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AP Micro > Unit 1 > Flashcards

Unit 1 Flashcards

1
Q

Trade off

A

an alternative that we sacrifice when we make a decision

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1
Q

Economics

A

the study of how society manages its scarce resources

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2
Q

Scarcity

A

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

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3
Q

constraint

A

limitation or restriction of resources (time, money, etc)

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4
Q

opportunity cost

A

whatever must be given up to obtain some item

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5
Q

Microeconomics

A

the study of the economic behavior and decision making of small units, such as individuals, families, and businesses

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6
Q

Macroeconomics

A

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

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7
Q

goods

A

Items purchased to satisfy needs and wants

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8
Q

Services

A

Items of value that cannot be seen or touched

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9
Q

Consumer

A

A person who purchases goods and services for personal use

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10
Q

consumption

A

spending by households on goods and services.

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11
Q

Economic Resources

A

the means through which goods and services are produced

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12
Q

factors of production

A

land, labor, capital, entrepreneurship

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13
Q

land

A

all natural resources used to produce goods and services

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14
Q

labor

A

Human effort directed toward producing goods and services. “Human capital”

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15
Q

Capital

A

the tools, equipment, machinery, and factories used in the production of goods and services

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16
Q

human capital

A

the knowledge and skills that workers acquire through education, training, and experience

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17
Q

Entrepreneurship

A

the process of starting, organizing, managing, and assuming the responsibility for a business

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18
Q

Rival nature

A

Only one person can consume them at a time

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19
Q

non-rival nature

A

more than one person or business at a time can use such information without depleting the supply for others

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20
Q

Economic system

A

Defined by the way a society answers three questions: What goods and services will be produces? How will those goods and services be produced? Who will consume the goods and services?

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21
Q

Means of Production

A

Everything used to supply goods and services, such as farmland, copper mines, factories, office buildings, robots, and super computers.

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22
Q

Traditional Economy

A

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

23
Q

command economy

A

An economic system in which the government makes all economic decisions.

24
Q

Market Economy (Capitalism)

A

An economic system based upon the fundamentals of private property, freedom, self-interest, and prices

25
Q

mixed economy

A

both government and individuals make decisions about economic resources. (Most Countries in the World)

26
Q

Production Possibilities Curve (PPC)

A

A basic economic model that illustrates scarcity and opportunity costs.

27
Q

Efficiency

A

using resources in such a way as to maximize the production of goods and services

28
Q

underutilized

A

not using all possible resources

29
Q

contraction

A

a decline in output

30
Q

growth

A

Increasing production

31
Q

absolute advantage

A

the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

32
Q

comparative advantage

A

the ability to produce a good at a lower opportunity cost than another producer

33
Q

Specialization

A

focusing on the production of specific goods so that more products can be produced with the same amount of labor

34
Q

division of labor

A

the assignment of different parts of a manufacturing process or task to different people in order to improve efficiency.

35
Q

gains from trade

A

result when two countries specialize in commodities in which they have a comparative advantage and exchange with one another, allowing each to benefit from increased consumption of goods they would not have without trade.

36
Q

cost-benefit analysis

A

economic model that compares the marginal costs and marginal benefits of a decision

37
Q

rational agents

A

free agents capable of making their own decisions, setting their own goals, and guiding their conduct by reason

38
Q

Explicit Opportunity Cost

A

Opportunity costs that involve a payment of some kind

39
Q

Implicit Opportunity Cost

A

is one (cost) an individual or a business gives up in order to use a resource that it already has or is using

40
Q

Utility

A

Ability or capacity of a good or service to be useful and give satisfaction to someone.

41
Q

Total Benefits

A

The amount of satisfaction people receive from all of the goods and services they use.

42
Q

Total Costs

A

The time, effort, and expense they spend to obtain goods and services.

43
Q

Total Net Benefits

A

the difference between total benefits and total costs

44
Q

optimal choice

A

The level at which you receive the greatest benefit for the least cost.

45
Q

marginal benefit

A

the additional benefit you gain from producing each additional unit. MB = Change in total benefits/Change in Output

46
Q

marginal cost

A

How much more you would have to spend to produce additional units.

47
Q

Consumer Choice Theory

A

The theory relating consumer demand curves to consumer preferences.

48
Q

diminishing marginal utility

A

decrease in satisfaction or usefulness from having one more unit of the same product

49
Q

marginal utility

A

satisfaction or usefulness obtained from acquiring one more unit of a product

50
Q

marginal benefit

A

the additional benefit to a consumer from consuming one more unit of a good or service

51
Q

marginal analysis

A

analysis that involves comparing marginal benefits and marginal costs

52
Q

optimal quantity

A

the quantity that generates the highest possible total profit. MB=MC

53
Q

sunk cost

A

a cost that has already been committed and cannot be recovered

54
Q

utility maximizing rule

A

The principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility.

AP Micro (1 decks)

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