Sherry Yao530299AP MICRO REVIEW1. Basic Economic Concepts (8%14%)A.Scarcity, choice, and opportunity costScarcity: the limited nature of society’s resourcesEconomics: the study of how society manages its scarce resourcesPeople face tradeoff (efficiency or equality)Opportunity cost: whatever must be given up to obtain some itemB.Production possibilities curveThe production possibilities curve shows the binations 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 QxC.parative advantage, absolute advantage, specialization and tradeparative advantage: the ability to produce a good at a lower opportunity cost than another producerAbsolute advantage: the ability to produce a good using fewer inputs than another producersTrade can benefit everyone in society because it allows people to specialize in activities in which they have a parative advantage、D.Economic systemE.Property rights and the role of incentivesProperty rights: the ability of an individual to own an exercise control over scarce resources Market powerMarket failure: allocate resources inefficiently ← Negative externalityIncentive: something that induces a person to act (the prospect of a punishment or a reward)F.Marginal analysisMarginal change: a small incremental adjustment to a plan of actionPeople make choice when marginal benefit > marginal cost2、 The Nature and Functions of Product Markets (55%70%)A.Supply and Demand (15%20%)a)Market equilibriumA situation in which...