AP Economics Chapter 2 Flashcards

5988559492	Factors of Production	The four economic resources: land, labor, capital, and entrepreneurial ability.	0
5988559493	Consumer Goods	Goods that give direct satisfaction.	1
5988559494	Capital Goods	Goods that give indirect satisfaction.	2
5988559495	Production Possibilities Curve (PPC)	Curve that displays the different combinations of goods and services that society can produce in a fully employed economy, assuming a fixed availability of supplies or resources and fixed technology.	3
5988559496	Law of Increasing Opportunity Costs	As the production of a particular good increases, the opportunity cost of producing an individual unit increases.	4
5988559497	Economic Growth	(1) An outward shift in the PPC that results from an increase in resource supplies or quality or an improvement in technology; (2) an increase of real output (gross domestic product) or real output per capita.	5
5988559498	Market System	Economic system that is characterized by a mixture of centralized government economics initiatives and decentralized actions taken by individuals and firms.	6
5988559499	Command System	Economic system in which government owns most property resources and economic decision-making is set by a central economic plan created and enforced by the government.	7
5988559500	Circular Flow Model	An illustration showing the flow of resources from households to firms and of products from firms to households. These flows are accompanied by reverse flows of money from firms to households and from households to firms.	8
5988559501	Resource Market	A market in which households sell and firms buy resources or the services of resources.	9
5988559502	Product Market	A market in which products are sold by firms and bought by households.	10
5988559503	Private Property	The right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property.	11
5988559504	Freedom of Enterprise	The freedom of firms to obtain economic resources, to use those resources to produce products of the firm's own choosing, and to sell their products in markets of their choice.	12
5988559505	Freedom of Choice	The freedom of owners of property resources to employ or dispose of them as they see fit, of workers to enter any line of work for which they are qualified, and of consumers to spend their incomes in a manner that they think is appropriate.	13
5988559506	Competition	The effort and striving between two or more independent rivals to secure the business of one or more third parties by offering the best possible terms.	14
5988559507	Money	Any item that is generally acceptable to sellers in exchange for goods and services.	15
5988559508	Barter	The direct exchange of one good or service for another good or service.	16
5988559509	Expanding Industry	An industry whose total output is increasing because positive economic profits lead many firms to enter the industry.	17
5988559510	Declining Industry	An industry whose total output is declining because negative economic profits lead many firms to exit the industry.	18
5988559511	Consumer Sovereignty	The determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy. Also known as "consumer choice."	19
5988559512	Dollar Votes	The "votes" that consumers cast for the production of preferred products when they purchase those products rather than the alternatives that were also available.	20
5988559513	Guiding Function of Prices	The ability of price changes to bring about changes in the quantities of the products and resources demanded and supplied.	21