AP Econ Unit 1 and 2 Vocab

Question 1

scarcity

Answer 1

the gap between limited resources & nearly unlimited desires or wants

Question 2

factors of production

Answer 2

land, labor, and capital

Question 3

capital goods

Answer 3

the tools, machines, buildings, and factories that are used to in the make goods or services (aka capital resources/physical capital)

Question 4

human capital

Answer 4

refers to the knowledge, skill, abilities, experiences, and creativity, and that help ppl maintain + increase their productivity.

Question 5

3 economic questions

Answer 5

What goods and services will be produced?
How will those goods & services be produced?
Who will consume the goods & services?

Question 6

command economy def and characteristics

Answer 6

a central authority answers to the questions
- aka a planned economy
- implements plans for what goods & services will be produced
-believes they can provide the best living by using resources

Question 7

what are the characteristics of a market economy?

Answer 7

(aka capitalist ecomony)
neither traditional or state control economic decisions individual + firms answer the 3 questions
- entrepreneurship/private property is the backbone of this economy
- have the freedom to produce wtv. they please
- producers try to maximize their profit
- consumers want 2 purchase their wants and needs @ the best possible price