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AP Microeconomics Unit 1: Basic Economic Concepts

12 questions

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Unit 1: Basic Economic Concepts

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Question 1

A linear PPC has endpoints at (0, 80) for Good Y and (40, 0) for Good X. What is the opportunity cost of producing one additional unit of Good X?

Question 2

When a new technology improves the production of consumer goods but not capital goods, what happens to the PPC?

A.The PPC shifts outward uniformly along both axes.B.The PPC rotates outward along the consumer goods axis only.C.The PPC shifts inward, reflecting that resources now have an alternative use.D.The PPC becomes linear because the opportunity cost is now constant.

Question 3

A firm decides to keep operating a machine that cost $50, 000 tw oy e a r s a g o, e v e n t h o ug han e w er ma c hin e w o u l d p r o d u ceo u tp u t m or ec h e a pl y . F r o man eco n o mi cs t an d p o in t, t h e$ 50,000 is:

A.A variable cost that should factor into the decision to upgrade.B.An opportunity cost that must be deducted from future revenue.C.A sunk cost that should not influence the upgrade decision.D.A fixed cost that reduces the firm's profit by $50,000 each year.

Question 4

Which of the following is the best example of a marginal decision?

A.A firm decides whether to enter a new industry.B.A government sets a national budget for the next fiscal year.C.A student decides whether to study one additional hour for a test.D.A country chooses between a market economy and a command economy.

Question 5

Which of the following events would cause an outward (rightward) shift of an economy's PPC?

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Question 6

An economy currently operates inside its production possibilities curve (PPC). This situation most likely indicates that the economy is experiencing:

A.Efficient allocation of all available resources.B.Unemployment or underutilization of resources.C.A point that is technologically impossible to achieve.D.An outward shift in the production possibilities curve.

Question 7

The concept of scarcity in economics refers to the condition in which:

Question 8

Trade between two parties occurs voluntarily only when:

Question 9

The concept of scarcity in economics refers to the condition in which:

A.Only low-income individuals cannot afford the goods they want.B.Resources are insufficient to satisfy all human wants simultaneously.C.Goods are physically rare or difficult to find in nature.D.A country lacks the technology to produce enough goods for its population.

Question 10

When a new technology improves the production of consumer goods but not capital goods, what happens to the PPC?

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Question 11

Country Alpha can produce 6 tons of wheat per labor-hour or 3 tons of steel per labor-hour. Country Beta can produce 4 tons of wheat per labor-hour or 4 tons of steel per labor-hour. Which statement is correct?

Question 12

An economy currently operates inside its production possibilities curve (PPC). This situation most likely indicates that the economy is experiencing:

AP Microeconomics Unit 1: Basic Economic Concepts — Free with Answer Explanations | Test Practice Hub