AP Microeconomics Basic Economic Concepts

Question 1

Which of the following best describes the concept of scarcity?

Accepted Answer

Limited resources to meet unlimited wants

Answer

Unlimited resources to meet unlimited wants

Answer

Limited wants and unlimited resources

Answer

Limited resources to meet limited wants

Question 2

What is the opportunity cost of choosing to produce more of one good?

Accepted Answer

The value of the next best alternative foregone

Answer

The cost of raw materials used in production

Answer

The money spent on producing that good

Answer

The total value of all alternatives foregone

Question 3

A production possibilities curve (PPC) is bowed outwards. This indicates:

Accepted Answer

Increasing opportunity costs

Answer

Constant opportunity costs

Answer

Decreasing opportunity costs

Answer

No opportunity costs

Question 4

If one country has an absolute advantage in producing all goods, can it still benefit from trade?

Accepted Answer

Yes, because of comparative advantage

Answer

Yes, because of absolute advantage

Answer

No, because it produces all goods more efficiently

Answer

No, because it does not need trade

Question 5

Which economic system relies on government planning to allocate resources?

Accepted Answer

Command economy

Answer

Market economy

Answer

Mixed economy

Answer

Traditional economy