AP Economics Vocab Chapter 1-3 – Flashcards
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after this, therefore because of this fallacy
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the fallacy in reasoning that ust because event A precedes event B, A caused B
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aggregate
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the ombining of individual units of data into one unit or number
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economics
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the social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited conomic wants
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economic perspective
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a viewpoint that envisions individuals and instituations making rational decisions by comparin the marginal beefits and marginal costs asssociated with their actions
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fallocy of composition
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the false notion that what is true for the individual (or part) is necessarily true for the group (or whole)
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generalizations
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statement of the nature of the relationsip between two or more sets of facts
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macroeconomics
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the part of economics concerned with the economy as a whole; with such major aggregates as the household, buisness, nd government sectors; and with measures of the total economy
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marginal analysis
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the comparrison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making
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microeconomics
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the part of economics concerned with such individual units as industries, firms, and households and with additional markets, specific goods, and services and product and resource prices
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normative economics
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the part of conomics involving value judgemens about what the conomy should be like, focused on which economic goals and policies should be implemented; policy economics
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other things equal assumtion
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the assumption taht factors other than those being considered are held constant
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principles
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statments about economic behavior or the economy that enable prediction of the probably effects of certain actions
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policy economics
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the formulation of courses of action to bring about desired conomic outcomes or to prevent undesired occurances
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positive economics
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the analysis of facts or data to establish scientific generalizations about economic behavior
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scientific method
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the procedure for the sustematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws
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theoretical economics
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the process of deriving and applying economic theories an princiles
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tradeoff
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the sacrifice of someor all ofones economic goal, good, or service to achieve some other good, goal, or service
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utility
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the want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumtion of a colletion of goods or services)
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allocative efficiency
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the apportionment of resources ams and industries to obtain the production of the products most wanted bys ociety (consumers); the output of each poduct at which its marginal cost and price or marginal benefit are equal
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capital
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human-made resources used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods
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capital goods
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human-made resources used to produce goods and services; goods that do not directly satisfy human wants
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capitalism
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an economic system in which property resources are privately owned and markets and prices are used to direct and coordinate economic activities
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circular flow model
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the flowof resources from households to firms and of products from firms to households
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command system
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A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; command economy; communism
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consumer goods
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products and services that satisfy human wants directly
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economic growth
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an outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology
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economic resources
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the land, labor, capital, and entrepreneurial ability that are used in the production of goods and services; productive agents; factors of production
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economic system
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A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy, of which the market system and the command system are the two general types.
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economizing problem
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the choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce)
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entrepreneurial ability
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the human resource that combines the other resources to product a product, makes nonroutine decisions, innovates, and bears risk
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factors of production
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economic resources:land, capital, labor, and entrepreneurial ability
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full employment
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the use of all available resources to produce want-satisfying goods and services
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full production
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employment of available resources so taht the maximum amount of (or total value of) goods and services is produced
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investment
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spending for the production and accumulation of capital and additions to inventories
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labor
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people's physical and mental talents and efforts taht are used to help produce goods and services
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land
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natural resources used to produce goods and services
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law of increasing opportunity cost
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the principle that as the production of a good increases, the opportunity cost of producing an additional unit rises
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market system
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all the product and resource markets of a market economy and the relationships among them
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opportunity cost
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the amount of other products that must be forgone or sacrificed to produce and a unit of the product
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product market
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a market in which products are sold by firms and bought by households
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productive efficiency
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the production of a goodin the lease costly way
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production possibilities curve
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a curve showing the different combinations of two goods or services that can be produced i a full-employment, full-production economy where the available supplies of resources and technology are fixed
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production possibilities table
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a table showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the availble supplies of resources and technology are fixed
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resource market
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a maret in which households sell and firms buy resources or the service of resources
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change in demand
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a change in the quantity demanded of a good or service at every price
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change in the quantity supplied
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a price change causing movement along the supply curve but no shift in the position of the curve itself
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change in the quantity demanded
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a movement along the demanded curve for goods in response for a change in the price of goods
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change in supply
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a change in the quantity supplied of a good or service at every price
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complementary goods
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products and services that are used together
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demand
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a schedule showing the amounts of a good or service that buyes wish to purchase at various prices during some time period
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demand curve
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a curve illustrating demand
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demand schedule
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a list of prices and correstponding quantities demadned
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deteminants of demand
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factors other than price that determine the quantities demanded of a good or service
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determinants of supply
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factors other than price that determine the quantities supplied of a good or service
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diminishing marginal utility
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the marginal utility of a good or servce is the utility gained or lost from an increase or decrease in teh consumption of that good or service
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equiibrium price
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he price in a competetive market at which the quantity demanded and the quantity supplied are equal, there is neither a shortage nor a surplus, and there is no tendency for price to rise or fall
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equilibrium quantity
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the quantity demanded and supplied at the equilibrium price in a competeivie market; the profit-maximizing output of a firm
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income effect
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achange in the quantity demaded of a product tha results from the change in real income caused by a change in the products price
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inferior goods
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a good or service whose consumption declines as income rises (and conversely)
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law of demand
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the principle that, other things equal, an increase in a product's price will reduct the quantity demanded, and conversely for a decreas in price
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law of supply
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the princi, other things equal, an increase in the price of a product will increase the quantity of it supplid,and converselfr a decrease in price
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market
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any institution or mechanism that brings together buyers and sellers of a particular good or service market
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normal goods
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a good or service whose consumption increases when incme increases and falls when income decreases, pric remaining constant
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price floor
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a legally determined price above the equilibrium price
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price ceilling
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a legally established maximum price for a good or service
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rationing function of prices
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the ability of market forces in competitive markets to equalize quantity demadned adn quantity supplied and to eliminate shortages and surpluses via cahnges in prices
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shortage
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the amount by which the quantity demanded of a product exceeds the quantity supplied at a particular price
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substitute goods
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products or servies that can be used in place of each other
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supply
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a schedule showing the amounts of a good or service hat sellers will offer at various prices during some period
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supply curve
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a curve illustrating supply
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supply schedule
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a tabular presentation of supply showing the price and quantity supplied of a particular good, all else being equal
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surplus
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the amount by which the quantity supplied of a product exceeds the quantity demandd at a specific price
