1. AP Government Summer Homework Review

2. I. The Market System
Distributes and sets the prices of goods and service through supply and demand.
Encourages producers to use resources wisely

3. Colbert Interview

4. II. Resources
The instruments provided by nature or by people that are used to create goods and services.
Land- Natural Resources
Labor- Work done by humans
Capital- Products used in manufacturing of goods

5. III. Opportunity Costs
The opportunity Cost of a decision is the value of the next best alternative that must be given up because of that decision.
What are the opportunity Costs of going to war?
What about going to college?

6. IV. Production Possibility Frontiers
The possible combinations of two products that can be made.
What economic concepts
are illustrated by this PPF?

7. IV. Production Possibility Frontiers
The possible combinations of two products that can be made.
What economic concepts
are illustrated by this PPF?
Scarcity and efficiency!
----- Meeting Notes (9/5/12 08:34) -----
Efficiency falls on the line

8. V. Comparative Advantage
The ability of a person or a country to produce a good at a lower opportunity costs.
This can make trade beneficial for both.

9. V. Comparative advantage

10. VI. Trade is a win-win situation
Both parties must expect to gain something in a voluntary exchange.
Countries are most efficient when they specialize in what they do best and trade for other things. (comparative advantage)

11. VII. Fighting against the market
When lawmakers are dissatisfied with the results of a free markets they may introduce price ceilings and price floors, known as price supports.
Sometimes price supports do good things but they also have the potential of creating the following problems:
Shortages or surpluses
Misallocation
Black Markets
Favoritism and Corruption