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Ap Economic Terms
Study for test
| Term | Definition |
|---|---|
| Scarcity | The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. |
| Factors of Production | The inputs that are used in the production of goods or services in the attempt to make an economic profit. |
| Law of Supply | All else equal, an increase in price results in an increase in quantity supplied. (Price and Quantity) |
| Law of Demand | All else being equal, the price of a product increases, quantity demand falls. Product goes down and demand goes up. |
| Efficiency | Every resource is optimally allocated to serve each person in the best way while minimizing waste and inefficiency. |
| Strong Dollars | U.S. dollar has risen to a level against another currency that is near historically high exchange rates for other products. |
| Weak Dollars | U.S. dollar can exchange for fewer due to changes in the interest rate and outlook on the U.S. economy's future. |
| Quantity Supplied | The quantity of commodity that producers are willing to sell at a particular price at a particular point of time. |
| Quantity Demand | The quantity of a commodity that people are willing to buy at a particular price at a particular point of time. |
| Characteristics of Competitive Market | Many Buyers and Sellers. Few if Any Barriers to Exit or Entry. Homogeneous Products. Marginal Cost Equals Marginal Revenue. |
| Fundamental Questions of Economics | 1. What will be produced? 2. How will the goods and services be produced? 3. Who will get goods and services? 4. How will the system accommodate changes? |
| Non-Price Competition | One firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship. |
| Monopoly | There is only one producer/seller for a product. (Single business industry). Market is restricted due to high costs or other impediments (economic, social or political). |
| Main Principle of Adam Smith's "The Wealth of Nation's" | business prospers by finding out what people want and providing it |
| Shortage | (Excess demand), when the demand for a product or service exceeds it's supply in the market. |
| Surplus | The amount of an asset or resource that exceeds the portion that is utilized. (Excess assets including income, profits, capital and goals). |
| Externalities in American Economy, Pros and Neg. | Pros: benefits whole economy like education. Neg: Pollution |
| Market Economy | Decisions regarding investment, production and distribution are based on supply and demand and prices of goods and services are determined in free price system |
| Command Economy | Govt. determines what goods should be produced, how much should be produced and the price at which goods will be offered for sell (communist) |
| Traditional Economy | Traditions, customs and beliefs shape the goods and services the economy produces, as well as the rules and manner of their distribution. (rural) |
| Mixed Economy | Economic system combining private and public enterprise |
| Price Ceiling | Govt. imposed price control or limit on how high a price is charged for a product. To protect consumers from conditions that could make necessary commodities unattainable. |
| Price Floor | A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product. A price floor must be higher than the equilibrium price in order to be effective. |
| Unemployment | the state of being unemployed. |
| Unemployment Rate | The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. |
| Full Employment | the level of employment rates where there is no cyclical or deficient-demand unemployment. |
| Structural Unemployment | A longer-lasting form of unemployment caused by fundamental shifts in an economy. (Lack job skill) |
| Underemployment | the term used to designate the situation of those who are able to find employment only for shorter than normal periods—part-time workers, seasonal workers, or day or casual workers. |
| Seasonal Employment | An elevated level of unemployment that is expected to occur at certain parts of the year. |
| Net National Product | Gross national product (GNP) less allowances for capital consumption. |
| Gross Domestic Product | The value of a country's overall output of goods and services. |
| Signaling Theory | one party (termed the agent) credibly conveys some information about itself to another party (the principal). |
| Right-to-Work Law | statutes in a number of states in the United States that prohibit union security agreements, or agreements between labor unions and employers. |
| What Increases Supply | When the consumers want more of a product or when the seller buys too much. |
| What Increases Demand | When consumers want it usually during seasonal times or when the price is lowered. |
| Perfect Competition | no participants are large enough to have the market power to set the price of a homogeneous product. |
| Federal Income Tax as a Progressive Tax | progressive: on average, households with higher incomes pay a larger share of their income. |
| Marginal Analysis | The process of identifying the benefits and costs of different alternatives by examining the incremental effect on total revenue. |
| Marginal Costs | the change in the total cost when the quantity produced changes by one unit. |
| Fixed Costs | indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business. |
| Comparative Advantage | if countries specialize in producing goods where they have a lower opportunity cost – then there will be an increase in economic welfare. |
| Absolute Advantage | to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service. |
| State Revenues | obtain the largest portion of tax revenues from property taxes and sales and gross receipts taxes. |
| Federal Revenues | individual income taxes, payroll taxes, and corporate income taxes. |
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Kklove
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