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Unit 1 AP microeconomics

question
Economics deals primarily with the concept of
a.scarcity.
b.poverty.
c.change.
d.power.
answer
a. scarcity
question
Economics is the study of
a.how society manages its scarce resources.
b.the government's role in society.
c.how a market system functions.
d.how to increase production.
answer
a. how society manages its scare resources
question
Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is
a.the $16 he could have earned working for two hours.
b.nothing, because he enjoys playing golf more than working.
c.the increase in skill he obtains from playing golf for those two hours.
d.nothing, because he spent $16 for green fees to play golf.
answer
a.the $16 he could have earned working for two hours.
question
When society requires that firms reduce pollution, there is
a.a tradeoff because of reduced incomes to the firms' owners, workers, and customers.
b.no tradeoff, since everyone benefits from reduced pollution.
c.no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms affected by the requirements.
d.a tradeoff only if some firms are forced to close.
answer
a.a tradeoff because of reduced incomes to the firms' owners, workers, and customers.
question
Productive efficiency means that
a.society is conserving resources in order to save them for the future.
b.society's goods and services are distributed fairly among society's members.
c.society has lessened its dependence on foreign energy sources.
d.society is getting the most it can from its scarce resources.
answer
d.society is getting the most it can from its scarce resources.
question
The opportunity cost of going to college is
a.the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
b.the value of the best opportunity a student gives up to attend college.
c.zero for students who are fortunate enough to have all of their college expenses paid by someone else.
d.zero, since a college education will allow a student to earn a larger income after graduation.
answer
b.the value of the best opportunity a student gives up to attend college.
question
People make decisions at the margin by
a.following tradition.
b.experience.
c.calculating dollar costs.
d.comparing costs and benefits.
answer
d.comparing costs and benefits.
question
A marginal change is a
a.long-term trend.
b.large, significant adjustment.
c.change for the worse, and so is usually short-term.
d.small incremental adjustment.
answer
d.small incremental adjustment.
question
A rational decision maker takes an action only if the
a.marginal benefit is less than the marginal cost.
b.marginal benefit is greater than the marginal cost.
c.average benefit is greater than the average cost.
d.marginal benefit is greater than both the average cost and the marginal cost.
answer
b.marginal benefit is greater than the marginal cost.
question
Which is the most accurate statement about trade?
a.Trade can make every nation better off.
b.Trade makes some nations better off and others worse off.
c.Trading for a good can make a nation better off only if the nation cannot produce that good itself.
d.Trade helps rich nations and hurts poor nations.
answer
a.Trade can make every nation better off
question
The decisions of firms and households are guided by profit and self-interest in a
a.command economy.
b.traditional economy.
c.market economy.
d.All of the above are correct.
answer
c.market economy.
question
One advantage market economies have over central planning is that market economies
a.provide an equal distribution of goods and services to consumers.
b.establish government economic control.
c.solve the problem of scarcity.
d.are more efficient.
answer
d.are more efficient.
question
A market economy differs from a communist economy in that economic decisions are made by
a.a central planner.
b.millions of firms and households.
c.primarily the government.
d.large corporations.
answer
b.millions of firms and households.
question
Prior to its collapse, communist countries worked on the premise that economic well-being could be organized only through/by
a.a market economy.
b.government central planners.
c.government-imposed private monopolies.
d.increased competition.
answer
b.government central planners.
question
Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
a.There is no such thing as a free lunch.
b.People buy more when prices are low than when prices are high.
c.No matter how much people earn, they tend to spend more than they earn.
d.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
answer
d.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
question
One component necessary for markets to work is
a.government intervention.
b.a benevolent society.
c.property rights.
d.abundant resources.
answer
c.property rights.
question
In the circular-flow diagram,
a.firms are sellers in the resource market and the product market.
b.firms are buyers in the product market.
c.households are sellers in the resource market.
d.spending on goods and services flows from firms to households.
answer
c.households are sellers in the resource market.
question
In the circular-flow diagram,
a.income from factors of production flows from firms to households.
b.goods and services flow from households to firms.
c.factors of production flow from firms to households.
d.spending on goods and services flow from firms to households.
answer
a.income from factors of production flows from firms to households.
question
In economics, capital refers to
a.the finances necessary for firms to produce their products.
b.buildings and machines used in the production process.
c.the money households use to purchase firms' output.
d.the city where firms must apply for the business license in their state.
answer
b.buildings and machines used in the production process.
question
Refer to Figure 2-3. The economy can produce at which point or points?
a.B, D, E
b.A, B, D, E
c.D, C
d.D
answer
a.B, D, E
question
Refer to Figure 2-3. Which point represents the maximum possible production of tubas?
a.A
b.B
c.D
d.E
answer
d.E
question
Refer to Figure 2-3. The economy CANNOT produce at which point or points?
a.A
b.C
c.A, C
d.A, C, D,
answer
c.A, C
question
Refer to Figure 2-3. Which point or points are efficient?
a.B, E
b.A, B, E
c.D
d.C
answer
a.B, E
question
Refer to Figure 2-3. Which point or points are inefficient?
a.A, C
b.D, C
c.C
d.D
answer
d.D
question
Refer to Figure 2-6. What is the opportunity cost to society of the movement from point A to point C?
a.50 baseballs
b.100 baseballs
c.100 bananas
d.300 bananas
answer
b.100 baseballs
question
Refer to Figure 2-6. The movement from point C to point D was most likely caused by
a.unemployment.
b.a decrease in society's preference for bananas.
c.fewer resources available for production.
d.All of the above are correct.
answer
a.unemployment.
question
Microeconomics is the study of
a.the behavior of consumers.
b.how individual households and firms make decisions.
c.how government affects the economy.
d.how the economy as a whole works.
answer
b.how individual households and firms make decisions.
question
For economists, statements about the world are of two types:
a.assumptions and theories.
b.true statements and false statements.
c.specific statements and general statements.
d.positive statements and normative statements.
answer
d.positive statements and normative statements.
question
A normative statement describes how the world
a.was in the past.
b.is.
c.will be in the future.
d.ought to be.
answer
d.ought to be.
question
Refer to Table 3-2. The opportunity cost of 1 quilt for Helen is
a.2 dresses.
b.3 dresses.
c.4 dresses.
d.5 dresses.
answer
c.4 dresses.
question
Refer to Table 3-2. The opportunity cost of 1 quilt for Carolyn is
a.5 dresses.
b.4 dresses.
c.3 dresses.
d.2 dresses.
answer
a.5 dresses.
question
Refer to Table 3-2. The opportunity cost of 1 dress for Helen is
a.1 quilt.
b.1/2 quilt.
c.1/4 quilt.
d.4 quilts.
answer
c.1/4 quilt.
question
Refer to Table 3-2. The opportunity cost of 1 dress for Carolyn is
a.5 quilts.
b.1 quilt.
c.1/5 quilt.
d.4 quilts.
answer
c.1/5 quilt.
question
Refer to Table 3-2. Helen has an absolute advantage in
a.dresses and Carolyn has a comparative advantage in quilts.
b.both goods and Carolyn has a comparative advantage in dresses.
c.quilts and Carolyn has a comparative advantage in dresses.
d.both goods and Carolyn has a comparative advantage in quilts.
answer
b.both goods and Carolyn has a comparative advantage in dresses.
question
Refer to Table 3-2. Helen and Carolyn both could benefit by Helen specializing in
a.dresses and Carolyn specializing in quilts.
b.neither good and Carolyn specializing in both goods.
c.quilts and Carolyn specializing in dresses.
d.both goods and Carolyn specializing in neither good.
answer
c.quilts and Carolyn specializing in dresses.
1 of 35
question
Economics deals primarily with the concept of
a.scarcity.
b.poverty.
c.change.
d.power.
answer
a. scarcity
question
Economics is the study of
a.how society manages its scarce resources.
b.the government's role in society.
c.how a market system functions.
d.how to increase production.
answer
a. how society manages its scare resources
question
Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is
a.the $16 he could have earned working for two hours.
b.nothing, because he enjoys playing golf more than working.
c.the increase in skill he obtains from playing golf for those two hours.
d.nothing, because he spent $16 for green fees to play golf.
answer
a.the $16 he could have earned working for two hours.
question
When society requires that firms reduce pollution, there is
a.a tradeoff because of reduced incomes to the firms' owners, workers, and customers.
b.no tradeoff, since everyone benefits from reduced pollution.
c.no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms affected by the requirements.
d.a tradeoff only if some firms are forced to close.
answer
a.a tradeoff because of reduced incomes to the firms' owners, workers, and customers.
question
Productive efficiency means that
a.society is conserving resources in order to save them for the future.
b.society's goods and services are distributed fairly among society's members.
c.society has lessened its dependence on foreign energy sources.
d.society is getting the most it can from its scarce resources.
answer
d.society is getting the most it can from its scarce resources.
question
The opportunity cost of going to college is
a.the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
b.the value of the best opportunity a student gives up to attend college.
c.zero for students who are fortunate enough to have all of their college expenses paid by someone else.
d.zero, since a college education will allow a student to earn a larger income after graduation.
answer
b.the value of the best opportunity a student gives up to attend college.
question
People make decisions at the margin by
a.following tradition.
b.experience.
c.calculating dollar costs.
d.comparing costs and benefits.
answer
d.comparing costs and benefits.
question
A marginal change is a
a.long-term trend.
b.large, significant adjustment.
c.change for the worse, and so is usually short-term.
d.small incremental adjustment.
answer
d.small incremental adjustment.
question
A rational decision maker takes an action only if the
a.marginal benefit is less than the marginal cost.
b.marginal benefit is greater than the marginal cost.
c.average benefit is greater than the average cost.
d.marginal benefit is greater than both the average cost and the marginal cost.
answer
b.marginal benefit is greater than the marginal cost.
question
Which is the most accurate statement about trade?
a.Trade can make every nation better off.
b.Trade makes some nations better off and others worse off.
c.Trading for a good can make a nation better off only if the nation cannot produce that good itself.
d.Trade helps rich nations and hurts poor nations.
answer
a.Trade can make every nation better off
question
The decisions of firms and households are guided by profit and self-interest in a
a.command economy.
b.traditional economy.
c.market economy.
d.All of the above are correct.
answer
c.market economy.
question
One advantage market economies have over central planning is that market economies
a.provide an equal distribution of goods and services to consumers.
b.establish government economic control.
c.solve the problem of scarcity.
d.are more efficient.
answer
d.are more efficient.
question
A market economy differs from a communist economy in that economic decisions are made by
a.a central planner.
b.millions of firms and households.
c.primarily the government.
d.large corporations.
answer
b.millions of firms and households.
question
Prior to its collapse, communist countries worked on the premise that economic well-being could be organized only through/by
a.a market economy.
b.government central planners.
c.government-imposed private monopolies.
d.increased competition.
answer
b.government central planners.
question
Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
a.There is no such thing as a free lunch.
b.People buy more when prices are low than when prices are high.
c.No matter how much people earn, they tend to spend more than they earn.
d.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
answer
d.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
question
One component necessary for markets to work is
a.government intervention.
b.a benevolent society.
c.property rights.
d.abundant resources.
answer
c.property rights.
question
In the circular-flow diagram,
a.firms are sellers in the resource market and the product market.
b.firms are buyers in the product market.
c.households are sellers in the resource market.
d.spending on goods and services flows from firms to households.
answer
c.households are sellers in the resource market.
question
In the circular-flow diagram,
a.income from factors of production flows from firms to households.
b.goods and services flow from households to firms.
c.factors of production flow from firms to households.
d.spending on goods and services flow from firms to households.
answer
a.income from factors of production flows from firms to households.
question
In economics, capital refers to
a.the finances necessary for firms to produce their products.
b.buildings and machines used in the production process.
c.the money households use to purchase firms' output.
d.the city where firms must apply for the business license in their state.
answer
b.buildings and machines used in the production process.
question
Refer to Figure 2-3. The economy can produce at which point or points?
a.B, D, E
b.A, B, D, E
c.D, C
d.D
answer
a.B, D, E
question
Refer to Figure 2-3. Which point represents the maximum possible production of tubas?
a.A
b.B
c.D
d.E
answer
d.E
question
Refer to Figure 2-3. The economy CANNOT produce at which point or points?
a.A
b.C
c.A, C
d.A, C, D,
answer
c.A, C
question
Refer to Figure 2-3. Which point or points are efficient?
a.B, E
b.A, B, E
c.D
d.C
answer
a.B, E
question
Refer to Figure 2-3. Which point or points are inefficient?
a.A, C
b.D, C
c.C
d.D
answer
d.D
question
Refer to Figure 2-6. What is the opportunity cost to society of the movement from point A to point C?
a.50 baseballs
b.100 baseballs
c.100 bananas
d.300 bananas
answer
b.100 baseballs
question
Refer to Figure 2-6. The movement from point C to point D was most likely caused by
a.unemployment.
b.a decrease in society's preference for bananas.
c.fewer resources available for production.
d.All of the above are correct.
answer
a.unemployment.
question
Microeconomics is the study of
a.the behavior of consumers.
b.how individual households and firms make decisions.
c.how government affects the economy.
d.how the economy as a whole works.
answer
b.how individual households and firms make decisions.
question
For economists, statements about the world are of two types:
a.assumptions and theories.
b.true statements and false statements.
c.specific statements and general statements.
d.positive statements and normative statements.
answer
d.positive statements and normative statements.
question
A normative statement describes how the world
a.was in the past.
b.is.
c.will be in the future.
d.ought to be.
answer
d.ought to be.
question
Refer to Table 3-2. The opportunity cost of 1 quilt for Helen is
a.2 dresses.
b.3 dresses.
c.4 dresses.
d.5 dresses.
answer
c.4 dresses.
question
Refer to Table 3-2. The opportunity cost of 1 quilt for Carolyn is
a.5 dresses.
b.4 dresses.
c.3 dresses.
d.2 dresses.
answer
a.5 dresses.
question
Refer to Table 3-2. The opportunity cost of 1 dress for Helen is
a.1 quilt.
b.1/2 quilt.
c.1/4 quilt.
d.4 quilts.
answer
c.1/4 quilt.
question
Refer to Table 3-2. The opportunity cost of 1 dress for Carolyn is
a.5 quilts.
b.1 quilt.
c.1/5 quilt.
d.4 quilts.
answer
c.1/5 quilt.
question
Refer to Table 3-2. Helen has an absolute advantage in
a.dresses and Carolyn has a comparative advantage in quilts.
b.both goods and Carolyn has a comparative advantage in dresses.
c.quilts and Carolyn has a comparative advantage in dresses.
d.both goods and Carolyn has a comparative advantage in quilts.
answer
b.both goods and Carolyn has a comparative advantage in dresses.
question
Refer to Table 3-2. Helen and Carolyn both could benefit by Helen specializing in
a.dresses and Carolyn specializing in quilts.
b.neither good and Carolyn specializing in both goods.
c.quilts and Carolyn specializing in dresses.
d.both goods and Carolyn specializing in neither good.
answer
c.quilts and Carolyn specializing in dresses.
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