AP Microeconomics

Note Taking Guide 1.1

Complete the following note taking guide as you review the various resources for
this lesson. You can either print a copy of this guide and write your responses onto
it, or you can save a copy and type your responses into it. If you are having trouble
answering any questions, look at the note taking guide correlations on each
resource in the lesson. For example, a resource in the course labeled as NGQ #2
would help you answer question #2 in the note taking guide.
1) What is economics?
The study of how individuals and society chooses to allocate its scarce resources
to alleviate the (quite unlimited) wants.

2) In terms of who makes production decisions, explain the differences

between a market and command economy.
Market Economy

Command Economy

What should be produced is determined What should be produced is determined

by the consumers and producers.
by the government.
(supply/demand)
How it should be produced is determined
How it should be produced is
by the government.
determined by businesses.
For whom it should be produced is
For whom it should be produced is
determined by the government.
determined by who can/will pay for the
good/service.

3) Explain why incentives and property rights are important components

of a market economy.
Incentives

Property Rights

4) How does marginal analysis help people and society make consumption
choices?

5) When deciding how much of a good to consume, what marginal analysis

formula should be followed? (Hint: use the terms marginal benefit and
marginal cost in your formula)

6) Identify and provide examples of the four economic resources needed

to produce goods and services.
Economic Resource

Examples

Land

Air, water, raw materials (oil, minerals)

Labor

Teachers, doctors, iron workers

Capital

Factories, machinery, equipment

Entrepreneurship

Those who start new business

7) Explain what scarcity is. Provide a few examples of scarce goods.

Scarcity is when the availability of resources is limited. A few examples: theres a
scarcity of clean drinking water in Flint.
Scarcity exists when there is not enough of something to satisfy everyones wants
AT A ZERO PRICE

8) Explain what opportunity cost measures.

Opportunity cost measures the foregone cost for making a certain decision.
Note: The note-taking guide is provided for your own benefit to help you keep a
record of what you have learned and give you a resource for studying for the Lesson

Quiz, Unit Test and ultimately the AP exam. If you have questions about how to
respond to any of the questions in the note taking guide, contact your instructor.