AP Macroeconomics Unit 1

1. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

• direct, inverse

• inverse, direct

• inverse, inverse

• direct, direct

• strong, weak

Which of the following will NOT cause the demand for model airplanes games to change?

• a change in the price of a close substitute

• a change in consumer incomes

• a change in the price of model airplanes

• a change in consumer tastes

• a change in consumer preferences

Oil is this type of scarce resource.

• Human Capital
• Land/Natural 
• Labor
• Physical Capital

Workers agree to a 10% wage increase.  Everything else remaining constant, this will cause the _______ curve to shift _____. 

• demand; right
• demand; left
• supply; right
• supply; left

There is an increase in supply.  This will cause the equilibrium price to ______ & the equilibrium quantity to ______.

• decrease; increase
• decrease; decrease
• increase; increase
• increase; decrease

Columbia and Mexico both produce wine and cars under conditions of constant opportunity costs. Columbia will have a comparative advantage in car production if:

• it can produce more cars than Mexico.
• the opportunity cost of car production is lower in Columbia than in Mexico.
• its labor productivity in car production is greater than Mexico's.
• it can produce more wine than Mexico.

If the supply and demand curves intersect at a price of $20 then any price above that would result in a(n):

• shortage.
• equilibrium.
• increase in demand.
• surplus.

A company that makes baseball caps is underutilizing its resources. What does this mean?

• The company is running more efficiently than its competitors.
• The company is paying its employees less than it should be.
• The company is making caps when it could be making t-shirts instead.
• The company is producing fewer caps than it could be.

What can cause a production possibilities frontier to shift away from the origin?

• Thousands of people move out of the country.
• A new technology used in production.
• An epidemic kills thousands .
• The population is growing increasingly old.

A country’s production possibilities increase because the available workers become more skilled at their jobs. This is an example of growth caused by

• Land
• Labor
• Capital
• Entrepreneurship