AP Microeconomics Unit 1.1 - 1.3 CFA#1

Front

Scarcity is best defined as

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the difference between unlimited wants and limited economic resources.

Front

Which of the following statements describes an economy confronting scarcity? If more of one good is produced, less of another good must be produced., An economy can produce a limitless amount of all goods., All individuals are able to satisfy their consumption desires., Scarcity is eliminated by government provision of goods., Scarcity only exists as a problem when there is more than one good to produce.

Back

If more of one good is produced, less of another good must be produced.

Front

Assume an economy is using all its available resources efficiently to produce only two goods, X and Y. As more of good X is produced, what happens to the production of good Y?

Back

Less of good Y is produced as resources move from producing good Y to producing good X.

Front

As a factor of production, capital refers to the

Back

tools and machinery used to produce goods and services

Front

In contrast to a market economy, a command economy relies on which of the following?
The private sector in deciding what goods will be produced,
Private ownership of resources,
Profits as incentives to make choices,
Supply and demand to determine prices,
The government to allocate resources

Back

The government to allocate resources

Front

A linear production possibilities curve indicates which of the following?
Options: Constant opportunity costs, Decreasing opportunity costs, Increasing opportunity costs, Diminishing marginal returns, Labor-intensive production

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Constant opportunity costs

Front

According to the graph above, if a country is currently producing at point X, the opportunity cost of producing another consumer good is

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20 capital goods

Front

Which of the following best defines opportunity cost? Options: the cost of producing those goods most desired by a given economy, cost of the input mix that will lead to the greatest rate of growth for a given company, amount of one product that must be given up in order to produce another additional unit of another product, use of the least-cost method of production, the cost of labor used in the production process

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amount of one product that must be given up in order to produce another additional unit of another product