AP Econ 1.2 F25

Multiple Choice

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.

Multiple Choice

Which of the following is NOT a characteristic of market economies?

• Private ownership of resources

• Government sets all prices

• Consumer demand drives production decisions

• Prices fluctuate with supply and demand

Multiple Select

Which of the following are considered factors of production?

• Labor

• Land

• Capital

• Money

Match

Match the terms

• What households provide to Factor Market

• What Firms/Businesses Provide

• What firms receive as payment

• What households receive from firms

• What firms pay to factor market

Factors of Production

Goods and Services

Revenue

Income

Wages, rent, profit

• Factors of Production

• Goods and Services

• Revenue

• Income

• Wages, rent, profit

Fill in the Blanks

The Production Possibilities Frontier/Curve (PPC) shows the combinations of two goods the economy can possibly produce given the available

and technology.

Multiple Choice

Which point on the Production Possibilities Curve (PPC) represents an unattainable production level given current resources?

• Point A

• Point B

• Point C

• Point D

Multiple Select

Which of the following statements about the Production Possibilities Frontier/Curve (PPC) are correct?

• Points inside the PPF are inefficient.

• Points on the PPF are efficient.

• Points outside the PPF are unattainable with current resources.

• All points on the PPF represent equal opportunity cost.

Fill in the Blanks

The opportunity cost of producing one computer is

tons of wheat.

Multiple Choice

In which country is the opportunity cost of cloth lower?

• France

• England

• Both have the same opportunity cost

• Cannot be determined

Open Ended

Explain why England has a lower opportunity cost of cloth compared to France, based on the PPF diagrams.

Open Ended

Why do you think the Production Possibilities Curve might be bowed rather than linear?

Multiple Choice

Which of the following statements best explains why the PPF might be bow-shaped?

• Resources are equally efficient in all activities.

• Opportunity cost increases as more of one good is produced.

• There is no opportunity cost involved.

• The PPF is always a straight line.

Open Ended

Describe how the opportunity cost changes as you move from point A to point B on a bow-shaped PPC.