Scarcity - AP Microeconomics

Evaluation of the additional benefits of an activity versus the additional costs. Compares incremental benefits to incremental costs for decisions.

Market forces that allocate resources efficiently. Self-interest guides resources to their most valued uses.

Scarcity limits growth; innovation can expand possibilities. Technology and capital expansion can overcome resource limits.

Resources are limited everywhere. No society has unlimited resources to satisfy all wants.

Limited resources create competition for allocation. Finite resources force individuals and firms to compete.

A statement based on facts and data. Describes economic relationships without value judgments.

The satisfaction or benefit derived from consuming a good or service. Measures the value or happiness gained from consumption.

An economy with both market and government involvement. Combines market mechanisms with government intervention as needed.

An economy where decisions are made by a central authority. Government planners decide what and how much to produce.

An economy where decisions are guided by prices and self-interest. Supply and demand determine resource allocation through prices.

Quantity supplied exceeds quantity demanded. Supply exceeds demand, creating downward price pressure.

Resources are distributed according to consumer preferences. Resources produce goods that society values most highly.

Government can regulate resources and distribution. Public policy can address market failures and inequities.

A statement that reflects opinions or what ought to be. Expresses values about how economics should work.

Producing goods at the lowest possible cost. Maximum output achieved with minimum resource waste.

A good that is not scarce and has no opportunity cost. Abundant resources like air require no economic choices.

Scarcity and choice. Limited resources require ranking desires by importance.

They determine the best allocation of resources. Compare benefits of alternatives to choose optimal allocation.

An unattainable level of production with current resources. Production exceeds current resource and technology limits.

Producing more of one good increases the opportunity cost. Resources become increasingly specialized, raising costs.

A balance achieved between two desirable but incompatible features. Choosing one benefit means sacrificing another.

Incentives influence choices in resource allocation. Rewards and penalties guide how people allocate scarce resources.

Scarcity is the limited nature of society's resources. This fundamental concept drives all economic decision-making.

Efficient use of resources. All available resources are being used optimally.

Inefficient use of resources. Resources are not being used to their full potential.

A curve depicting all maximum output possibilities for two goods. Shows trade-offs between two goods given limited resources.

It determines how resources are distributed. All economic systems must decide resource allocation methods.

Scarcity is long-term; shortage is temporary. Scarcity is permanent; shortages can be resolved quickly.

Through price adjustments. Prices rise when demand exceeds supply of scarce goods.