AP微观经济知识点.docVIP

AP微观经济知识点 AP微观经济知识点 PAGE AP微观经济知识点 Sherry Yao 99 AP MICRO REVIEW Basic Economic Concepts (8%-14%) Scarcity, choice, and opportunity cost Scarcity: the limited nature of society’s resources Economics: the study of how society manages its scarce resources People face trade-off (efficiency or equality) Opportunity cost: whatever must be given up to obtain some item Production possibilities curve The production possibilities curve shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology Qy 1. The opp cost of Qx equals the slope of curve 2. The opp cost of Qx is higher, the curve is steeper 3. opp cost is constant, the PPF is strict line 4. Technology advance → PPF shift I Inefficient Qx Comparative advantage, absolute advantage, specialization and trade Comparative advantage: the ability to produce a good at a lower opportunity cost than another producer Absolute advantage: the ability to produce a good using fewer inputs than another producers Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage. Economic system Property rights and the role of incentives Property rights: the ability of an individual to own an exercise control over scarce resources Market power Market failure: allocate resources inefficiently ← Negative externality Incentive: something that induces a person to act (the prospect of a punishment or a reward) Marginal analysis Marginal change: a small incremental adjustment to a plan of action People make choice when marginal benefit ＞ marginal cost 2. The Nature and Functions of Product Markets (55%-70%) Supply and De