FREE AP MACRO Concepts and Models Questions and Answers
Which of the following best describes the concept of scarcity?
Scarcity arises because resources are finite, while human desires and needs are virtually infinite. This imbalance forces individuals and societies to make choices about allocating resources.
What does the production possibilities curve (PPC) illustrate?
The PPC shows the maximum output combinations of two goods that an economy can achieve, given its available resources and technology. Points on the curve represent efficient production, while points inside represent underutilization.
If an economy is operating on its production possibilities curve, it implies that:
Operating on the PPC means the economy is using all its resources efficiently. To increase production of one good, the economy must reduce the production of another good, reflecting opportunity cost.
What is the opportunity cost of attending college full-time?
Opportunity cost is the value of the next best alternative forgone. For attending college full-time, it includes both direct costs like tuition and the income lost by not working full-time.
Which of the following would cause a shift outward in a production possibilities curve?
An outward shift in the PPC indicates economic growth, often resulting from factors like technological advancements or increases in resources, which enable higher productivity.