[AP Microecon] Unit 1-2 Vocab

the social science dealing with the use of scarce resources to obtain the maximum satisfaction of society's virtually unlimited economic wants

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 consumption of a collection of goods and services)

the sacrifices of some or all of one economic goal, good, or service to achieve some other goal, good, or service

the part of economics concerned with the economy as a whole; with such major aggregates such as the household, business, and government sectors; and with measures of the total economy

the part of economics concerned with such individual units as industries, firms, and households and with individual markets, specific goods and services, and product and resource prices

statements based on facts and analysis to establish scientific generalizations about economic behavior

statements involving value judgements about what the economy should be like

economic resources: land, labor, capital, and entrepreneurial ability

the production of a good in the least cast way; occurs when production takes place at the output at which the ATC is at a minimum & marginal product per dollar's worth of input is the same for all inputs

the apportionment of resources among firms and industries to obtain the production of the products most wanted by society; MC = P or MB

products/services that satisfy human wants directly

human-made resources used to produce goods and services; goods that do not directly satisfy human wants

a curve showing the different combinations of two goods/services that can be produces in a full-employment, full-production economy where the available supplies of resources and tech are fixed

the amount of other products that must be forgone/sacrificed to produce a unit of a product

the principle that as the production of a good increases, the opportunity cost of producing an additional unit rises

an economy in which only the private decisions of consumers, resource suppliers, and firms determine how resources are allocated

a method of organizing an economy in which property resources are publicly owned/govt. uses central economic planning to direct and coordinate economic activities

a market in which households sell and firms buy resources/the services of resources

a market in which products are sold by firms and bought by households

a schedule showing the amounts of a good or service that buyers (or a buyer) wish to purchase at various prices during some time period

the principle that, other things equal, an increase in a product's price will reduce the quantity of it demanded and conversely for a decrease in price

the principle that as a consumer increases the consumption of a good or service, the marginal utility obtained from each additional unit of the good/service decreases

a change in the quantity demanded of a product that results from the change in real income caused by a change in the product's price

a change in the quantity demanded of a consumer good that results from a change in its relative expensiveness caused by a change in the product's price

a good/service whose consumption increases when income increases/fall when income decreases, price remaining constant

a good/service whose consumption declines when income increases (and conversely), price remaining constant

a schedule showing the amounts of a good or service that sellers (or a seller) will offer at various prices during some period

the principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and conversely

the amount by which the quantity supplied of a produce exceeds the quantity demanded at a specific price

the amount by which the quantity demanded of a product exceeds the quantity supplied at a particular price

a legally established maximum price for a good or service

a legally determined price above the equilibrium price

the ratio of the percentage change in quantity demanded of a product or resource to the percentage change in its price; a measure of the responsiveness of buyers to a change in the price of a product or resource

product or resource demand whose price elasticity is greater than 1. This means the resulting change in quantity demanded is greater than the percentage change in price

product or resource supply for which the price elasticity coefficient is less than 1. The percentage change in quantity supplied is less than the percentage change in price

product or resource demand in which quantity demanded can be of any amount at a particular product price; graphs as a horizontal supply curve

the ratio of the percentage change in quantity demanded of one good to the percentage change in the price of some other good. A positive coefficient indicates the two products are substitute goods; a negative coefficient indicates the two products are complementary goods

the ratio of the percentage change in quantity demanded of one good to the percentage change in consumer income; measures the responsiveness of consumer purchases to income changes

the principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility

the monetary payment a firm must make to an outsider to obtain a resource

the monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit

the payment made by a firm to obtain and retain entrepreneurial ability; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm

the total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called "pure profit" and "above-normal profit"

the principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease

any cost that in total does not change when the firm changes its output the cost of fixed resources

a cost that in total increases when the firm increases its output and decreases when the firm reduces its output

the sum of fixed cost and variable cost

reductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production

increases in the average total cost of producing a product as the firm expands the size of its plant (its output) in the long run

an economic condition where a company's inputs, like capital and labor, increase at the same rate as their outputs, or value of their goods