AP Macroeconomics Unit 1 (Mods 1-4)

Oil is this type of scarce resource.

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

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.

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

Although water is very abundant in most places, it is scarce because:

• it has no alternative uses.
• there is not enough of it to meet all needs at zero cost.
• it is a free good.
• scarce goods in general are not all that costly.

Both nations will gain from trade when 1 tire trades for:

• 1/3 radio.
• 1/2 radio.
• 1 1/2 radios
• 2 radios

Economics is the study of...

• how businesses produce goods and services
• the efficient use of scarce resources
• the equitable distribution of wealth
• the printing and circulation of money

"There is no such thing as a free lunch means?"

• marginal benefit is greater than marginal cost
• businesses can increase market share by offering free lunch
• scarce resources have alternative uses or opportunity costs
• consumers often ask for free lunch

When we look at the aggregate of the economy the analysis at the level would be called

• microeconomics
• positive economics
• macroeconomics
• normative economics