AP Macroeconomics - Unit 1 Flashcards

8714604508	Scarcity	Society has unlimited wants & limited resources	0
8714604509	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
8714604513	Trade-off	An exchange of one thing in return for another (you don get the one you give up)	2
8714604514	Opportunity cost	What one must give up after making a certain choice	3
8714604515	Macroeconomics	Focuses on the behavior of the market as a whole	4
8714604516	Microeconomics	Focuses on the choices of individuals and firms	5
8714604519	What are the 4 factors of production	Land, labor, capital, & entrepeneurship	6
8714604520	Land	Resources which come from nature	7
8714604521	Labor	Resource which is the effort of workers	8
8714604522	Entrepeneurship	Resource which is the efforts made by entrepreneurs for production	9
8714604523	Capital	Resource which is the manufactured good are used to make products/services	10
8714604524	Production possibilities curve	Model that shows alternative ways that an economy can use its scarce resources	11
8714604525	Points inside the frontier line are	obtainable, but not efficient	12
8714604526	Points on the frontier line are	Obtainable & efficient	13
8714604527	Points outside of the frontier line are	Unobtainable due to the lack of resources	14
8714604528	What causes the PPC to shift?	Change in resource quantity/quality, technology, or trade	15
8714604529	Increasing opportunity cost		16
8714604530	Constant opportunity cost		17
8714604531	Human capital	the skills and knowledge gained by a worker through education and experience	18
8714604532	Physical capital	tools and equipment used in production	19
8714604533	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.	20
8714604534	Comparative advantage	The ability of a country to produce a good at a lower cost than another country can.	21
8714604535	Absolute advantage	the ability to produce a good using fewer inputs than another producer	22
8714604536	Specialization is based on which advantage?	Comparative advantage	23
8714604537	Law of demand	There is an inverse relationship between price and quantity demanded, as price goes up demand goes down	24
8714604538	Law of supply	There is a direct relationship between price and quantity supplied, as price goes up supply goes up	25
8714604539	What causes a movement along the supply or demand curve?	Change in price	26
8714604540	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	27
8714604541	Inferior good	a good that consumers demand less of when their incomes increase	28
8714604542	Normal good	a good that consumers demand more of when their incomes increase	29
8714604543	Increase in demand/supply	Curve shifts right	30
8714604544	Decrease in demand/supply	Curve shifts left	31
8714604545	Market day supply	a special type of supply curve/situation where quantity is fixed (ex: concert tickets)	32
8714604546	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	33
8714604547	Market equilibrium	Quantity demanded equals quantity supplied	34
8714604548	Shortage	Quantity demanded is greater than quantity supplied (prices will increase)	35
8714604549	Surplus	Quantity demanded is less than quantity supplies (prices will decrease)	36
8714604550	Price floor	a minimum price for a good or service (ex. minimum wage) causes a surplus	37
8714604551	Price ceiling	a maximum price for a good or service (rentals) causes a shortage	38
8714604552	The circular flow model	Demonstrates the way that money and goods and services flow between households and firms	39
8714604553	Product market	the market in which households purchase the goods and services that firms produce	40
8714604554	Resource market	The market in which firms purchase the goods and services that households produce	41