AP Microeconomics Unit 1 & 2 Practice (Set 1)
Unit 1: Basic Economic Concepts
Unit 2: Supply and Demand
1 / 20
What is scarcity in the context of economics?
The downward shift of demand.
The fundamental economic problem of having limited resources to meet unlimited wants.
When the quantity supplied of a good is unable to meet quantity demanded.
The leftward shift of supply.
None of the above.
2 / 20
A student can either spend three hours studying for an exam or working a part-time job for $15 per hour. What is the opportunity cost of choosing to study for the exam instead of working?
The potential exam score
The cost of tuition
The study materials
The $45 the student could have earned
3 / 20
A country produces only two goods: computers and wheat. The production possibilities curve (PPC) is bowed outward. This shape implies that:
Resources are perfectly adaptable between the production of the two goods.
Increasing the production of one good requires larger sacrifices in the production of the other.
Opportunity costs are constant.
The country is not using all of its resources efficiently.
4 / 20
A rational consumer will continue to consume a good or service until:
The marginal benefit equals the marginal cost.
The total cost exceeds the total benefit.
The marginal cost equals zero.
The total utility is maximized.
5 / 20
If one country can produce more of a good using the same resources as another country, it is said to have:
Comparative advantage
Specialization advantage
Absolute advantage
Marginal advantage
6 / 20
Which of the following statements is true about comparative advantage?
A country should specialize in producing goods for which it has the lowest opportunity cost
A country has a comparative advantage in producing a good if it can produce the good using fewer inputs than another country
Comparative advantage is determined by who can produce more of a good
A country can only have a comparative advantage in one good
7 / 20
Which of the following are an examples of a trade-offs
A business decides to increase its advertising budget and decrease its research budget.
A consumer decides to save money rather than spend it.
A government chooses to build a highway instead of funding schools.
A student decides to work instead of study.
8 / 20
Which of the following is not considered a factor of production?
Labor
Capital
Money
Land
9 / 20
Allocative efficiency occurs when:
Goods and services are produced at the lowest possible cost.
All firms in a market earn zero economic profit.
Resources are distributed equally among all consumers.
The combination of goods and services produced maximizes society's total benefit.
10 / 20
In a market economy, how are resources typically allocated?
By individuals and firms interacting in markets to make decisions based on prices
Based on traditional methods passed down through generations
Through a combination of government planning and market forces
By a central authority making all economic decisions
11 / 20
The law of demand states that, other things equal:
As the price of a good decreases, the quantity demanded increases
As the price of a good increases, the quantity demanded increases
As the price of a good decreases, the demand for the good increases
The demand for a good is always perfectly elastic
12 / 20
If the price of tea increases and the demand for coffee increases, tea and coffee are likely:
Complementary goods
Scarce goods
Inferior goods
Substitute goods
13 / 20
The law of supply indicates that:
Producers supply less of a good as its price falls
Producers supply more of a good as its price rises, all else equal
Producers supply more of a good as its price falls
The price and quantity supplied are unrelated
14 / 20
Which of the following would cause a rightward shift in the demand curve for normal goods?
A decrease in consumer income
An increase in consumer income
A decrease in the price of substitutes
A decrease in the price of complements
15 / 20
If a market is in equilibrium, which of the following is true? (Best answer)
Demand is perfectly elastic
Supply is perfectly inelastic
Quantity demanded is equal to quantity supplied
Quantity demanded is greater than quantity supplied
16 / 20
A price ceiling set below the equilibrium price is likely to cause:
A surplus
A shortage
No effect on the market
A decrease in the equilibrium price
17 / 20
If the price elasticity of demand for a good is greater than 1, the demand for the good is considered
Inelastic
Elastic
Unit elastic
Perfectly inelastic
18 / 20
Which of the following would cause the supply curve for cars to shift to the right?
A decrease in the wages of auto workers
An increase in the price of steel, a key input in car production
An increase in the price of cars
An increase in the demand for cars
19 / 20
Consumer surplus is defined as the:
Total amount consumers spend on a good
Difference between the equilibrium price and the price paid by producers
Difference between what consumers are willing to pay and what they actually pay
Benefit to producers from charging higher prices
20 / 20
If the income elasticity of demand for a good is positive, the good is considered:
A complementary good
A substitute good
An inferior good
A normal good
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AP Micro/ Macro/ Standard Econ (Supply and Demand Shifters)
Practice the Various Shifters of Supply and Demand
Which of the following would cause a rightward shift in the demand curve for laptops?
A decrease in the price of desktop computers
A decrease in consumer incomes, and laptops are a normal good
An increase in consumer preferences for portable devices
A decrease in the price of laptop components
Which of the following would cause the supply curve for wheat to shift to the right?
A drought affecting key wheat-growing regions
A technological advancement in harvesting equipment
An increase in the price of wheat
An increase in the price of corn, a substitute in production
If consumers’ incomes rise and housing is a normal good, what will happen to the demand for housing?
The demand curve will shift to the left.
The demand curve will shift to the right.
There will be no change in demand.
The quantity demanded will decrease.
For an inferior good, a decrease in consumer incomes will cause:
A decrease in demand.
No change in demand.
An increase in demand.
A movement along the demand curve.
If the price of Pepsi increases, what is likely to happen to the demand for Coca-Cola?
The demand for Coca-Cola will increase.
The demand for Coca-Cola will decrease.
There will be no change in demand for Coca-Cola.
The supply of Coca-Cola will decrease.
If the price of printers decreases, what will likely happen to the demand for printer ink?
The supply of printer ink will decrease.
The price of printer ink will decrease.
The demand for printer ink will decrease.
The demand for printer ink will increase.
If consumers’ preferences shift away from gasoline-powered cars toward electric vehicles, what will happen to the demand for gasoline-powered cars?
The demand will increase.
The demand will decrease.
The demand will remain unchanged.
The quantity demanded will increase.
If consumers expect the price of smartphones to decrease next month, what will happen to the demand for smartphones today?
The supply of smartphones will increase.
The demand will stay the same.
If the population of a country increases, what is likely to happen to the demand for housing?
The supply will increase.
The price of housing will decrease.
If producers expect the price of oil to rise in the future, what will happen to the current supply of oil?
The supply will stay the same.
The demand for oil will decrease.
The supply will decrease.
If the price of steel, an input for car production, rises, what will happen to the supply of cars?
The supply of cars will increase.
The supply of cars will decrease.
The demand for cars will increase.
There will be no change in the supply of cars.
A new technology improves the efficiency of solar panel production. What will happen to the supply of solar panels?
If the government imposes a new tax on the production of tobacco, what will happen to the supply of tobacco?
The price of tobacco will decrease.
If the government provides a subsidy to wheat farmers, what will happen to the supply of wheat?
The price of wheat will decrease.
If the price of cotton increases and cotton and wheat are substitutes in production, what will happen to the supply of wheat?
The supply of wheat will decrease.
The supply of wheat will increase.
The demand for wheat will increase.
There will be no effect on the supply of wheat.
Leather and beef are complements in production. If the price of beef increases, what will happen to the supply of leather?
The supply of leather will increase.
The supply of leather will decrease.
The demand for leather will decrease.
The supply of beef will decrease.
If a government sets a price floor on wheat above the equilibrium price, what is the likely result?
A decrease in the demand for wheat
No change in the wheat market
A shortage of wheat
A surplus of wheat
If a price ceiling on gasoline is set below the equilibrium price, what will likely happen?
A surplus of gasoline
A shortage of gasoline
An increase in gasoline supply
No effect on the gasoline market
If the population of a city increases significantly, what will happen to the demand for public transportation?
If the government introduces stricter environmental regulations on oil production, what is likely to happen to the supply of oil?
The price of oil will decrease.
The demand for oil will increase.
