MUSE TECHNOLOGIES
AP Micro Unit 1 Multiple Choice Questions1. Which of the following is true for all economies regardless of their economic system?A. Every economy must determine what to produce and how it produce goods and servicesB. Every economy must find a way to distribute income equallyC. Every economy must find ways to privatize markets to maximize efficiencyD. Every economy must prevent unemployment through government interventionE. Every economy must open free trade with other economies2. Which of the following is the best example of physical capital?A. A $100,000 business loan from a bank B. A business hiring 10,000 workers at a factoryC. A truck for a delivery companyD. An oven for a family of four E. An increase in construction jobs3. When making a decision, the next best alternative is calledA. The production possibilitiesB. The opportunity costC. ScarcityD. The absolute advantageE. Efficiency 4. Which of the following must be true if an individual’s next best alternative to going to the beach is studying for an economics exam?A. They will decide to study for the examB. The opportunity costs is seeing their friends at the beachC. The person prefers playing volleyball at the beach to study for the exam D. The opportunity cost of going to the beach is all the other things they could have doneE. The opportunity cost of going to the beach is being better prepared for the exam5. If the production possibilities curve is concave from the origin (or bowed out), then economists say thatA. Resources are scarce in the economyB. Resources are not equally suited for the production of both goodsC. Economic growth is occurring in the economyD. Resources are being inefficiently used in the economyE. Resources are equally suited for the production of either good6. A point outside the production possibilities curve would representA. An efficient use of resourcesB. Future output once producers become more efficientC. An inefficient use of resourcesD. A combination that cannot be achieved due to scarcityE. Full employment of resources in the economy7. An increase in which of the following would cause an outward shift of the production possibilities curve for consumer goods and capital goods?A. An increase in the demand for consumer goodsB. An increase in taxes on consumers C. A decrease in unemployment D. An increase in the resources to produce capital goodsE. The efficient production of consumer goods8. Which of the following is true according to the circular flow model?A. Firms are suppliers in both the product and factor markets.B. Firms are demanders in the resource markets and suppliers in the product markets.C. Households are demanders in both the resource and factor markets.D. Households are demanders in the resource markets & suppliers in the product markets.E. The private sector is made up of the households, firms, and the government.9. Which of the following can be considered a leakage from the circular flow of economic activity?A. Taxes B. Government expenditures C. Social Security payments D. Consumer spendingE. Saving 10. Which of the following best explains why many U.S. economists support free trade?A. Workers who lose their jobs due to free trade can collect unemployment compensation.B. It is more important to reduce global inflation than to reduce domestic unemployment.C. Workers are not affected by free trade since only domestic businesses suffer.D. The long-run gains to consumers and some producers exceed the losses to other producers.E. Government can protect domestic industries while encouraging free trade.11. Claire is an economist who can earn $150 per hour. She is also an excellent chef who can cook three times as fast as the best chef in the area, whose hourly wage is $20 per hour. Which of the following is a correct economic statement?A. Claire has a comparative advantage in economics so she should specialize in economics and hire the chef to cook for her.B. Claire has an absolute and comparative advantage in both economics and cooking, so she work as an economist and as a chef.C. Claire is three times faster than any chef so she could give up economics to become a chef.D. When chefs work for economists, they should charge $150 per hour instead of $20 per hour.E. Because Claire is an excellent chef, when the best chef works for Claire, she should pay the chef only 1/3 the hourly wage. 12. If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true?A. Mike has an absolute advantage in the production of surfboardsB. Mike’s opportunity cost for producing one bike is 5 surfboardsC. Joe has a comparative advantage in the production of both surfboards and bikesD. Mike has a comparative advantage in the production of surfboards E. Joe’s opportunity cost for producing one surfboard is 3 bikes13. Atlantis can produce either 2 tons of grain or 4 cars with 10 units of labor. Zoltar can produce either 5 tons of grain or 25 cars with 10 units of labor. Based on this information, which of the following is true.A. Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of grain.B. Atlantis has a comparative advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars.C. Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars.D. Atlantis has a comparative disadvantage in the production of both goods.E. Neither country has a comparative advantage in the production of either good. Answer Key1. A2. C3. B4. E5. B6. D7. D8. B9. E10. D11. A12. E13. B ................
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