Ap Economics: Chapter 2

Front 1

economizing problem

Back 1

society has unlimited economic wants and limited resources

Front 2

utility

Back 2

pleasure or satisfaction

Front 3

economic resources

Back 3

all natural, human, and manufactured resources that go into the production of goods and services

Front 4

land

Back 4

all natural resources used in the production process such as arable land, forests, mineral and oil deposits, and water resources

Front 5

capital

Back 5

all manufactured aids used in producing consumer goods and services - that is, all tools, machinery, equipment, factory, storage, transportation, and distribution facilities

Front 6

investment

Back 6

the process of producing and purchasing capital goods

Front 7

labor

Back 7

all the physical and mental talents of individuals available and usable in producing goods and services

Front 8

entrepreneurial ability

Back 8

human resource that combines the other resources to produce a product, makes nonroutine decisions, innovates, and bears risks

Front 9

factors of production

Back 9

land, labor, capital, and entrepreneurial ability

Front 10

full employment

Back 10

the use of all available resources

Front 11

full production

Back 11

all employed resources should be used so that they provide the maximum possible satisfaction of our material wants

Front 12

productive efficiency

Back 12

the production of any particular mix of goods and services in the least costly way

Front 13

allocative efficiency

Back 13

the production of that particular mix of goods and services most wanted by society

Front 14

consumer goods

Back 14

products that satisfy our wants directly

Front 15

capital goods

Back 15

products that satisfy our wants indirectly by making possible more efficient production of consumer goods

Front 16

production possibilities table

Back 16

a list of the different combinations of two products that can be produced with a specific set of resources, full employment, and productive efficiency

Front 17

production possibilities curve

Back 17

graph of the production possibilities table

Front 18

opportunity cost

Back 18

the amount of other products that must be foregone or sacrificed to obtain one unit of a specific good

Front 19

law of increasing opportunity cost

Back 19

the more of a product that is produced, the greater its opportunity cost

Front 20

economic growth

Back 20

the ability to produce a larger total output because of increases in supplies of resources, improvements in resource quality, or technological advances

Front 21

economic system

Back 21

a particular set of institutional arrangements and a coordinating mechanism - who owns factors of production and method used to coordinate and direct economic activity

Front 22

market system (capitalism)

Back 22

the private ownership of resources and the use of markets and prices to coordinate and direct economic activity

Front 23

command system

Back 23

government owns most property resources and economic decision making occurs through a central economic board

Front 24

circular flow model

Back 24

an interrelated web of decision making and economic activity involving businesses and households where there is a counterclockwise real flow and a clockwise money flow