AP MACRO 1.1-1.3 Quiz

Which of the following is true for all economies regardless of their economic system?

• Every economy must determine what to produce and how it produces goods and services

• Every economy must find a way to distribute income equally

• Every economy must find ways to privatize markets to maximize efficiency

• Every economy must prevent unemployment through government intervention

• Every economy must open free trade with other economies

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

Which of the following must be true if an individual's next best alternative to going to the beach is studying for an economics exam?

• They will decide to study for the exam

• The opp. cost is seeing their friends at the beach

• The person prefers playing volleyball at the beach to studying for the exam

• The Opp Cost of going to the beach is all the other things they could have done

• The Opp Cost of going to the beach is being better prepared for the exam.

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

A point outside the PPC would represent

• An efficient use of resources

• Future output once producers become more efficient

• An inefficient use of resources

• A combination that cannot be achieved due to scarcity

• Full employment of resources in the economy

An increase in which of the following would cause an outward shift of the PPC for consumer goods and capital goods?

• An increase in the demand for consumer goods

• An increase in taxes on consumers

• A decrease in unemployment

• An increase in the resources to produce capital goods

• The efficient production of consumer goods

Claire is an economist who can earn $150 per hour. She is also an excellent chef who can cook three times as fast as the best chef in the area, whose hourly wage is $20 per hour. Which of the following is a correct economic statement?

• Claire has a comparative advantage in economics so she should specialize in econ and hire the chef to cook for her

• Claire has an absolute and comparative advantage in both econ and cooking, so she should work as an economist and as a chef

• claire is 3 times faster than any chef so she could give up econ and be a chef

• when chefs work for economists, they should charge $150 per hour instead of $20 per hour

• Because claire is an excellent chef, when the best chef works for claire, she should pay the chef only 1/3 the hourly rate.

If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bike. Which of the following is true?

• Mike has an absolute adv in the production of surfboards

• mike's Opp Cost for producing one bike is five surfboards

• joe has comparative adv. in the production of both surfboards and bikes

• mike has a comparative adv. in the production of bikes

• joe's Opp Cost for producing one surfboard is 3 bikes

Atlantis can produce either 2 tons of grain or 4 cars with 10 units of labor. Zoltar can produce either 5 tons of grain or 25 cars with 10 units of labor. Based on this information, which of the following is true:

• Atlantis has an absolute adv. in the production of grain, while Zoltar has a comparative adv. in the production of grain

• Atlantis has a comparative adv. in the production of grain, while Zoltar has a comparative adv. in the production of cars

• Atlantis has an absolute adv. in the production of grain, while Zoltar has a comparative adv. in the production of cars.

• Atlantis has a comparative disadvantage in the production of both goods.

• Niether country has a comparative adv in the production of either good