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AP Macroeconomics > Unit 1 (Ch. 1-5) Vocabulary > Flashcards

Unit 1 (Ch. 1-5) Vocabulary Flashcards

1
Q

scarcity

A

the limited nature of society’s resources

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2
Q

economics

A

the study of how society manages its scarce resources

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3
Q

efficiency

A

the property of society getting the most it can from its scarce resources

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4
Q

equity

A

the property of distributing economic prosperity fairly among the members of society

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5
Q

opportunity cost

A

whatever must be given up to obtain some item

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6
Q

rational people

A

people who systematically and purposefully do the best they can to achieve their objectives

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7
Q

marginal changes

A

small incremental adjustments to a plan of action

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8
Q

incentive

A

something that induces a person to act

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9
Q

market economy

A

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

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10
Q

property rights

A

the ability of an individual to own and exercise control over scarce resources

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11
Q

market failure

A

a situation in which a market left on its own fails to allocate resources efficiently

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12
Q

externality

A

the impact of one person’s actions on the well-being of a bystander

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13
Q

market power

A

the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

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14
Q

productivity

A

the quantity of goods and services produced from each hour of a worker’s time

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15
Q

inflation

A

an increase in the overall level of prices in the economy

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16
Q

business cycle

A

fluctuations in economic activity, such as employment and production

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17
Q

circular-flow diagram

A

a visual model of the economy that shows how dollars flow through markets among households and firms

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18
Q

production possibilities frontier

A

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

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19
Q

microeconomics

A

the study of how households and firms make decisions and how they interact in markets

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20
Q

macroeconomics

A

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

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21
Q

positive statements

A

claims that attempt to describe the world as it is

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22
Q

normative statements

A

claims that attempt to prescribe how the world should be

23
Q

absolute advantage

A

the ability to produce a good using fewer inputs than another producer

24
Q

opportunity cost

A

whatever must be given up to obtain some item

25
Q

comparative advantage

A

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

26
Q

imports

A

goods produced abroad and sold domestically

27
Q

exports

A

goods produced domestically and sold aborad

28
Q

market

A

a group of buyers and sellers of a particular good or service

29
Q

competitive market

A

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

30
Q

quantity demanded

A

the amount of a good that buyers are willing and able to purchase

31
Q

law of demand

A

the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises

32
Q

demand schedule

A

a table that shows the relationship between the price of a good and the quantity demanded

33
Q

demand curve

A

a graph of the relationship between the price of a good and the quantity demanded

34
Q

normal good

A

a good for which, other things equal, an increase in income leads to an increase in demand

35
Q

inferior good

A

a good for which, other things equal, an increase in income leads to decrease in demand

36
Q

substitutes

A

two goods for which an increase in the price of one leads to an increase in the demand for the other

37
Q

complements

A

two goods for which an increase in the price of one leads to a decrease in the demand for the other

38
Q

quantity supplied

A

the amount of a good that sellers are willing and able to sell

39
Q

law of supply

A

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

40
Q

supply schedule

A

a table that shows the relationship between the price of a good and the quantity supplied

41
Q

supply curve

A

a graph of the relationship between the price of a good and the quantity supplied

42
Q

equilibrium

A

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

43
Q

equilibrium price

A

the price that balances quantity supplied and quantity demanded

44
Q

equilibrium quantity

A

the quantity supplied and the quantity demanded at the equilibrium price

45
Q

surplus

A

a situation in which quantity supplied is greater than quantity demanded

46
Q

shortage

A

a situation in which quantity demanded is greater than quantity supplied

47
Q

law of supply and demand

A

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

48
Q

elasticity

A

a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants

49
Q

price elasticity of demand

A

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

50
Q

total revenue

A

the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

51
Q

income elasticity of demand

A

a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

52
Q

cross-price elasticity of demand

A

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

53
Q

price elasticity of supply

A

a measure of how much the quantity supplied of a good responds to a change in the price o that good, computed as the percentage change in quantity supplied divided by the percentage change in price

AP Macroeconomics (5 decks)

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