AP Eco Unit 1 Exam

Unlimited wants, limited resources

• Revenue

• Scarcity

• Marginal Cost

• Opportunity Cost

The study of choices a society makes in response to scarcity

• Marginal Cost

• Utility

• Trade-offs

• Economics

The study of small economic units

• Microeconomics

• Macroeconomics

• Input

• Output

The study of the large economy as a whole

• Microeconomics

• Macroeconomics

• Laissez Faire

• Private Sector

Based on facts, avoids judgement; what is

• Marginal analysis

• Positive Statements

• Output

• Production Possibilities Curve (PPC)

Includes value judgement, opinions; what ought to be

• Investment

• Law of Increasing Opportunity Cost

• Microeconomics

• Normative Statements

Making decisions based on increments; thinking on the margin

• Physical Capital

• Marginal Analysis

• Factor of Production (4)

• Mixed Economy

Additional satisfaction that comes from consuming a good or service; the maximum amount that we are willing to pay to get that additional benefit

• Transfer Payments

• Marginal Benefit

• Opportunity Cost

• Explicit Cost

The change in total cost that comes from producing an extra product

• Normative Statements

• Analysis Cost

• Marginal Cost

• Opportunity Cost

All of the alternatives that are given up when a choice is made; all decisions involve____________

• Input

• Laissez Faire

• Trade-offs

• Marginal Analysis