AP Micro Microeconomics: Basic Economic Concepts 2

Question 1

A student chooses to attend college instead of working full-time. The opportunity cost of attending college is best represented by:

Accepted Answer

The wages foregone from not working full-time

Answer

Tuition and textbook fees

Answer

The total cost of tuition plus foregone wages

Answer

The future salary premium earned after graduation

Question 2

Which of the following best illustrates the economic concept of scarcity?

Accepted Answer

A hospital cannot treat all patients due to limited staff and equipment

Answer

A country has a large supply of natural resources

Answer

A government prints more money to pay its debts

Answer

A store reduces prices to sell excess inventory

Question 3

On a production possibilities curve (PPC), a point located inside the curve indicates:

Accepted Answer

Productive inefficiency or unemployed resources

Answer

Maximum productive efficiency

Answer

An unattainable level of production

Answer

A trade-off between two goods

Question 4

Comparative advantage differs from absolute advantage in that comparative advantage is based on:

Accepted Answer

Having lower opportunity costs of production

Answer

Producing more output per unit of input

Answer

Using the most advanced technology available

Answer

Controlling the largest share of the market

Question 5

If Country A can produce either 100 units of wheat or 50 units of cloth, and Country B can produce either 60 units of wheat or 60 units of cloth, which country has a comparative advantage in cloth?

Accepted Answer

Country B, because the opportunity cost of cloth is lower

Answer

Country A, because it can produce more wheat

Answer

Country A, because it can produce more total goods

Answer

Neither country has a comparative advantage in cloth

Question 6

The law of increasing opportunity costs states that as an economy produces more of one good:

Accepted Answer

The opportunity cost of producing each additional unit rises

Answer

The price of that good will fall due to surplus

Answer

Resources become more efficient at producing that good

Answer

Consumer demand for that good will decrease

Question 7

Which of the following is an example of a normative economic statement?

Accepted Answer

The government should raise taxes on the wealthy to reduce income inequality

Answer

The unemployment rate fell by 0.5% last month

Answer

An increase in the minimum wage reduces employment for low-skilled workers

Answer

Consumer spending accounts for roughly 70% of GDP