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AP Microeconomics
Section 1 Practice Test
Multiple Choice
1.
How people choose among the alternatives available to them is:
a. not part of the study of economics.
b. impossible to describe.
c. the study of microeconomics.
d. not important.
e. normative economics.
2. When we are forced to make choices we are facing the concept of:
a. ceteris paribus.
b. free goods.
c. scarcity.
d. the margin.
e. positive and normative analysis.
3. Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for
Margo is:
a. $10,000.
b. whatever she would have purchased with the $10,000 instead.
c. whatever she would have earned had she not been in college.
d. whatever she would have purchased with the $10,000 minus whatever she would have
earned had she not been in college.
e. whatever she would have purchased with the $10,000 plus whatever she would have
earned had she not been in college.
Scenario 1-1: Marginal Benefits and Marginal Costs
In the graph, MB represents the additional points on an economics exam for each hour of studying economics, and
MC represents the loss of points on an accounting test for each hour of studying economics.
4. (Scenario 1-1: Marginal Benefits and Marginal Costs) As shown, more time spent studying economics adds points
to economics scores but subtracts points from accounting scores. The marginal benefit of studying economics
when the student is at 2 hours is ________ points and the marginal cost is ________ points.
a. 40; 0
b. 30; 10
c. 20; 20
d. 10; 30
e. 30; 0
5. The study of a single firm and how it determines prices would fall under:
a. macroeconomics.
b. microeconomics.
c. economic growth.
d. fiscal policy.
e. the Federal Reserve.
6. The student center on campus has burritos, bagels, or burgers for lunch. You decide to have a burger today, but if
they had been out of burgers, you would have bought a bagel. Your opportunity cost is the:
a. burger.
b. bagel.
c. burrito.
d. bagel and burrito.
e. burger, bagel, and burrito
7. You like to read Vogue and Sports Illustrated. You only have $5 to spend so you only buy Sports Illustrated. This
statement best represents the economic concept of:
a. resources are scarce.
b. the real cost of something is what you must give up to get it.
c. “how much?” is a decision at the margin.
d. there are gains from trade.
e. one person’s spending is another person’s income.
Figure 3-2: Strawberries and Submarines
8. (Figure 3-2: Strawberries and Submarines) Suppose the economy is operating at point C. Moving to point E would
require that the economy:
a. reduce employment and allow some resources to be idle.
b. eliminate its production of strawberries.
c. reduce its production of submarines.
d. improve its technology or increase the quantity of economic resources.
e. convert resources currently in submarine production to strawberry production.
Figure 3-11: Production Possibilities and Circular-Flow Diagram
9. (Figure 3-11: Production Possibilities and Circular-Flow Diagram) Assume the accompanying figures represent the
same economy. Suppose that in the circular-flow diagram there is a significant increase in the amount of capital
that is flowing to the firms that produce fish. Assume that there is a corresponding decrease in the amount of
capital that is flowing to the firms that produce coconuts. This adjustment in the economy would be best
represented in the production possibilities figure by a move from point A toward:
a. point A (no movement would occur).
b. point B (an increase in fish production).
c. point C (a decrease in coconut production).
d. point D (an outward shift of the entire curve..
e. point D (an inward shift of the entire curve..
Figure 3-1: Guns and Butter
10. (Figure 3-1: Guns and Butter) This production possibility curve is:
a. bowed out from the origin because of increasing opportunity costs.
b. bowed in toward the origin because of increasing opportunity costs.
c. bowed in toward the origin because of constant opportunity costs.
d. linear because of constant opportunity costs.
e. bowed out from the origin because of constant opportunity costs.
11. “In Thailand, all the land, labor, and capital in society are used in a way that has fully exploited all opportunities to
make everyone better off.” This statement best represents the economic concept of:
a. markets move toward equilibrium.
b. resources should be used as efficiently as possible to achieve society's goals.
c. markets usually lead to efficiency.
d. when markets don't achieve efficiency, government intervention can improve society's
welfare.
e. one person’s spending becomes another person’s income.
Figure 3-5: Tom’s Production Possibilities
12. (Figure 3-5: Tom’s Production Possibilities) In the figure, which point or points would represent (an) inefficient
combination(s) of wine and wheat if Tom made that choice?
a. A
b. A and B
c. C
d. B and D
e. C and D
13. If an economy is efficient, this means:
a. all goods are produced at their maximum quantities.
b. all opportunities to make people better off without making other people worse off have
been taken.
c. more resources have been used to produce specific consumer goods than producer goods.
d. prices are the lowest they can possibly be.
e. there is no role for the government in the marketplace.
14. In most cases, economic efficiency is achieved through:
a. individuals that sacrifice their own self-interest.
b. regulation of the invisible hand.
c. individuals seeking out opportunities that involve no risk.
d. maximizing equity.
e. incentives built into a market economy.
15. An economy that has the lowest opportunity cost for producing a particular good is said to have a(n):
a. technological advantage.
b. comparative advantage.
c. production possibility curve.
d. increasing opportunity cost.
e. absolute advantage.
16. Specialization and trade usually lead to:
a. lower economic growth.
b. the exchange of goods and services in markets.
c. lower living standards.
d. higher prices.
e. less efficiency.
Coffee
Salmon
Brazil
40
20
Alaska
10
10
Table 4-1: Coffee and Salmon Production
Possibilities
17. (Table 4-1: Coffee and Salmon Production Possibilities) The table shows the maximum amounts of coffee and
salmon that Brazil and Alaska can produce if they just produce one good. The opportunity cost of producing 1 unit
of salmon for Alaska is:
a. 2 coffees.
b. 1/4 coffee.
c. 10 coffee.
d. 1/2 coffee.
e. 1 coffee.
Figure 4-4: Alphaland and Omegaland
18. (Figure 4-4: Alphaland and Omegaland) The opportunity cost of producing 1 tire in Alphaland is ________
radio(s), while the opportunity cost of producing 1 tire in Omegaland is ________ radio(s).
a. 1/2; 2
b. 2; 1
c. 600; 800
d. 800; 1,200
e. 2; 1/2
Figure 4-2: Comparative Advantage
Eastland and Westland produce only two goods, peaches and oranges, and this figure shows each nation's
production possibility curve for the two goods.
19. (Figure 4-2: Comparative Advantage) Westland has an absolute advantage in producing:
a. oranges only.
b. a combination of oranges and peaches.
c. both oranges and peaches.
d. neither oranges or peaches.
e. peaches only.
The table shows the maximum amounts of machinery and petroleum that the United States and Mexico can
produce if they only produce one good. Both nations face constant costs of production.
Countries
Machinery (units)
Petroleum (units)
United States
80
40
Mexico
60
180
Table 4-5: Production Possibilities for Machinery and Petroleum
20. (Table 4-5: Production Possibilities for Machinery and Petroleum) The opportunity cost in the United States of
producing 40 units of machinery is ________ units of petroleum.
a. 80
b. 60
c. 40
d. 20
e. 2