AP Macro Unit 1 Review

Which of the following is likely to increase the demand for peanut butter?

• Fewer children in the population
• News that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months.
• A big increase in the price of jelly.
• A report from the Surgeon General of the United States that eating peanut butter makes people nutty.

In economics, a shortage of a product occurs when

• the product's price falls below its market-clearing level
• the product's market-clearing level reduces overall demand
• the people who buy the product consume more than they need
• the businesses producing the product become less efficient

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing trucks and what is their opportunity cost? 

• Japan, 1/3 airplane per truck
• US, 1/2 airplane per truck
• US, 2 airplanes per truck
• Japan, 3 airplanes per truck

When a point lies inside of the PPF it can be said that

• Resources are under employed
• Resources are fully utilize
• Production is beyond the resource potential
• Opportunity cost of production is constant

What does the Production Possibilities Frontier represent? 

• A.  A catalog of all possible production options, represented as percentages.
• B. The tradeoffs between possible production levels for two goods.
• C. The amount that a society could produce if it devoted all its resources to producing one good.
• D. The possible gains from international trade in two or more goods.

The resource that includes equipment, machinery, buildings, and tools.

• Land
• Labor
• Capital 
• Entrepreneur

Economics may best be defined as the:

• interaction between macro and micro considerations.

• social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants.

• empirical testing of value judgments through the use of logic.

• use of policy to refute facts and hypotheses.

Which of the following will not produce an outward shift of the production possibilities curve?

• an upgrading of the quality of a nation's human resources

• the reduction of unemployment

• an increase in the quantity of a society's labor force

• the improvement of a society's technological knowledge

Refer to the above diagram. At which point will this economy NOT be able to produce, it is currently unattainable?

• A

• B

• C

• E

Which of the following might shift a nation's production possibilities curve inward?

• improved technology.

• devastation by war.

• improved health care.

• a business downturn in which unemployment temporarily rises.