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Summary AP Macroeconomics Semester 1 Review 2024
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AP Macroeconomics Semester 1 Review 2024
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AP Macroeconomics Semester 1 Review 2024Economics - A study of choice under conditions of
scarcity
Positive Economics - The analysis of facts or data to establish scientific generalizations about economic
behavior.
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.
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.
Marginal Analysis - The comparison of Marginal benefits and marginal costs, usually for decision making.
Trade-offs - The sacrifice of some or all of one economic goal, good, or service to achieve some other
goal, good, or service.
Opportunity Cost - The amount of other products that must be forgone or sacrificed to produce a unit of
a product.
Macroeconomics - Looks at the economy as a whole, overview of the economy and the
relationships of its parts
Microeconomics - Looks at specific economic units, Observes the details of a very small segment of the
,AP Macroeconomics Semester 1 Review 2024
economy
Land - In addition to the part of the earth's surface not covered by water, this term refers to any and all
natural resources that are used to produce goods and services.
Labor - Any mental or physical exertion on the part of a human being that is used in the production of a
good or service.
Capital - Human-made resources (buildings, machinery, and equipment) used to produce goods and
services; goods that do not directly satisfy human wants.
Entrepreneur - Individuals who provide entrepreneurial ability to firms by setting strategy, advancing
innovations, and bearing the financial risk if their firms do poorly.
Factors of Production - The four economic resources: land, labor, capital, and entrepreneurial ability.
Market - An institution that brings together buyers
and sellers of particular goods, services, or resources, exists in many forms, link potential buyers with
potential sellers
Demand - A schedule or curve that shows the various amounts of a product that consumers are willing
and able to purchase at each of a series of possible prices during a specified period of time.
Demand Schedule - A table of numbers showing the amounts of a good or service buyers are willing and
able to purchase at various prices over a specified period of time.
, AP Macroeconomics Semester 1 Review 2024
Law of Demand - The principle that, other things equal, an increase in a product's price will reduce the
quantity of it demanded, and conversely for a decrease in price.
Diminishing Marginal Utility - The principle that as a consumer increases the consumption of a good or
service, the marginal utility obtained from each additional unit of the good or service decreases.
Income Effect - A change in the quantity demanded of a product that results from the change in real
income caused by a change in the product's price.
Substitution Effect - A change in the quantity demanded of a consumer good that results from a change
in its relative expensiveness caused by a change in the good's own price.
Demand Curve - A curve that illustrates the demand for a product by showing how each possible price is
associated with a specific quantity demanded.
Determinants of Demand - Factors other than price that determine the quantities demanded of a good
or service. Also referred to as "demand shifters" because changes in the determinants of demand will
cause the demand curve to shift either right or left.
Substitute Goods - Products or services that can be used in place of each other. When the price of one
falls, the demand for the other product falls; conversely, when the price of one product rises, the
demand for the other.
Complementary Goods - Products and services that are used together. When the price of one falls, the
demand for the other increases (and conversely).
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