Quiz 3 - AP Microeconomics

Which of the following statements about an effective price floor is true?

• An effective price floor must be set below the equilibrium price.

• An effective price floor increases the quantity demanded.

• An effective price floor causes a surplus when it is binding.

• An effective price floor will cause the demand curve to shift left.

• An effective price floor eliminates producer surplus entirely.

The table shows possible production choices for two goods (cars and bicycles). The opportunity cost of producing the second car is:

• 40 bicycles

• 50 bicycles

• 90 bicycles

• 30 bicycles

• 20 bicycles

Which of the following will NOT permanently shift a country’s production possibilities frontier (PPF) outward?

• An improvement in renewable energy technology.

• An increase in capital stock.

• A rise in the average education level of the labor force.

• A decrease in cyclical unemployment.

• Greater investment in research and development.

Suppose demand for electric scooters is unchanged while the supply of scooters decreases. Which of the following explains why fewer scooters are sold even though demand didn’t shift?

• This cannot happen without a demand shift.

• There is a movement up along the demand curve to a lower quantity demanded at a higher equilibrium price.

• The demand curve became steeper.

• The market is permanently in disequilibrium.

• Buyers became less willing to pay at every price.

A country produces only laptops and wheat. If the country cannot produce more laptops without giving up some wheat, economists say the country has achieved

• lowest marginal cost.

• highest marginal benefit.

• allocation inefficiency.

• production efficiency.

• absolute advantage.

If the price of a good is below its equilibrium price, then

• there is a surplus and price will fall.

• there is a shortage and price will rise.

• quantity demanded equals quantity supplied.

• the supply curve will shift left.

• the market clears immediately.

The law of demand states that, all else equal,

• an increase in price reduces the quantity demanded along the demand curve.

• an increase in price increases the demand for the good.

• buyers will always purchase more when price rises.

• demand curves slope upward.

• supply and demand move together.

Which of the following is a positive statement (rather than normative)?

• The government should subsidize farmers to increase food security.

• A higher minimum wage will make workers better off.

• An increase in factory automation shifts the PPF outward.

• The central bank ought to lower interest rates.

• People should save at least 20% of their income.

Which of the following would shift the supply curve for solar panels to the left (i.e., reduce supply at every price)?

• A fall in the price of a key input (silicon wafers).

• An increase in the number of solar panel manufacturers.

• A new environmental regulation that increases production costs.

• A change in consumers' preference for electricity source.

• A tax credit for solar panel production.

3. In one season a blight reduces cocoa supply. At the same time, a new study finds that dark chocolate consumption improves heart health. Which of the following best describes the likely effect on equilibrium price and quantity of chocolate bars?

• A

• B

• C

• D

• E