AP+MI+Ch.+1+Vocabulary

AP Microeconomics

Important Terms
 * 1) economics - The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
 * 2) economic perspective - A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions
 * 3) opportunity costs - The amount of other products that must be forgone or sacrificed to produce a unit of a product.
 * 4) utility -The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services).
 * 5) marginal analysis - The comparison of marginal ("extra" or "additional") benefits and marginal costs, usually for decision making.
 * 6) Scientific method - The procedure for the systematic pursuit of knowledge involving the observation of facts and the formulation and testing of hypotheses to obtain theories, principles, and laws.
 * 7) economic principle - A widely accepted generalization about the economic behavior of individuals or institutions.
 * 8) "other-things-equal" assumption (ceteris paribus) - The assumption that factors other than those being considered are held constant; //ceteris paribus// assumption.
 * 9) macroeconomics - The part of economics concerned with the economy as a whole; with such major aggregates as the household, business, and government sectors; and with measures of the total economy.
 * 10) aggregate - A collection of specific economic units treated as if they were one. For example, all prices of individual goods and services are combined into a //price level,// or all units of output are aggregated into //gross domestic product.//
 * 11) microeconomics - The part of economics concerned with decision- making by individual units such as a //household,// a //firm,// or an //industry// and with individual markets, specific goods and services, and product and resource prices.
 * 12) positive economics - The analysis of facts or data to establish scientific generalizations about economic behavior.
 * 13) normative economics - The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.
 * 14) economizing problem - The choices necessitated because society's economic wants for goods and services are unlimited but the resources available to satisfy these wants are limited (scarce).
 * 15) budget line - A line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices.
 * 16) economic resources - The //land, labor, capital,// and //entrepreneurial ability// that are used in the production of goods and services; productive agents; factors of production.
 * 17) factors of production - //Economic resources: land, capital, labor,// and //entrepreneurial ability.//
 * 18) land - Natural resources ("free gifts of nature") used to produce goods and services.
 * 19) labor - People's physical and mental talents and efforts that are used to help produce goods and services.
 * 20) capital - Human-made resources (buildings, machinery, and equipment) used to produce goods and services; goods that do not directly satisfy human wants; also called capital goods.
 * 21) investment - Spending for the production and accumulation of //capital// and additions to inventories.
 * 22) entrepreneurial ability - The human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks.
 * 23) consumer goods - Products and services that satisfy human wants directly.
 * 24) capital goods - (See //capital.//)
 * 25) production possibilities curve - A curve showing the different combinations of two goods or services that can be produced in a //full-employment, full-production// economy where the available supplies of resources and technology are fixed.
 * 26) law of increasing opportunity costs - The principle that as the production of a good increases, the //opportunity cost// of producing an additional unit rises.
 * 27) economic growth - (1) An outward shift in the //production possibilities curve// that results from an increase in resource supplies or quality or an improvement in //technology;// (2) an increase of real output //(gross domestic product)// or real output per capita.