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Vertical Axis
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The vertical number line of a graph along which values of the y-variable are measured. y-axis, price.
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Horizontal Axis
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X-axis, quantity horizontal.
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Slope
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Rate of change in y in response to a change in x.
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Positive Slope
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Increase in value (direct relationship) (supply curve).
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Negative Slope
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Decrease in value (inverse relationship) (demand curve).
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Economics
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Is an attempt to overcome scarcity, trade-offs, and opportunity costs.
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Scarcity
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Insufficient resources to satisfy unlimited wants.
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Opportunity Cost
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True cost of something including what is given up to get it; "value lost".
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Factors of Production
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1. Land=naturally occurring resource.
2. Labor=human effort in production process.
3.Capital=value of all assets; including money, equipment, buildings, tools, and inventory.
2. Labor=human effort in production process.
3.Capital=value of all assets; including money, equipment, buildings, tools, and inventory.
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Entrepreneurship
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Risk taking by individuals and business firms.
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Property Rights
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System in which valuable items have specific owners who can dispose of them as they choose.
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Role of incentives
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Possibility of personal gain; what motivates people to be involved in the market system and is a major contributor of efficiency in the market economy.
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Law of Diminishing Marginal Returns
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When increasing amounts of a variable factor of production are employed in a production along with a fixed fixed production factor, after some point the amount produced will diminish.
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Opportunity Cost example
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Take a nap and lose out on watching t.v.; The t.v. time is the opportunity cost.
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4 Factors of Production
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1. Land=water, trees, minerals
2. Labor=workers
3.Entrepreneurship=take risks needed to start and maintain a business
4.Capital=financial capital is the money needed to pay for venture, physical capital for buildings and equpment.
2. Labor=workers
3.Entrepreneurship=take risks needed to start and maintain a business
4.Capital=financial capital is the money needed to pay for venture, physical capital for buildings and equpment.
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Role of Incentives
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Motivates people to be involved with a market system, ex) spending more time studying certain test material, since my incentive for extra hours of study is a good grade, (Hourly vs. Commission Employees)-incentive to try harder or develop more skill.
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Production Possibilities Curve (PPC)
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Graphical representation of the combination of 2 goods and/or services that can be produced by an economy when using resources efficiently, can shift ONLY because of factors of production or trade.
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Countries that produce capital goods
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Have more growth since capital is a resource.
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Production Possibilities Frontier (PPF)
*AP exam
*AP exam
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Graphical representation of the combination of 2 goods and/or services that can be produced by an economy when using resources efficiently.
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Trade-off
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The act of giving up one thing to have more of another.
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Economic Growth
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Changes in total output of a nation overtime as a result of increased production, income, and wealth.
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Inefficiency
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The waste that stems from unproductive use of resources, ex) unemployment.
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