AP Macroeconomics - Unit 1 Flashcards

7585546571	Scarcity	Society has unlimited wants & limited resources	0
7585546572	What are the 4 fundamental economic questions?	(1)What goods and services should be produced? (2)How should these goods and services be produced? (3)Who consumes these goods and services? (4)Who produces these goods and services	1
7585546573	Traditional economy	An economic system in which the 4 economical questions are answered for you	2
7585546574	Command economy	An economic system in which the government makes all production & consumption decisions.	3
7585546575	Market economy	Production & consumption decisions are made by individuals or the open market.	4
7585546576	Trade-off	An exchange of one thing in return for another (you don get the one you give up)	5
7585546577	Opportunity cost	What one must give up after making a certain choice	6
7585546578	Macroeconomics	Focuses on the behavior of the market as a whole	7
7585546579	Microeconomics	Focuses on the choices of individuals and firms	8
7585546580	Examples of renewable resources	Forests, sea & land animals, water, grasses & forage on rangelands	9
7585546581	Examples of nonrenewable resources	Metals & ores, oil & natural gas	10
7585546582	What are the 4 factors of production	Land, labor, capital, & entrepeneurship	11
7585546583	Land	Resources which come from nature	12
7585546584	Labor	Resource which is the effort of workers	13
7585546585	Entrepeneurship	Resource which is the efforts made by entrepreneurs for production	14
7585546586	Capital	Resource which is the manufactured good are used to make products/services	15
7585546587	Production possibilities curve	Model that shows alternative ways that an economy can use its scarce resources	16
7585546588	Points inside the frontier line are	obtainable, but not efficient	17
7585546589	Points on the frontier line are	Obtainable & efficient	18
7585546590	Points outside of the frontier line are	Unobtainable due to the lack of resources	19
7585546591	What causes the PPC to shift?	Change in resource quantity/quality, technology, or trade	20
7585546592	Increasing opportunity cost		21
7585546593	Constant opportunity cost		22
7585546594	Human capital	the skills and knowledge gained by a worker through education and experience	23
7585546595	Financial capital	money used to buy the tools and equipment used in production	24
7585546596	Specialization	Goods and services are produced in better quality, quantity and speed when people focus on producing a few things instead of making everything they want by themselves.	25
7585546597	Comparative advantage	The ability of a country to produce a good at a lower cost than another country can.	26
7585546598	Absolute advantage	the ability to produce a good using fewer inputs than another producer	27
7585546599	Specialization is based on which advantage?	Comparative advantage	28
7585546600	Law of demand	There is an inverse relationship between price and quantity demanded, as price goes up demand goes down	29
7585546601	Law of supply	There is a direct relationship between price and quantity supplied, as price goes up supply goes up	30
7585546602	What causes a movement along the supply or demand curve?	Change in price	31
7585546603	What are the factors of demand?	(1)Change in income (2)Change in consumer tastes & preferences (3)Change in the price of supstitute & complimentary goods (4)Change in the expected future price of a good (5)Change in the number of consumer	32
7585546604	Inferior good	a good that consumers demand less of when their incomes increase	33
7585546605	Normal good	a good that consumers demand more of when their incomes increase	34
7585546606	Increase in demand/supply	Curve shifts right	35
7585546607	Decrease in demand/supply	Curve shifts left	36
7585546608	Market day supply	a special type of supply curve/situation where quantity is fixed (ex: concert tickets)	37
7585546609	What are the factors of supply?	(1)Change in costs of production (2)Change in technology (3)Change in numbers of producers (4)Change in taxes (5)Change in the producers expectations	38
7585546610	Market equilibrium	Quantity demanded equals quantity supplied	39
7585546611	Shortage	Quantity demanded is greater than quantity supplied (prices will increase)	40
7585546612	Surplus	Quantity demanded is less than quantity supplies (prices will decrease)	41
7585546613	Price floor	a minimum price for a good or service (ex. minimum wage) causes a surplus	42
7585546614	Price ceiling	a maximum price for a good or service (rentals) causes a shortage	43
7585546615	The circular flow model	Demonstrates the way that money and goods and services flow between households and firms	44
7585546616	Product market	the market in which households purchase the goods and services that firms produce	45
7585546617	Resource market	The market in which firms purchase the goods and services that households produce	46