What this deck covers
This deck focuses on Resource Allocation And Economic Systems, giving you a quick way to review the definitions, rules, and examples that matter most for AP Microeconomics.
AP Microeconomics Flashcards: Resource Allocation And Economic Systems
Study Resource Allocation And Economic Systems in AP Microeconomics with focused flashcards that help you recognize the idea, recall the key rule, and apply it in practice-style prompts.
AP Microeconomics
Resource Allocation And Economic Systems
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QUESTION
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What is the invisible hand?
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ANSWER
The unseen forces that move the free market economy. Adam Smith's concept of self-interest guiding efficient market outcomes.
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Flashcard 1: What is the invisible hand?
Answer: The unseen forces that move the free market economy. Adam Smith's concept of self-interest guiding efficient market outcomes.
Flashcard 2: Which economic system combines elements of market and command economies?
Answer: Mixed economy. Uses both market mechanisms and government planning for allocation.
Flashcard 3: Identify the primary economic systems.
Answer: Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
Flashcard 4: Identify the primary economic systems.
Answer: Traditional, Command, Market, Mixed. These represent the four main ways societies organize production and distribution.
Flashcard 5: What is the role of government in a market economy?
Answer: Minimal, mainly to enforce laws and protect property rights. Government provides framework but avoids direct economic control.
Flashcard 6: What is the primary goal of economic efficiency?
Answer: Maximize output with given resources. Achieve maximum production from available resources without waste.
Flashcard 7: Identify a policy tool for correcting negative externalities.
Answer: Pigovian tax. Tax on activities that create negative externalities to reduce them.
Flashcard 8: What is the primary goal of economic efficiency?
Answer: Maximize output with given resources. Achieve maximum production from available resources without waste.
Flashcard 9: Identify a policy tool for correcting negative externalities.
Answer: Pigovian tax. Tax on activities that create negative externalities to reduce them.
Flashcard 10: Describe a traditional economy.
Answer: A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
Flashcard 11: Which economic system is most likely to promote innovation?
Answer: Market economy. Competition and profit incentives drive entrepreneurship and creativity.
Flashcard 12: How does a mixed economy allocate resources?
Answer: Through both market forces and government intervention. Combines price signals with government regulation and planning.
Flashcard 13: Which economic system is most likely to have public ownership of resources?
Answer: Command economy. Government typically owns and controls major industries and resources.
Flashcard 14: Identify one factor that can shift a PPF outward.
Answer: Technological advancement. Improves productivity, allowing more output from same inputs.
Flashcard 15: What is the primary function of money in an economy?
Answer: Medium of exchange. Facilitates trade by eliminating need for direct barter.
Flashcard 16: What is the main disadvantage of a command economy?
Answer: Lack of incentives for productivity and innovation. Without profit motive, workers and managers lack efficiency incentives.
Flashcard 17: Identify the main advantage of a command economy.
Answer: It can quickly mobilize resources. Central control enables coordinated response to national priorities.
Flashcard 18: What characterizes a command economy?
Answer: In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
Flashcard 19: What characterizes a command economy?
Answer: In a command economy, the government makes all economic decisions. Central planners control what, how, and for whom goods are produced.
Flashcard 20: Which economic system uses central planning?
Answer: Command economy. Government agencies coordinate all production and distribution decisions.
Flashcard 21: In which system are prices most flexible?
Answer: Market economy. Supply and demand forces allow rapid price adjustments.
Flashcard 22: What is the definition of an economic system?
Answer: An economic system is an organized way a society allocates resources and distributes goods and services. Shows how societies decide who gets what, when, and how.
Flashcard 23: Which system encourages consumer sovereignty?
Answer: Market economy. Consumer demand directly influences production decisions through prices.
Flashcard 24: How does a mixed economy allocate resources?
Answer: Through both market forces and government intervention. Combines price signals with government regulation and planning.
Flashcard 25: Identify one factor that can shift a PPF outward.
Answer: Technological advancement. Improves productivity, allowing more output from same inputs.
Flashcard 26: What is a Production Possibility Frontier (PPF)?
Answer: A curve depicting maximum feasible amounts of two products that a nation can produce. Shows trade-offs between different production possibilities given resources.
Flashcard 27: Describe a traditional economy.
Answer: A traditional economy is based on customs, history, and time-honored beliefs. Decisions follow established cultural practices passed down generations.
Flashcard 28: Which economic system is based on supply and demand?
Answer: Market economy. Price mechanism coordinates production and consumption decisions.
Flashcard 29: What does a point inside the PPF indicate?
Answer: Inefficient resource use. Resources are not being used to their full potential.
Flashcard 30: Which economic system combines elements of market and command economies?
Answer: Mixed economy. Uses both market mechanisms and government planning for allocation.
Flashcard 31: Identify the main advantage of a command economy.
Answer: It can quickly mobilize resources. Central control enables coordinated response to national priorities.
Flashcard 32: What is the main disadvantage of a market economy?
Answer: It can result in economic inequalities. Income distribution depends on market success rather than need.
Flashcard 33: State one advantage of a traditional economy.
Answer: Stability and predictability. Established patterns provide security and reduce uncertainty.
Flashcard 34: Define consumer sovereignty.
Answer: The power of consumers to decide what gets produced. Consumer choices determine which goods and services are produced.
Flashcard 35: Identify a consequence of an economic system with no private property.
Answer: Lack of individual incentives. People have no personal stake in improving productivity or efficiency.
Flashcard 36: What role do prices play in a market economy?
Answer: Prices signal resource allocation. Higher prices indicate greater demand or lower supply for resources.
Flashcard 37: What is an externality?
Answer: An externality is a consequence of an economic activity experienced by unrelated third parties. Costs imposed on others not involved in the economic transaction.
Flashcard 38: State the formula for calculating opportunity cost.
Answer: Opportunity Cost = Next Best Alternative Foregone. The value of the best alternative choice that must be given up.