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AP Eco Final
| Question | Answer |
|---|---|
| Scarcity | the state of being scarce or in short supply; shortage. |
| Factors of Production | land, labor, capital and entrepreneurship |
| Characteristics of Competitive Market | (i) The market consists of buyers and sellers who are price takers. (ii) Each firm in the market produces undifferentiated and homogenous products. (iii) Buyers and sellers have perfect information about the price prevailing in the mark! About the a |
| Law of Supply | the principle that other things equal an increase in the price of a product will increase the quantity of it supplied |
| Law of Demand | a higher price for a good or service all other things being equal leads to people to demand a smaller quantity of that good or service |
| Efficiency | describes a market or economy in which there is no way too make anyone better off without making at least one person worse off |
| Strong Dollars | A situation in which the U.S. dollar can be exchanged for a relatively large amount of another currency. |
| Weak Dollars | U.S. dollar can exchange for fewer amounts of foreign currency. |
| Quantity Supplied | actual amount of a good or service people are willing to sell at one specific price |
| Quantity Demanded | the amount of a good or service consumers willing to sell at some specific price |
| Fundamental questions of Economics | what to produce, how to produce it, and for whom it is produced. |
| Non-price Competition | competition in areas other than price to increase sales, such as new product features and advertising; especially engaged in by firms that have a tacit understanding not to compete on price. |
| Monopoly | the exclusive possession or control of the supply or trade in a commodity or service. an industry controlled by a monopolist |
| Main Principle of Adam Smith's "The Wealth of Nations" | that business prospers by finding out what people want and providing it. |
| Shortage | a state or situation in which something needed cannot be obtained in sufficient amounts |
| Surplus | an amount of something left over when requirements have been met; an excess of production or supply over demand. |
| Externalities in American Economy, Positive and Negatives | the cost or benefit that affects a party who did not choose to incur that cost or benefit |
| Market Economy | an economy in which decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions. |
| Command Economy | industry is publicly owned and a central authority makes production and consumption decisions. |
| Traditional Economy | economic decisions made based on what has always been done. traditions. ๎๎๎ |
| Mixed Economy | an economic system combining private and public enterprise. |
| Price Ceiling | the maximum price sellers are allowed to charge for a good or service; a form of price control |
| Price Floor | the minimum price buyers are required to pay for a good or service; a form of price control. |
| Unemployment | the total number of people who are actively looking for work but arenโt currently employed |
| Unemployment rate | the percentage of the total number of people in the labor force who are unemployed, calculated as unemployment/(unemployment + employment). |
| Full Employment | the condition in which virtually all who are able and willing to work are employed. |
| Structural Unemployment | unemployment that results when there are more people seeking jobs in a labor market than there are jobs available at the current wage rate. |
| Underemployment | people who work part time because they cannot find fulltime jobs. |
| Seasonal Employment | employee who works one hundred twenty (120) days a year or less for the employer. These days need not be consecutive. Thus, if an employee works only for the months of January, July, and October, then the employee is a seasonal employee. |
| Net National Product | The total value of goods produced and services provided in a country during one year, after depreciation of capital goods has been allowed for. |
| Gross Domestic Product | the total value of all final goods and services produced in the economy during a given period, usually a year |
| Signaling Theory | is the idea that one party (termed the agent) credibly conveys some information about itself to another party (the principal). |
| Right-to-Work Law | prohibit union security agreements, or agreements between labor unions and employers, that govern the extent to which an established union can require employees' membership, payment of union dues, or fees as a condition of employment, ... |
| What increases supply? | an increase in the number of producers. a decrease in the costs of production (such as higher prices for oil, labor, or other factors of production). weather (e.g., ideal weather may increase agricultural production) technology (Technological innovatio |
| What increases demand? | an increase in the number of consumers. an increase in income (for normal products) or a decrease in income (for inferior products, such as Ramen noodles). an increase in the price of a substitute product. a decrease in the price of a complementary pro |
| Market Equilibrium | market state where the supply in the market is equal to the demand in the market. The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it in the market. |
| Perfect Competition | the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers. |
| Federal Income Tax as a Progressive | on average, households with higher incomes pay a larger share of their income in federal tax than do those with lower incomes. |
| Marginal Analysis | An examination of the additional benefits of an activity compared to the additional costs of that activity |
| Marginal Cost | the cost added by producing one extra item of a product |
| Fixed Costs | expenses that do not change as a function of the activity of a business, within the relevant period. |
| Comparative Advantage | the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity |
| Absolute Advantage | the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group. |
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