Chapter 1 AP macro vocab

the advantage con-ferred 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 short-run alterna-tion between economic downturns, known as recessions, and economic upturns, known as expansions.

any tangible asset used by a business to produce goods or services for consumer goods or for use by other businesses

an economic system where a government body makes economic decisions regarding the production and distribution of goods.

the advantage conferred if the opportunity cost of producing the good or service is lower for another producer.

products used for immediate consumption

the study of scarcity and choice.

an increase in the maximum amount of goods and serv- ices an economy can produce.

Determinants are factors that can cause the entire demand curve to increase or decrease (shift to the right or shift to the left). When there is an increase in demand (see graph below), the demand curve will shift right. At every price level, there is an increase in the quantity demanded.

the inputs used to produce a good or service in order to produce income

one without government intervention or regulation

a good for which a rise in income decreases the demand for the good.

a rise in the overall price level.

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

an economic principle that describes how opportunity costs increase as resources are applied.

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

to an economic system as a whole the branch of economics that is concerned with the overall ups and downs in the economy.

a condition in a market where the quantity supplied equals the quantity demanded at an optimal price level

the branch of econom- ics that studies how people make deci- sions and how those decisions inter- act.

a system that combines aspects of both capitalism and socialism.

a good for which a rise in income increases the demand for that good—the “normal” case.

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

the maximum price sellers are allowed to charge for a good or service; a form of price control.

the minimum price buyers are required to pay for a good or serv- ice; a form of price control.

illus- trates the trade-offs facing an econo- my 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.

a period of economic down- turn when output and unemployment are falling; also referred to as a con- traction.

the basic problem in economics in which society does not have enough resources to produce whatever everyone needs and wants

the insufficiency of a good or service that occurs when the quan- tity demanded exceeds the quantity sup- plied; shortages occur when the price is below the equilibrium price.

a situation in which different people each engage in the different task that he or she is good at performing.

the excess of a good or service that occurs when the quantity supplied exceeds the quantity demanded; sur- pluses occur when the price is above the equilibrium price.

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

a system where goods production and distribution are driven by time-honored beliefs, customs, culture, and traditions

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