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

Opportunity cost is the value of the next best alternative foregone, which in this case is the wages the student could have earned working full-time.

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

Scarcity occurs when limited resources cannot satisfy all human wants, as illustrated by a hospital unable to treat all patients with limited staff and equipment.

Question 3

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

Accepted Answer

Productive inefficiency or unemployed resources

Answer

A point inside the PPC represents productive inefficiency, meaning resources are unemployed or being used ineffectively.

Question 4

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

Accepted Answer

Having lower opportunity costs of production

Answer

Comparative advantage is based on lower opportunity costs, not on producing the most output, which is absolute advantage.

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 B gives up 1 unit of wheat per unit of cloth, while Country A gives up 2 units of wheat per unit of cloth, so Country B has the lower opportunity cost for cloth.

AP Practice Test

AP Practice Test

AP Micro Microeconomics: Basic Economic Concepts 2