote overall economic growth in the region