AP Macro Unit 1 (all vocab)

manufactured goods used to make other goods and services.

an economy in which industry is publicly owned and a central authority makes production and consumption decisions.

economic measures that summarize data across many different markets.

the study of scarcity and choice.

a system for coordinating a society's productive and consumptive activities.

the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes.

rewards or punishments that motivate particular choices.

decisions by individuals about what to do, which necessarily involve decisions about what not to do.

the effort of workers.

all resources that come from nature, such as minerals, timber, and petroleum.

the branch of economics that is concerned with the overall ups and downs of the economy.

the study of the costs and benefits of doing a little bit more of an activity versus a little bit less.

an economy in which the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions.

the branch of economics that studies how individuals, households, and firms make decisions and how those decisions interact.

the branch of economic analysis that makes prescriptions about the way the economy should work.

the real cost of an item: what you must give up in order to get it.

the branch of economic analysis that describes the way the economy actually works.

establish ownership and grant individuals the right to trade goods and services with each other.

anything that can be used to produce something else.

in short supply; when a resource is not available in sufficient quantities to satisfy all the various ways a society wants to use it.

the economy's total production of goods and services for a given time period.

the alternation between economic downturns, known as recessions, and economic upturns, known as expansions.

a falling overall price level.

a very deep and prolonged downturn.

an increase in the maximum amount of goods and services an economy can produce.

the number of people who are currently working for pay in the economy.

a period of economic upturn in which output and employment are rising; also referred to as recovery.

a rising overall price level.

the number of people who are either actively employed for pay or unemployed and actively looking for work; the sum of employment and unemployment.

a simplified representation used to better understand a real-life situation.

in the development of a model, the assumption that all other relevant factors remain unchanged; also known as the ceteris paribus assumption.

the quantity of goods and services produced.

when the overall price level is changing only slowly if at all.

a period of economic downturn when output and employment are falling.

the percentage of the labor force that is unemployed.

the number of people who are actively looking for work but aren't currently employed.

achieved by an economy if it produces at the point along its production possibilities curve that makes consumers as well off as possible.

describes a market or economy in which there is no way to make anyone better off without making at least one person worse off.

illustrates the trade-offs facing an economy that produces only two goods; shows the maximum quantity of one good that can be produced for each possible quantity of the other good produced.

achieved by an economy if it produces at a point on its production possibilities curve.

the technical means for producing goods and services.

when you give up something in order to have something else.

the advantage conferred by the ability to produce more of a good or service with a given amount of time and resources; not the same thing as comparative advantage.

the advantage conferred by an individual if the opportunity cost of producing the good or service is lower for that individual than for other people.

an economic principle that states that people can get more of what they want through trade than they could if they tried to be self-sufficient; this increase in output is due to specialization.

each person specializes in the task that he or she is good at performing.

indicate the rate at which one good can be exchanged for another.

when individuals provide goods and services to others and receive goods and services in return.

a shift of the demand curve, which changes the quantity demanded at any given price.

a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold.

two goods (often consumed together) for which a rise in the price of one of the goods leads to a decrease in the demand for the other good.

a graphical representation of the demand schedule. It shows the relationship between quantity demanded and price.

shows how much of a good or service consumers will be willing and able to buy at different prices.

illustrates the relationship between quantity demanded and price for an individual consumer.

when a rise in income decreases the demand for a good; usually considered less desirable than more expensive alternatives.

the "law" that a higher price for a good or service, other things being equal, leads people to demand a smaller quantity of that good or service.

a change in the quantity demanded of a good that is the result of a change in that good's price.

when a rise in income increases the demand for a good; most goods are normal goods.

the actual amount of a good or service consumers are willing and able to buy at some specific price.

two goods for which a rise in the price of one of the goods leads to an increase in the demand for the other good.

a model of how a competitive market works.

a shift of the supply curve, which changes the quantity supplied at any given price.

illustrates the relationship between quantity supplied and price for an individual producer.

a good or service that is used to produce another good or service.

the "law" that, other things being equal, the price and quantity supplied of a good are positively related.

a change in the quantity supplied of a good arising from a change in the good's price.

the actual amount of a good or service people are willing to sell at some specific price.

shows the relationship between the quantity supplied and the price.

shows how much of a good or service producers would supply at different prices.

the price of a good at which the quantity demanded of that good equals the quantity supplied of that good.

the quantity of a good bought and sold at its equilibrium price.

an economic situation when no individual would be better off doing something different; a competitive market is in equilibrium when the price has moved to a level at which the quantity demanded of goods equals the quantity supplied of that good.

when the quantity supplied of a good or service exceeds the quantity demanded; occurs when the price is above its equilibrium level and is also known as excess supply.

the value of foregone mutually beneficial transactions.

the price of a given quantity at which consumers will demand that quantity.

gives its owner the right to supply a good or service; a form of quantity control, as only those who are licensed can supply the good or service.

an upper limit on the quantity of some good that can be bought or sold.

the earnings that accrue to the license-holder from ownership of the right to sell the good.

the price of a given quantity at which producers will supply that quantity.

the difference between the demand price and the supply price of a good, often created by a quota.

legal restrictions on how high or low a market price may go; typically take the form of either a price ceiling or a price floor.

a market in which goods or services are bought and sold illegally--either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling.

a form of inefficiency resulting from price floors in which those who would be willing to sell the good at the lowest price are not always those who manage to sell it.

a form of inefficiency often resulting from price ceilings in which people who want a good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are only willing to pay a relatively low price do get it.

a form of inefficiency resulting from price floors in which sellers offer high-quality goods at a high price, even though buyers would prefer a lower quality at a lower price.

a form of inefficiency resulting from price ceilings in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price.

a legal floor on the hourly wage rate paid for a worker's labor.

a maximum price that sellers are allowed to charge for a good or service.

a minimum price that buyers are required to pay for a good or service.

a form of inefficiency in which people expend money, effort, and time to cope with the shortages caused by the price ceiling or surpluses caused by the price floor.