AP Microeconomics Unit 1 Basic Economic Concepts

question

Scarcity

answer

Unlimited wants and needs but limited resources to meet those needs

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Trade Off

answer

Having to choose between two options

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Opportunity Cost

answer

The second best alternative given up when making a choice

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Marginal Benefit

answer

The additional benefit earned when doing one more of something

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Marginal Cost

answer

The additional cost faced when doing one more of something

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Production possibilities curve

answer

Graph of production options between two goods/services given then available resources

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Increasing production possibilities curve

answer

Graph of production options where the opportunity cost of producing is increasing

question

Decreasing production possibilities curve

answer

Graph of production options where the opportunity cost of producing is decreasing

question

Constant production possibilities curve

answer

Graph of production options where the opportunity cost of producing is constant

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Law of increasing costs

answer

The idea that as you produce more of something, your costs will at first decline, then level off, then rise

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Comparative Advantage

answer

Producing goods and services at a lower opportunity cost than someone else

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Absolute Advantage

answer

Producing more of a good or service than someone else

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Specialization

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Focusing on one task and becoming an expert at that job

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Productive Efficiency

answer

Producing goods and services at the minimum cost

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Allocative Efficiency

answer

Producing the most amount of goods and services possible

question

Economic Growth

answer

Producing more goods or services than you produced in previous time periods

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Market Economy

answer

Economic system in which the consumers and producers make all decisions

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Command Economy

answer

Economic system in which the government makes all decisions

1 of 18

question

Scarcity

answer

Unlimited wants and needs but limited resources to meet those needs

question

Trade Off

answer

Having to choose between two options

question

Opportunity Cost

answer

The second best alternative given up when making a choice

question

Marginal Benefit

answer

The additional benefit earned when doing one more of something

question

Marginal Cost

answer

The additional cost faced when doing one more of something

question

Production possibilities curve

answer

Graph of production options between two goods/services given then available resources

question

Increasing production possibilities curve

answer

Graph of production options where the opportunity cost of producing is increasing

question

Decreasing production possibilities curve

answer

Graph of production options where the opportunity cost of producing is decreasing

question

Constant production possibilities curve

answer

Graph of production options where the opportunity cost of producing is constant

question

Law of increasing costs

answer

The idea that as you produce more of something, your costs will at first decline, then level off, then rise

question

Comparative Advantage

answer

Producing goods and services at a lower opportunity cost than someone else

question

Absolute Advantage

answer

Producing more of a good or service than someone else

question

Specialization

answer

Focusing on one task and becoming an expert at that job

question

Productive Efficiency

answer

Producing goods and services at the minimum cost

question

Allocative Efficiency

answer

Producing the most amount of goods and services possible

question

Economic Growth

answer

Producing more goods or services than you produced in previous time periods

question

Market Economy

answer

Economic system in which the consumers and producers make all decisions

question

Command Economy

answer

Economic system in which the government makes all decisions

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