Krugman's Economics for AP®, 2e, Module 1

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capital

capital

manufactured goods used to make other goods and services. (p. 3)

command economy

an economy in which industry is publicly owned and a central authority makes production and consumption decisions. (p. 2)

economic aggregates

economic measures that summarize data across many different markets. (p. 5)

economics

the study of scarcity and choice. (p. 2)

economy

a system for coordinating a society's productive and consumptive activities. (p. 2)

entrepreneurship

the efforts of entrepreneurs in organizing resources for production, taking risks to create new enterprises, and innovating to develop new products and production processes. (p. 3)

incentives

rewards or punishments that motivate particular choices. (p. 3)

individual choice

decisions by individuals about what to do, which necessarily involve decisions about what not to do. (p. 2)

labor

the effort of workers. (p. 3)

land

all resources that come from nature, such as minerals, timber, and petroleum. (p. 3)

macroeconomics

the branch of economics that is concerned with the overall ups and downs of the economy. (p. 5)

marginal analysis

the study of the costs and benefits of doing a little bit more of an activity versus a little bit less. (p. 3)

market economy

an economy in which the decisions of individual producers and consumers largely determine what, how, and for whom to produce, with little government involvement in the decisions. (p. 2)

microeconomics

the branch of economics that studies how individuals, households, and firms make decisions and how those decisions interact. (p. 5)

normative economics

the branch of economic analysis that makes prescriptions about the way the economy should work. (p. 6)

opportunity cost

the real cost of an item: what you must give up in order to get it. (p. 4)

positive economics

the branch of economic analysis that describes the way the economy actually works. (p. 6)

property rights

establish ownership and grant individuals the right to trade goods and services with each other. (p. 3)

resource

anything that can be used to produce something else. (p. 3)

scarce

in short supply; when a resource is not available in sufficient quantities to satisfy all the various ways a society wants to use it. (p. 3)