AP Micro Unit 1

Front

Which country has an absolute advantage in producing lumber?

Back

Finland has an absolute advantage in producing lumber.

Front

A farmer in Country A can harvest 20 bushels of wheat or 10 bushels of corn in a day, while a farmer in Country B can harvest 8 bushels of wheat or 8 bushels of corn in a day. If Country A and Country B specialize and trade, Country A will

Back

export wheat and import corn

Front

Stefan and Donna produce orange juice and canvases. The table provided shows the maximum possible production of orange juice OR canvases that can be produced by Stefan and Donna. Which of the following terms of trade would be mutually beneficial to Stefan and Donna? 1 canvas for 0.4 liter of orange juice, 1 canvas for 0.5 liter of orange juice, 1 canvas for 1 liter of orange juice, 1 canvas for 1.5 liters of orange juice, 1 canvas for 2.5 liters of orange juice

Back

1 canvas for 1.5 liters of orange juice

Front

A country can consume beyond its present production possibilities curve when it trades with other countries, thus taking advantages of different opportunity costs.

Back

trades with other countries, thus taking advantages of different opportunity costs

Front

All of the following are included in computing the opportunity cost of attending college EXCEPT: interest paid on student loans, wages the student gave up to attend college, money spent on college tuition, money spent on clothing expenses, money spent on books and supplies.

Back

money spent on clothing expenses

Front

An opportunity cost is entailed in which of the following situations? I. A student decides to attend college full-time. II. A family uses its $20,000 savings to purchase an automobile. III. A farmer decides to grow more wheat and less corn.

Back

I, II, and III

Front

The table provided shows the total benefits and costs of studying at the library. If the student is rational, the optimal number of hours to spend at the library is

Back

3

Front

The opportunity cost of owning a business is equal to which of the following? I. The economic profits earned in the business II. The accounting profits earned in the business III. The profits that could be earned in another business using the same amount of resources

Back

The profits that could be earned in another business using the same amount of resources.

Front

Mr. Carpenter devotes his working time to producing tables and chairs. An increase in the demand for chairs will result in

Back

an increase in his opportunity cost of producing tables

Front

Opportunity cost is defined as

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the value of the next best alternative that is forgone when an activity is pursued