AP Microeconomics - Assignment Essays %

question

Scarcity

answer

limited quantities of resources to meet unlimited wants

question

Economics

answer

the study of how people seek to satisfy their needs and wants by making choices

question

Theoretical Economics

answer

process of deriving theories and principles. systematically arrange facts (cause and effect order), interpret and generalize from them.

question

Policy Economics

answer

The formulation of courses of action to bring about desired economic outcomes or to prevent undesire or occurences.

question

Positive

answer

Based on fact and avoids value judgement

question

Normative

answer

Includes value judgement

question

Marginal

answer

Additional

question

5 Key Economic Assumptions

answer

1. Scarcity
2. Trade - Offs
3. Self - Interests
4. Compare Marginal Benefit vs. Marginal Cost
5. Simplified Models and Graphs

question

Trade - Offs

answer

all the alternatives that we give up whenever we choose one course of action over others

question

Opportunity Cost

answer

the most desirable alternative given up as a result of a decision

question

Utility

answer

Satisfaction

question

Allocate

answer

Distribute

question

Shortage

answer

occur when producers will not or cannot offer goods or services at current prices. They are temporary.

question

Price

answer

the amount the consumer pays

question

Cost

answer

the amount sellers pay to produce a good

question

Investment

answer

the money spent by businesses to improve their production

question

Goods

answer

physical objects that satisfy needs and wants

question

Consumer Good

answer

created for direct consumption

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Capital Good

answer

created for indirect consumption or production of consumer goods

question

Services

answer

action or activity that one person performs for another

question

4 Factors of Production

answer

1. Land
2. Labor
3. Capital
4. Entrepreneurship

question

3 Economic Systems

answer

1. Centrally Planned Economy
2. Free Market Economy
3. Mixed Economy

question

Centrally Planned Economy

answer

Government controls the factor of production

question

Free Market Economy

answer

Factors of production are owned entirely by the people with no government intervention

question

Mixed Economy

answer

Factors of production are owned by the people, but there is some government intervention

question

4 Key Assumptions of a PPC

answer

1. Only 2 Goods Can Be Produced
2. Full Employment of Resources
3. Fixed resources (Ceteris Paribus)
4. Fixed Technology

question

Law of Increasing Opportunity Cost

answer

The more product produced, the greater the opportunity cost because resources are NOT easily adaptable to producing both goods

question

Per Unit Opportunity Cost

answer

= Cost / Gain

question

Shifters of the PPC (3)

answer

1. Change in resource quantity
2. Change in technology
3. Change in trade

question

Productive Efficiency

answer

Any point ON the PPC

question

Allocative Efficiency

answer

Products produced are the ones desired by society

question

Capital goods increase _____

answer

Future Growth

question

Absolute Advantage

answer

makes the most OR requires the least amount of resources

question

Comparative Advantage

answer

producer with the lowest opportunity cost

question

Input Problems

answer

Other number goes Under

question

Output Problems

answer

Other number goes Over

question

Demand

answer

the different quantities of goods that consumers are WILLING and ABLE to buy at different prices

question

Law of Demand

answer

There is an inverse relationship between price and quantity demand

question

The Substitution Effect

answer

occurs when consumers react to an increase in a good's price by consuming less of that good and more of another substitute good

question

The Income Effect

answer

occurs as a price changes, the purchasing power of people changes while they have an unchanging income

question

Law of Diminishing Marginal Utility

answer

as consumers consume more units of any good, the additional satisfaction from each additional unit will begin to decrease

question

Demand Curve Shifters (5)

answer

1. Change in Taste and Preference
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations

question

Supply

answer

the different quantities of a good that sellers are WILLING and ABLE to sell at different prices

question

Supply Curve Shifters (6)

answer

1. Prices / Availability of Inputs
2. Number of Sellers
3. Technology
4. Government Action
5. Opportunity Cost of Alternate Production
6. Expectation of Future Profit

question

Double Shifters

answer

If 2 curves shift at the same time, either price or quantity will be indeterminate

question

Consumer Surplus

answer

Consumer Max - Sold Price

question

Producer Surplus

answer

Sold Price - Producer Min

question

Price Ceiling

answer

Effective Below equilibrium, caps the price of goods for consumer benefit, creates a shortage

question

Price Floor

answer

Effective Above equilibrium, raises the price above equilibrium for producer benefit, creates a surplus

question

Quota

answer

Government imposed limit on the production of a good

1 of 50

question

Scarcity

answer

limited quantities of resources to meet unlimited wants

question

Economics

answer

the study of how people seek to satisfy their needs and wants by making choices

question

Theoretical Economics

answer

process of deriving theories and principles. systematically arrange facts (cause and effect order), interpret and generalize from them.

question

Policy Economics

answer

The formulation of courses of action to bring about desired economic outcomes or to prevent undesire or occurences.

question

Positive

answer

Based on fact and avoids value judgement

question

Normative

answer

Includes value judgement

question

Marginal

answer

Additional

question

5 Key Economic Assumptions

answer

1. Scarcity
2. Trade - Offs
3. Self - Interests
4. Compare Marginal Benefit vs. Marginal Cost
5. Simplified Models and Graphs

question

Trade - Offs

answer

all the alternatives that we give up whenever we choose one course of action over others

question

Opportunity Cost

answer

the most desirable alternative given up as a result of a decision

question

Utility

answer

Satisfaction

question

Allocate

answer

Distribute

question

Shortage

answer

occur when producers will not or cannot offer goods or services at current prices. They are temporary.

question

Price

answer

the amount the consumer pays

question

Cost

answer

the amount sellers pay to produce a good

question

Investment

answer

the money spent by businesses to improve their production

question

Goods

answer

physical objects that satisfy needs and wants

question

Consumer Good

answer

created for direct consumption

question

Capital Good

answer

created for indirect consumption or production of consumer goods

question

Services

answer

action or activity that one person performs for another

question

4 Factors of Production

answer

1. Land
2. Labor
3. Capital
4. Entrepreneurship

question

3 Economic Systems

answer

1. Centrally Planned Economy
2. Free Market Economy
3. Mixed Economy

question

Centrally Planned Economy

answer

Government controls the factor of production

question

Free Market Economy

answer

Factors of production are owned entirely by the people with no government intervention

question

Mixed Economy

answer

Factors of production are owned by the people, but there is some government intervention

question

4 Key Assumptions of a PPC

answer

1. Only 2 Goods Can Be Produced
2. Full Employment of Resources
3. Fixed resources (Ceteris Paribus)
4. Fixed Technology

question

Law of Increasing Opportunity Cost

answer

The more product produced, the greater the opportunity cost because resources are NOT easily adaptable to producing both goods

question

Per Unit Opportunity Cost

answer

= Cost / Gain

question

Shifters of the PPC (3)

answer

1. Change in resource quantity
2. Change in technology
3. Change in trade

question

Productive Efficiency

answer

Any point ON the PPC

question

Allocative Efficiency

answer

Products produced are the ones desired by society

question

Capital goods increase _____

answer

Future Growth

question

Absolute Advantage

answer

makes the most OR requires the least amount of resources

question

Comparative Advantage

answer

producer with the lowest opportunity cost

question

Input Problems

answer

Other number goes Under

question

Output Problems

answer

Other number goes Over

question

Demand

answer

the different quantities of goods that consumers are WILLING and ABLE to buy at different prices

question

Law of Demand

answer

There is an inverse relationship between price and quantity demand

question

The Substitution Effect

answer

occurs when consumers react to an increase in a good's price by consuming less of that good and more of another substitute good

question

The Income Effect

answer

occurs as a price changes, the purchasing power of people changes while they have an unchanging income

question

Law of Diminishing Marginal Utility

answer

as consumers consume more units of any good, the additional satisfaction from each additional unit will begin to decrease

question

Demand Curve Shifters (5)

answer

1. Change in Taste and Preference
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations

question

Supply

answer

the different quantities of a good that sellers are WILLING and ABLE to sell at different prices

question

Supply Curve Shifters (6)

answer

1. Prices / Availability of Inputs
2. Number of Sellers
3. Technology
4. Government Action
5. Opportunity Cost of Alternate Production
6. Expectation of Future Profit

question

Double Shifters

answer

If 2 curves shift at the same time, either price or quantity will be indeterminate

question

Consumer Surplus

answer

Consumer Max - Sold Price

question

Producer Surplus

answer

Sold Price - Producer Min

question

Price Ceiling

answer

Effective Below equilibrium, caps the price of goods for consumer benefit, creates a shortage

question

Price Floor

answer

Effective Above equilibrium, raises the price above equilibrium for producer benefit, creates a surplus

question

Quota

answer

Government imposed limit on the production of a good

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