AP Government Lectures 1 and 2 Flashcards

215277080	economics	study of human efforts to satisfy what appear to be unlimited and competing wants	0
215277081	scarcity	the condition that arises because society does not have enough resources to produce all the things people like to have	1
215277082	four factors of production	land, natural resources, Capital (good/financial), labor, entrepreneur	2
215277083	land	includes "gifts of nature" created by human effort	3
215277084	natural resources	deserts, fertile fields, forests mineral deposits, cattle, whales, sunshine, climate necessary to grow crops	4
215277085	capital goods	the tools, equipment and factories used in the production of goods and services	5
215277086	financial capital	money used to buy the tools and equipment used in production	6
215277087	labor	people with all their efforts, abilities, and skills	7
215277088	entrepreneur	individuals who start a new business or bring a product to market	8
215277089	what are characteristics and motivation of an entrepreneur?	The respondent entrepreneurs were motivated primarily by the desire to create something new, the desire for autonomy, wealth and financial independence, the achievement of personal objectives and the propensity for action ('doing').	9
215277090	3 basic economic questions	what to produce? how to produce? for whom to produce?	10
215277091	purpose of government	security stability	11
215277092	Trade-offs	an alternative choice whenever one makes an economic decision	12
215277093	opportunity cost	the cost of the next best alternative use of money, tie, or resources when one choice is made rather than another.	13
215277094	production possibilites frontier	diagram representing maximum combinations of goods and/or services an economy can produce when all productive resources are fully employed.	14
215277095	cost benefit analysis	a way of thinking that compares the cost of an action to its benefits	15
215277096	economic systems	an organized way of providing for the wants and needs of their people 3 types; traditional economy, command economy, market economy	16
215277097	traditional economy	the allocation of scarce resources, and nearly all other economic activities, stems from rituals, habit, or customs.	17
215277098	command economy	central authority makes most of the what, how, and for whom decisions.	18
215277099	market economy	(capitalism or free enterprise system) people and firms act in their own self-interest to answer what, how, and for whom questions.	19
215277100	capitalism	private citizens own factors of production, an economic system based on private ownership of capital	20
215277101	mixed economy	capitalism with some government involvement	21
215277102	communism	a form of socialism that abolishes private ownership	22
215277103	pure capitalism	The private ownership of resources and the market distribution of products	23
215277104	3 types of business organizations	sole proprietorship, partnership, corporations	24
215277105	sole proprietorship	business owned and run by one person advantages 1. owner=boss 2. easiest kind of business to organize 3. business profits are made by individual owners 4.owner can quickly react to business problems 5. does not have to pay corporate income tax disadvantages 1. funding limited by amount of personal savings or ability to borrow 2.lack of opportunities for employees since firms are generally small 3.unlimited liability 4.death of owner can result in termination of business	25
215293022	partnership	business jointly owned by 2 or more people. advantages 1. business profits are made by individual owners 2. owners can quickly react to business problems 3. does not have to pay corporate income tax 4. combines funds of more than 1 person for start up of expansion disadvantages 1.funding limited by amount of personal savings and ability to borrow 2. each owner acts on behalf of the business and is personally responsible 3. lack of opportunities for employees since firms are generally small 4. often requires a lawyer to formally set up the business 5.unlimited liability 6. death of owners can result in termination of business	26
215293023	corporations	a business recognized by law as a separate entity having all the rights of an individual advantages 1. can continue operations indefinitely 2. limited liability 3. ownership can easily be transferred through transfer of stock 4. people can buy and cell their shares of ownership without business ending 5. can grow to be very large disadvantages 1. often requires lawyer to formally set up business 2. double taxation 3. must pay special tax on profits 4. management often separates from ownership	27
215293024	merger	a combination of 2 or more businesses to form a single firm (horizontal and vertical)	28
215293025	horizontal merger	2 or more firms that produce the same kind of product join forces	29
215293026	vertical merger	2 or more firms involved in different steps of manufacturing or marketing join together	30
215293027	conglomerate	a firm that has at least 4 businesses, each making unrelated products, none of which is responsible for the majority of its sales	31
215293028	multinational	a corporation that has manufacturing or service operations in several different countries	32
215293029	non-profit organizations	operates in a business like way to promote the collective interests of its members rather than seek financial gain for its owners	33
215317894	law of demand	quantity demanded of a good or service varies inversely with its price	34
215317895	demand	desire, ability, and willingness to buy a product	35
215317896	demand curve	a graph showing the quantity demanded at each and every price that might prevail in the market	36
215317897	market demand curve	demand curve that shows the quantities demanded by everyone that is interested in purchasing the product	37
215317898	reasons for demand or determinants of demand	1. consumer income 2. consumer tastes 3. substitutes 4. compliments 5.changes in expectations 6. number of consumers	38
215317899	consumer income	how much money people in the market have	39
215317900	consumer tastes	the preference towards different products by a consumer. causes change in demand	40
215317901	substitutes	goods used in place of one another	41
215317902	compliments	A product that is usually bought with another, together. (ex. hot dogs and hot dog buns)	42
215317903	changes in expectation	what people or businesses anticipate will happen, especially in terms of markets and prices.	43
215326505	number of consumers	more consumers=more demand	44
215326506	elastic demand	when a given change in price causes a relatively larger change in quantity demanded	45
215326507	inelastic demand	a given change in price causes a relatively smaller change in quantity demanded	46
215326508	unit elastic demand	given change in price causes a proportional demand, percentage change in quantity demanded equals percentage change in price	47
215326509	elastic supply	when a given change in price causes a relatively larger change in quantity supplied	48
215326510	inelastic supply	a given change in price causes a relatively smaller change in quantity supplied	49
215326511	unit elastic supply	given change in price causes a proportional supplied, percentage change in quantity supplied equals percentage change in price	50
215326512	market equilibrium	a situation in which prices are relatively stable, and quantity of goods or services supplied is equal to the quantity demanded	51
215326513	surplus	a situation in which quantity supplied is greater than the quantity demanded at a given price	52
215326514	shortage	a situation in which the quantity demanded is greater than the quantity supplied	53
215326515	price ceiling	maximum legal price that can be charged for a product	54
215326516	price floors	lowest legal price that can be payed for services	55