AP Macroeconomics - Unit 1 Flashcards

13996587407	Scarcity	Society has unlimited wants & limited resources	0
13996587408	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
13996587409	Traditional economy	An economic system in which the 4 economical questions are answered for you	2
13996587410	Command economy	An economic system in which the government makes all production & consumption decisions.	3
13996587411	Market economy	Production & consumption decisions are made by individuals or the open market.	4
13996587412	Trade-off	An exchange of one thing in return for another (you don get the one you give up)	5
13996587413	Opportunity cost	What one must give up after making a certain choice	6
13996587414	Macroeconomics	Focuses on the behavior of the market as a whole	7
13996587415	Microeconomics	Focuses on the choices of individuals and firms	8
13996587416	Examples of renewable resources	Forests, sea & land animals, water, grasses & forage on rangelands	9
13996587417	Examples of nonrenewable resources	Metals & ores, oil & natural gas	10
13996587418	What are the 4 factors of production	Land, labor, capital, & entrepeneurship	11
13996587419	Land	Resources which come from nature	12
13996587420	Labor	Resource which is the effort of workers	13
13996587421	Entrepeneurship	Resource which is the efforts made by entrepreneurs for production	14
13996587422	Capital	Resource which is the manufactured good are used to make products/services	15
13996587423	Production possibilities curve	Model that shows alternative ways that an economy can use its scarce resources	16
13996587424	Points inside the frontier line are	obtainable, but not efficient	17
13996587425	Points on the frontier line are	Obtainable & efficient	18
13996587426	Points outside of the frontier line are	Unobtainable due to the lack of resources	19
13996587427	What causes the PPC to shift?	Change in resource quantity/quality, technology, or trade	20
13996587452	Increasing opportunity cost		21
13996587453	Constant opportunity cost		22
13996587428	Human capital	the skills and knowledge gained by a worker through education and experience	23
13996587429	Financial capital	money used to buy the tools and equipment used in production	24
13996587430	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
13996587431	Comparative advantage	The ability of a country to produce a good at a lower cost than another country can.	26
13996587432	Absolute advantage	the ability to produce a good using fewer inputs than another producer	27
13996587433	Specialization is based on which advantage?	Comparative advantage	28
13996587434	Law of demand	There is an inverse relationship between price and quantity demanded, as price goes up demand goes down	29
13996587435	Law of supply	There is a direct relationship between price and quantity supplied, as price goes up supply goes up	30
13996587436	What causes a movement along the supply or demand curve?	Change in price	31
13996587437	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
13996587438	Inferior good	a good that consumers demand less of when their incomes increase	33
13996587439	Normal good	a good that consumers demand more of when their incomes increase	34
13996587440	Increase in demand/supply	Curve shifts right	35
13996587441	Decrease in demand/supply	Curve shifts left	36
13996587443	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	37
13996587444	Market equilibrium	Quantity demanded equals quantity supplied	38
13996587445	Shortage	Quantity demanded is greater than quantity supplied (prices will increase)	39
13996587446	Surplus	Quantity demanded is less than quantity supplies (prices will decrease)	40
13996587447	Price floor	a minimum price for a good or service (ex. minimum wage) causes a surplus	41
13996587448	Price ceiling	a maximum price for a good or service (rentals) causes a shortage	42
13996587449	The circular flow model	Demonstrates the way that money and goods and services flow between households and firms	43
13996587450	Product market	the market in which households purchase the goods and services that firms produce	44
13996587451	Resource market	The market in which firms purchase the goods and services that households produce	45