Ap Macroeconomics Formula Sheet – Flashcards
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Opportunity Cost
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highest-valued , next-best alternative that must be given up to obtain something.
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The concept of opportunity cost exists because of
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scarcity.
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All our wants cannot be satisfied because
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limited resources mean all the goods that we want can't be obtained.
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Economists are concerned with an individual's
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wants because the existence of wants leads to scarcity.
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Opportunity cost is the ____ on the PPC
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movement along the curve
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If opportunity cost is constant then...
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PPC is a negatively sloped straight line.
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The PPC reps the max. feasible production combinations resulting from
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the mix of current resources that utilizes all available inputs using current technology.
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The production possibilities curve represents
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all possible combinations of total output that can be produced.
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According to the law of increasing additional cost, the opportunity cost of producing
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corn is likely to increase as society tries to produce more corn.
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A country operates inside its PPC; this may be caused by
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unemployment
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The PPC bow curves out because
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of the law of increasing additional cost.
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When deriving the PPC, it is assumed that
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resources are efficiently used.
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A bowed PPC indicates
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the trade off between 2 goods is constant.
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When better technology is used in production, most likely what will happen is
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an outward shift of PPC
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One of the assumptions underlying the PPC is that
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the quantity of the resources available for the production of economic goods is fixed over a given time period.
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Technology is best defined as
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society's pool of applied knowledge concerning the production of goods and services.
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A technological improvement can cause the PPC to shift outward because
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maximum feasible outputs of both goods increase.
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Suppose the current unemployment rate is 15%. If it rises to 20%
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the economy will operate farther inside the PPC.
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A point outside a society's PPC is one that is
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unattainable given the resources of the society.
