What is scarcity?
Factors of production
Capital: the most common AP mistake
How scarcity creates trade-offs
The PPC shows all efficient output combinations given scarce resources
Reading the PPC
Opportunity cost on the PPC
Worked example
Moving from X to Y: gaining 45 consumer goods costs 38 capital goods
Why the PPC bows outward
Marginal analysis
The optimal quantity is where the MB and MC curves intersect
Reading the MB/MC graph
Applying marginal analysis
The three fundamental questions
Economic systems
How the price mechanism works
Scarcity vs. shortage
Free goods vs. economic goods
AP exam tips for 1.1
Common mistakes
Key equations
Vocabulary