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

Unit 1 (Ch. 1-5) Vocabulary Flashcards

(53 cards)

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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

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A

claims that attempt to prescribe how the world should be

23
Q

absolute advantage

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A

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

24
Q

opportunity cost

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A

whatever must be given up to obtain some item

25
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
26
imports
goods produced abroad and sold domestically
27
exports
goods produced domestically and sold aborad
28
market
a group of buyers and sellers of a particular good or service
29
competitive market
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
30
quantity demanded
the amount of a good that buyers are willing and able to purchase
31
law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
32
demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
33
demand curve
a graph of the relationship between the price of a good and the quantity demanded
34
normal good
a good for which, other things equal, an increase in income leads to an increase in demand
35
inferior good
a good for which, other things equal, an increase in income leads to decrease in demand
36
substitutes
two goods for which an increase in the price of one leads to an increase in the demand for the other
37
complements
two goods for which an increase in the price of one leads to a decrease in the demand for the other
38
quantity supplied
the amount of a good that sellers are willing and able to sell
39
law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
40
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
41
supply curve
a graph of the relationship between the price of a good and the quantity supplied
42
equilibrium
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
43
equilibrium price
the price that balances quantity supplied and quantity demanded
44
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
45
surplus
a situation in which quantity supplied is greater than quantity demanded
46
shortage
a situation in which quantity demanded is greater than quantity supplied
47
law of supply and demand
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
48
elasticity
a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants
49
price elasticity of demand
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
total revenue
the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold
51
income elasticity of demand
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
cross-price elasticity of demand
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
price elasticity of supply
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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