AP®︎ Macroeconomics: Unit 1 Flashcards

The inputs used to produce goods and services: land, labor, capital, and entrepreneurship.

Natural resources used in production, such as water, minerals, forests, and oil.

Human effort, skills, and time used to produce goods and services.

Man-made resources used to produce other goods and services, including physical and human capital.

Physical capital is man-made productive equipment; human capital is workers' education, skills, and knowledge.

The ability to combine resources and take risks to create goods, services, or businesses.

Every economy must decide what to produce, how to produce, and for whom to produce.

Traditional, command, market, and mixed systems differ in how they allocate scarce resources.

The condition in which limited resources force choices among competing uses and cannot satisfy unlimited wants.

All the alternatives given up when a choice is made; getting more of one good requires producing less of another.

The value of the next best alternative forgone, or the amount of one good given up to produce one more unit of another good.

A graph showing maximum output combinations of two goods using fixed resources and technology.

Two goods are produced, resources are fixed, and technology is fixed.

What is given up divided by the amount gained of the other good.

Using all available resources to produce the maximum possible output.

Producing the combination of goods most preferred by society.

Output inside the curve, showing some resources are idle or misallocated.

A point outside the curve that cannot be produced with current resources and technology.

Producing more tools and machinery now can increase future productive capacity.

Constant cost makes a straight line; increasing cost bows outward; decreasing cost bows inward.

Changes in resources or technology shift the curve outward for growth or inward for contraction.

A situation where all available resources are fully used, shown by points on the curve.

The ability to produce more output with the same resources, or the same output with fewer resources.

The ability to produce a good or service at a lower opportunity cost than another producer.

Output compares goods produced from resources; input compares resources needed to produce one unit.

In output, choose the higher production; in input, choose the lower resource requirement.

Find per-unit opportunity cost; in output use give up/gain, in input use gain/give up; lower cost wins.

Each producer focuses on the good with the lower opportunity cost.

A country exports the good with lower opportunity cost and imports the good with higher opportunity cost.

The exchange ratio between goods that must fall between both producers’ opportunity costs.

Specialization and trade let producers consume beyond their own production possibilities curve.

The quantities consumers are willing and able to buy at various prices.

The amount consumers are willing and able to buy at a specific price.

As price rises, quantity demanded falls; as price falls, quantity demanded rises.

A downward-sloping graph showing quantities demanded at different price levels.

A movement along the same curve caused only by a change in the good's price.

Higher consumer income usually increases demand, while lower income usually decreases demand.

More consumers increase market demand; fewer consumers decrease market demand.

If a substitute's price rises, demand increases; if it falls, demand decreases.

If a complement's price falls, demand increases; if it rises, demand decreases.

Expected higher future prices raise current demand; expected lower future prices reduce current demand.

Greater consumer preference increases demand, while weaker preference decreases demand.

Nonprice factors like income, buyers, substitutes, expectations, complements, and tastes shift demand.

A leftward or rightward shift of the demand curve caused by a nonprice factor.

As price rises, quantity supplied rises; as price falls, quantity supplied falls.

An upward-sloping graph showing the positive relationship between price and quantity supplied.

Nonprice factors that shift supply: resources, other good prices, taxes, technology, expectations, and sellers.

Lower input costs increase supply; higher input costs decrease supply.

If alternative products become more profitable, producers shift resources away, reducing current supply.

Higher production taxes or stricter rules decrease supply; lower taxes or fewer rules increase it.

Better production methods increase supply by lowering costs or raising productivity.

Beliefs about future prices or profits can increase or decrease current supply.

More firms in a market increase supply; fewer firms decrease supply.

The whole curve shows all amounts offered at different prices, while one point shows a specific price amount.

Price changes move along the curve, while nonprice factors shift the entire curve.

A market condition where quantity demanded and quantity supplied are unequal.

A condition where quantity supplied exceeds quantity demanded at a given price.

A condition where quantity demanded exceeds quantity supplied at a given price.

Surpluses push price down, while shortages push price up until quantities are equal.

Subtract the smaller quantity from the larger at the disequilibrium price.

Demand or supply shifts create a new equilibrium price and quantity.

Raises equilibrium price and equilibrium quantity, assuming supply is unchanged.

Lowers equilibrium price and equilibrium quantity, assuming supply is unchanged.

Lowers equilibrium price and raises equilibrium quantity, assuming demand is unchanged.

Raises equilibrium price and lowers equilibrium quantity, assuming demand is unchanged.

The market-clearing point where quantity demanded equals quantity supplied at one price.