AP Macroeconomics - Unit 1 Basic Economic Concepts

Which of the following does Economics primarily study?

• how scarcity can be eliminated

• how firms manipulate prices

• how government influences resource allocation decisions

• the problem of scarce resources relative to human wants

Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. What is the opportunity cost of one video?

• It is constant and equal to ½ song
  

• It is constant and equal to 2 songs

• It is $1.00

• An increases in cost as more videos are purchased

Answer the question on the basis of the data given in the following production possibilities table. According to the data in the table, what is required as indicated by increasing production of capital goods?

• The increase in sacrifices of consumer goods.

• The decrease in sacrifices of consumer goods.

• There are no sacrifices of consumer goods.

• The constant sacrifices of consumer goods.

Consider the problem Marsha faces of how to allocate her weekly allowance between books and videos. How will an increase in Marsha's allowance affect her budget on a supply and demand curve?

• Rotate her budget line, allowing her to buy more books but not more videos.
  

• Rotate her budget line, allowing her to buy more videos but not more books.

• Shift her budget line to the right.

• Shift her budget line to the left.

What would a microeconomist most likely study?

• The relationship between the size of the money supply and the rate of inflation.

• The effects of aggregate consumer debt on overall consumption spending.

• The effects of an income tax reduction on the size of the national budget deficit.

• How consumers respond to a change in gasoline prices.

Refer to the production possibilities diagram for the following Question.

Production of which of the points in the diagram is currently unattainable given the economy's resources?

• Point A

• Point B

• Point C

• Point D

What does the fundamental problem of economics imply?

• Governments must be relied upon to supply essential goods and services.

• Inflation and unemployment are unavoidable.

• Growing populations will deplete natural resources.

• Individuals and communities must make choices among competing alternatives.

Which of the following is the best example of physical capital?

• A $100,000 business loan from a bank

• A business hiring 10,000 workers at a factory

• A truck for a delivery company

• An oven for a family of four

• An increase in construction jobs

When making a decision, the next best alternative is called

• The production possibilities

• The opportunity cost

• Scarcity

• The absolute advantage

• Efficiency

If the Production possibilities curve (PPC) is concave from the origin (bowed out), then economists say that

• Resources are scarce in the economy

• Resources are not equally suited for the production of both goods

• Economic growth is occurring in the economy

• Resources are being inefficiently used in the economy

• Resources are equally suited for the production of either good