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AP Macroeconomics Unit 1: Basic Economic Concepts
Terms in this set (36)
The economic condition in which limited resources are met with unlimited wants and needs.
The set of all available alternatives, when one makes a choice.
The most desirable alternative given up when one makes a decision.
The power of consumers to decide what gets produced.
The study of how choices are made given the fundamental condition of scarcity.
The land, labor, capital (human and physical), and entrepreneurship used to produce all goods and services.
All natural resources used in the production of goods and services
The human effort provided in the creation of goods and services.
Any man made tool used in the production of a good or a service.
knowledge or training utilized by workers (labor) in the production of a good.
Any good produced for direct consumption by consumers
Any good produced for indirect consumption by consumers
Statements based upon facts
Statements that include value judgements
Decisions based upon the additional benefit and additional cost.
The additional utility generated from the addition of one more unit of something.
When a producer cannot afford to offer goods or services at current prices.
The amount a buyer pays for a good or service
The amount a producer pays to produce a good or service
Money spend by businesses to improve their production
An ambitious business leader who's quest for profit leads them to develop and market new goods and services.
Production Possibilities Curve
An economic model that shows the alternative ways that an economy can utilize it's scarce resources.
"All else remains equal (or the same)"
Products are being produced in the least costly way
The products being produced are the ones that are most desired by society
"Let it be" the economic phrase that refers to the government not intervening in a market.
An Economy where the productive resources are allocated by the government.
Free Market Economy
Economy where the productive resources are allocated by private businesses and individuals. Driven by profit motive.
Mixed Market Economy
Economy where resources are allocated by private businesses, individuals and varying degrees of government intervention.
"The Invisible Hand"
Adam Smith's idea economies are driven by profit motive and regulated by competition.
When a person, company, or country can produce a good or service at a lower cost than another can.
When a person, company, or country can produce a good or service at a lower opportunity cost than another can.
The study of the small units within the economy.
The study of large economic systems.
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