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AP Econ > Unit One > Flashcards

Unit One Flashcards

0
Q

Purposeful behavior

A

Individuals look to increase their utility (pleasure)

Economics realize impulse

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1
Q

Opportunity Cost

A

To obtain one good thing society forgoes the opportunity of getting the next best thing

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2
Q

Micro economics

A

Decisions making of individuals

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3
Q

Macro

A

Performance of the whole economy

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4
Q

Aggregate

A

Collection of specific economic units as if they are one unit

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5
Q

Positive economics

A

What is
Facts and cause/effect
Description theory development and testing

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6
Q

Normative economics

A

What should be

Value judgements and desirability of certain economic aspects

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7
Q

Individual Economic problem

A

Limited realities, unlimited wants

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8
Q

Budget line

A

Schedule or curve showing combinations of two products and how they go up and down
To obtain more of one you must give up the other

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9
Q

Society’s economizing problem

A

Where do we donate our resources?

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10
Q

Four factors of production

A

Land, labor, capital, (entrepreneurial ability)

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11
Q

PPC assumes

A

Full employment of resources, fixed resources and technology, two goods~~consumer goods (direct) and capital goods (efficiency)

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12
Q

Why is the PPC concave?

A

The law of increasing opportunity costs~~economic resources are not adaptable to alternate use

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13
Q

How can the PPC move?

A

Increase of resources, improvement of quality, trade and technology advances

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14
Q

Capital goods

A

Goods to produce other goods IE a factory. Lead to future economic growth

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15
Q

Does employment lead to shifts in the PPC?

A

NO. 4% unemployment is good. The employment moves the point not the curve

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16
Q

Marginal benefit in relation to total benefit

A

The slope of TB

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17
Q

Marginal cost

A

Slope of total cost

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18
Q

Direct relationship

A

Two variables move in the same direction

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19
Q

Inverse relationship

A

Two variables move in opposite directions

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20
Q

Economics

A

Social science examining how individuals and society make optimal choices under conditions of scarcity

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21
Q

Markets

A

Prices and profits lead to incentives

1) efficiency
2) incentives
3) freedom

22
Q

Circular flow

A

Households to firms~~household gives money to firms in exchange for goods and services
Firms give households rent wages interest and profit in exchange for land labor capital and entrepreunial ability

23
Q

Two aspects of an economic system

A

1) who runs the factor of production

2) method used to motivate coordinate and direct economic activity

24
Q

Two extremes of economic systems

A

Command system and laissez faire capitalism

25
Q

Command system

A

Government runs and owns almost everything with a central plan leading to socialism/communism
In reality soviets allowed some private ownerships

26
Q

Laissez faire capitalism

A

Pure capitalism when gvnmt has very little say and no society has ever done this

27
Q

Market System

A

Capitalism with a mixed economy and it relies on private property and freedoms
Dominant force is the market
The result is competition and incentives

28
Q

Private property

A

Encourages people to cooperate to ensure “mutually agreeable” transactions
Facilitates exchange
Includes intellectual property rights

29
Q

Freedoms

A

Freedom of enterprise ensures people can obtain resources

Freedom of choice

30
Q

Market

A

Institution bringing buyers and sellers together

31
Q

Specialization

A

Makes use of differences in ability
Fosters learning by doing
Saves time

32
Q

Geographic specialization

A

Regional and international specialization

33
Q

Five fundamental questions

A

1) what goods and services are produced?
2) how are they produced?
3) who gets them?
4) how will the system accommodate change?
5) how will it promote progress?

34
Q

Consumer sovereignty

A

Crucial to determine the types and quantities of goods produced
“Dollar votes”

35
Q

Competition

A

Eliminates high cost producers

36
Q

Absolute advantage

A

Country who specializes in one thing

Ends up being irrelevant

37
Q

Comparative advantage

A

Lower opportunity cost than other producer

38
Q

Terms of trade

A

Exchange ratio

Depends on world’s supply and demand

39
Q

Output problem

A

Two actors, what can they produce?

40
Q

Input problem

A

How much time will it take

41
Q

Fallacy of composition

A

The false notion that what is true for an individual is true for the whole group

42
Q

Product market

A

A system in which products or bought by households and sold by firms

43
Q

Two insurmountable problems of a command economy

A

Coordination and incentives

44
Q

For the 20th century what economic ills did people blame on the free marker capitalism?

A

Inflation recession depression and unemployment

45
Q

What was impressive about lenins Soviet Union

A

Industrialized a backwards society in a single generation

46
Q

Goals of central planning of the soviet system

A

Criminalment controlled the economy

Became a military industrial super power

47
Q

What did Oleg gordievsky reveal about the soviet economy

A

Devoted more than 50% of economy to military

48
Q

AWPA

A

Alaskanwilderness preservation act

49
Q

OSHA

A

Occupational safety and health administration

Protected workers

50
Q

Production surplus

A

Amount the seller is paid less the cost of production

51
Q

How do curved and straight PPCs differ

A

They do not

52
Q

What problems do economic systems face

A

How to allocate scarce resources among unlimited wants

How to decide what to produce how to produce and for whom to produce

AP Econ (15 decks)

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