AP Macro unit 1

A leftward shift of the supply curve for computers could be caused by which of the following in the short run? A A decrease in the number of computer manufacturers B A decease in taxes on computer manufacturers C A decrease in the price of computers D A decrease in the price of components used to assemble computers E An increase in the price of mobile devices, a substitute good

A A decrease in the number of computer manufacturers

The diagram above shows two demand curves for video games identified as D1 and D2. Which of the following changes will most likely cause a shift of the demand curve from D1 to D2 as shown in the diagram?(shift right) A An increase in consumers' income, assuming that video games are a normal good B An increase in the price of game consoles, a complementary good C A decrease in the price of mobile games, a substitute good D A decrease in the number of buyers in the market E A decrease in the price of video games

A An increase in consumers' income, assuming that video games are a normal good

The diagram below shows the production alternatives of two countries, Alpha and Beta, producing two goods, grain and steel, using all of their available resources. Grain (in tons) Steel (in tons) Alpha 30 30 Beta 10 20 The theory of comparative advantage implies that Alpha would find it advantageous to A export grain and import steel B export steel and import grain C export both grain and steel and import nothing D import both grain and steel and export nothing E trade 1 ton of grain for 0.5 ton of steel

A export grain and import steel

Scarcity exists because A human wants exceed the productive capacity of the economy B supplies of land and other natural resources are unlimited C physical capital does not depreciate D population and labor force growth are slowing E innovation causes unemployment

A human wants exceed the productive capacity of the economy

If there is a decrease in the price of the coffee beans used to make brewed coffee, how will this affect the equilibrium price and quantity of brewed coffee? A Equilibrium price will decrease and equilibrium quantity will increase B Equilibrium price will decrease and equilibrium quantity will not change C Equilibrium price will decrease and equilibrium quantity will decrease D Equilibrium price will increase and equilibrium quantity will decrease E Equilibrium price will increase and equilibrium quantity will not change

A Equilibrium price will decrease and equilibrium quantity will increase

Country X is a major buyer of Country Y's grains. Assume Country X's government announced an increase in taxes on its imports of Country Y's grains effective next month. How will this news likely affect consumers' demand for grains in Country X? A It will increase now because the tax on imported grains will increase the future price of grains. B It will decrease now because the tax on imported grains will increase the future price of grains. C It will not change now because the tax on imported grains will increase the future price of grains. D It will increase now because the tax on imported grains will increase the current price of grains. E It will decrease now because the tax on imported grains will increase the current price of grains.

A It will increase now because the tax on imported grains will increase the future price of grains.

Which of the following describes the relationship between price and quantity supplied according to the law of supply? A Positive relationship, illustrated by an upward-sloping supply curve B Positive relationship, illustrated by a downward-sloping supply curve C Positive relationship, illustrated by a horizontal supply curve D Negative relationship, illustrated by an upward-sloping supply curve E Negative relationship, illustrated by a downward-sloping supply curve

A Positive relationship, illustrated by an upward-sloping supply curve

Which of the following illustrates the effect of a decrease in an economy's resources using a production possibilities curve (PPC)? A The economy's PPC will shift inward and to the left. B The economy's PPC will shift outward and to the right. C The economy's PPC will become steeper. D The economy's PPC will become flatter. E The economy's PPC will remain the same.

A The economy's PPC will shift inward and to the left.

Which of the following changes will most likely result in a movement from point X to point Y along the demand curve D1 ? A A decrease in the number of buyers B A decrease in the price of video games C A decrease in the expected future price of video games D An increase in the negative effects of video games on players E An increase in the use of video games for educational purposes

B A decrease in the price of video games

Which of the following changes would result in an indeterminate change in the equilibrium price in a competitive market? A An increase in demand and a decrease in supply B An increase in demand and an increase in supply C A decrease in demand and an increase in supply D A decrease in demand with no change in supply E A decrease in supply with no change in demand

B An increase in demand and an increase in supply

To protect high-cost domestic producers, a country imposes a tariff on an imported commodity, Y. Which of the following is most likely to occur in the short run? A decrease in domestic production of Y An increase in domestic production of Y An increase in foreign output of Y A I only B II only C III only D I and III only E II and III only

B II only

If the wage rate of workers producing a good decreases, then which of the following will most likely occur? A The demand curve will shift to the right. B The supply of the good will increase. C The quantity supplied of the good will decrease. D Demand for the good will increase E Quantity demanded for the good will decrease.

B The supply of the good will increase.

Which of the following describes scarcity? A Wants are limited. B Wants exceed resources. C Resources are unlimited. D Resources are fully employed. E Resources are allocated efficiently.

B Wants exceed resources.

The fundamental economic problem is A rising interest rates B the scarcity of resources C unemployment and inflation D the tax burden on households E the unequal distribution of income

B the scarcity of resources

The concept of opportunity cost would no longer be relevant if A poverty in an economy no longer existed B the supply of all resources were unlimited C resources were allocated efficiently D real wages were flexible E all current incomes were invested in technological research

B the supply of all resources were unlimited

Trucks Coffee(in tons) China 250 50 Malaysia 300 100 The table above shows the maximum amount of trucks or coffee that China and Malaysia can produce using the same amount of resources. Based on the data provided, which of the following terms of trade are mutually beneficial for the two countries? A 1 ton of coffee for 3 trucks B 1 ton of coffee for 4 trucks C 1 ton of coffee for 5 trucks D 1 truck for 1 ton of coffee E 1 truck for 5 tons of coffee

B 1 ton of coffee for 4 trucks

Which of the following changes will increase the demand for bicycles? A An increase in the price of bicycle helmets, a complementary good B An increase in the price of scooters, a substitute good C A decrease in the price of bicycles D A decrease in consumers' income E A decrease in the number of buyers

B An increase in the price of scooters, a substitute good

Suppose countries Alphania and Betania produce electronics and apparel using identical resources. Which of the following is true if Alphania exports electronics to and imports apparel from Betania within a free-trade system ? A The opportunity cost of producing electronics is higher in Alphania than in Betania. B Betania has a comparative advantage in producing apparel, and Alphania has a comparative advantage in producing electronics. C Alphania must be specializing in apparel, while Betania is specializing in electronics. D Workers in Alphania can produce more apparel per hour than workers in Betania. E Consumers in Betania buy more electronics than consumers in Alphania.

B Betania has a comparative advantage in producing apparel, and Alphania has a comparative advantage in producing electronics.

How will an increase in demand and a simultaneous decrease in supply affect the equilibrium price and quantity of a good in a market? A PriceQuantity IncreaseIncrease B PriceQuantity IncreaseIndeterminate C PriceQuantity DecreaseIncrease D PriceQuantity DecreaseIndeterminate E PriceQuantity IndeterminateIndeterminate

B PriceQuantity IncreaseIndeterminate

Allie is shopping when she finds a pair of running shoes priced at $90. When Allie uses her debit card to pay, it is declined because her balance is insufficient to cover the cost of the running shoes. Allie's situation best illustrates which economic concept? A Opportunity cost B Scarcity C Unlimited resources D Trade-offs E Trade

B Scarcity

Production Point Shirts Chairs A 20 0 B 16 1 C 12 2 D 8 3 E 4 4 F 0 5 The table shows the production possibilities for Country X in producing shirts and chairs when it uses all its available resources. The opportunity cost of producing one additional chair is A zero B constant C increasing D decreasing E indeterminate

B constant

The graph above shows the production possibilities curves (PPC) for an economy. The concept of opportunity cost is best represented by which of the following? A A shift from PPC1 to PPC2 B A movement from point A to point D C A movement from point B to point C D A movement from point C to point E E A movement from point D to point B

C A movement from point B to point C

What type of opportunity costs do PPC1 and PPC2 illustrate? A PPC1 illustrates constant opportunity costs and PPC2 illustrates increasing opportunity costs. B PPC1 illustrates constant opportunity costs and PPC2 illustrates decreasing opportunity costs. C PPC1 illustrates increasing opportunity costs and PPC2 illustrates decreasing opportunity costs. D PPC1 illustrates increasing opportunity costs and PPC2 illustrates constant opportunity costs. E PPC1 illustrates decreasing opportunity costs and PPC2 illustrates constant opportunity costs.

C PPC1 illustrates increasing opportunity costs and PPC2 illustrates decreasing opportunity costs.

If one-fourth of a nation's wheat crop is destroyed by a flood in a given season, then the price of wheat and the quantity sold will change in the short run in which of the following ways? A PriceQuantity SoldDecreaseNo change B PriceQuantity SoldDecreaseIncrease C PriceQuantity SoldIncreaseDecrease D PriceQuantity SoldIncreaseIncrease

C PriceQuantity SoldIncreaseDecrease

A simultaneous increase in both the demand for and the supply of a good in a market will lead to which of the following changes in the equilibrium price and quantity of the good? A PriceQuantityIncreaseIncrease B PriceQuantityIndeterminateDecrease C PriceQuantityIndeterminateIncrease D PriceQuantityIncreaseIndeterminate E PriceQuantityDecreaseIncrease

C PriceQuantityIndeterminateIncrease

The opportunity cost of an activity is A the amount of time spent on the activity B the value of the benefit received from performing the activity C the value of the forgone benefit of the next best alternative D zero if the activity offered no benefits E the sum of benefits from all the sacrificed alternatives

C the value of the forgone benefit of the next best alternative

A city government received a $1$1 million grant to build swimming pools and skating rinks for youth. Based on the data provided in the graph, what is the opportunity cost of building one swimming pool? A 0.50 skating rink B 0.50 swimming pool C 2 skating rinks D 2 swimming pools E 5 skating rinks

C 2 skating rinks

Which of the following will increase the market supply for new automobiles? A An increase in the price of steel, an input in the production of automobiles B An increase in taxes on automobile manufacturers C An increase in subsidies to automobile manufacturers D An increase in consumers' income E An increase in the price of gasoline, a complementary good

C An increase in subsidies to automobile manufacturers

Bikes Skateboards X 40 60 y 80 60 The graph above shows the production possibilities curve for Factory X and Factory Y. If Factory X uses the same amount of resources to produce skateboards and bikes as Factory Y uses, which of the following is true? A Factory X has an absolute advantage in producing bikes. B Factory X has an absolute advantage in producing skateboards. C Factory X has a comparative advantage in producing skateboards. D Factory Y has a comparative advantage in producing skateboards. E Factory Y has an absolute advantage in producing skateboards.

C Factory X has a comparative advantage in producing skateboards.

Matcha green tea is primarily cultivated by Japanese farmers. Suppose that Matcha green tea grows in popularity as its health benefits, namely its lower caffeine content, become known, and at the same time the government reduces taxes imposed on Japanese tea farmers. What is the likely effect on the equilibrium price and equilibrium quantity in the Japanese Matcha tea market? A The equilibrium price will increase, and the equilibrium quantity will increase. B The equilibrium price will decrease, and the equilibrium quantity will decrease. C The equilibrium price will be indeterminate, and the equilibrium quantity will increase. D The equilibrium price will be indeterminate, and the equilibrium quantity will decrease. E The equilibrium price will decrease, and the equilibrium quantity will be indeterminate.

C The equilibrium price will be indeterminate, and the equilibrium quantity will increase.

Which of the following will cause a movement along the demand curve for chicken, a normal good, resulting in an increase in the quantity demanded? A An increase in consumers' income B An increase in the price of fish, a substitute good C An increase in the price of barbecue sauce, a complementary good D A decrease in the price of chicken E A decrease in the number of consumers of chicken

D A decrease in the price of chicken

Sam and Bill run a leaf raking and lawn mowing business. In one day, Sam can rake 3 lawns or mow 5 lawns whereas Bill can rake 2 lawns or mow 6 lawns. Which of the following correctly describes Sam's and Bill's absolute and comparative advantages? A Sam has a comparative advantage in raking and an absolute advantage in mowing. B Sam has a comparative advantage in mowing and an absolute advantage in raking. C Sam has a comparative advantage in mowing and an absolute advantage in mowing. D Bill has a comparative advantage in mowing and an absolute advantage in mowing. E Bill has a comparative advantage in raking and an absolute advantage in mowing.

D Bill has a comparative advantage in mowing and an absolute advantage in mowing.

At a price of P0 in the diagram above, which of the following is true? A The existing surplus in the market will cause upward pressure on prices until equilibrium is reached at 75 units. B The existing surplus in the market will cause downward pressure on prices until equilibrium is reached at 60 units. C The existing shortage in the market will cause upward pressure on prices until equilibrium is reached at 30 units. D The existing shortage in the market will cause upward pressure on prices until equilibrium is reached at 60 units. E The existing shortage in the market will cause downward pressure on prices until equilibrium is reached at 45 units.

D The existing shortage in the market will cause upward pressure on prices until equilibrium is reached at 60 units.

In the competitive market represented by the graph provided, which of the following is true at a price of $20 ? A There is a surplus of 60 units. B There is a surplus of 35 units. C There is a shortage of 60 units. D There is a shortage of 35 units. E The quantity sold equals 60 units.

D There is a shortage of 35 units.

Number of lawns mowed number of trees trimmed Simone 12 24 Irina 9 12 Based on the information in the table, which of the following is true? A Irina has an absolute advantage in mowing lawns. B Irina has an absolute advantage in trimming trees. C Irina has a comparative advantage in trimming trees. D Simone has an absolute advantage in trimming trees and mowing lawns. E Simone has a comparative advantage in trimming trees and mowing lawns.

D Simone has an absolute advantage in trimming trees and mowing lawns.

Price of Candy Bar Q Demanded Q Supplied $1.00 1000 0 $2.00 775 100 $4.00 600 250 $5.00 525 525 $6.00 375 700 $7.00 200 975 $8.00 501 200 When the price of a candy bar is $6.00, which of the following is true? A The market does not clear because the price is lower than the equilibrium price and there will be a surplus in the market. B The market does not clear because the price is lower than the equilibrium price and there will be a shortage in the market. C The market clears because buyers and sellers are in agreement on the price. D The market does not clear because the price is higher than the equilibrium price and there will be a surplus in the market. E The market does not clear because the price is higher than the equilibrium price and there will be a shortage in the market.

D The market does not clear because the price is higher than the equilibrium price and there will be a surplus in the market.

Two nations sign a trade agreement expecting to enjoy mutual gains from the trade of a certain good. How will this event likely affect the supply of the good in the two nations? A This event will likely cause a decrease in the quantity supplied of the good in both nations. B This event will likely cause an increase in the quantity supplied of the good in both nations. C This event will likely cause a decrease in the supply of the good in both nations. D This event will likely cause an increase in the supply of the good in both nations. E This event will likely have no effect on the good in either nation.

D This event will likely cause an increase in the supply of the good in both nations.

An economy is operating at a point inside its production possibilities curve (PPC). Which of the following will most likely cause the economy to move toward the current PPC in the short run? A A decrease in government spending B A decrease in inflation C An increase in human capital D An increase in employment E An increase in imports

D an increase in employment

A production possibilities curve that is concave to the origin (bowed out) implies that as more of a good is produced, the opportunity cost A remains constant B decreases C decreases at first and then increases D increases E increases at first and then decreases

D increases

Which of the following describes the law of supply? A An increase in the price of a good will decrease the quantity demanded. B The price of a good will increase if production input costs increase. C An increase in taxes will decrease the supply of a good. D An increase in the number of sellers will increase the supply of a good. E An increase in the price of a good will increase the quantity supplied.

E An increase in the price of a good will increase the quantity supplied.

Which of the following is the most fundamental issue that economics addresses? A Choice of appropriate technology B Reduction of unemployment C Reduction of budget deficit D Promotion of privatization E Use of scarce resources

E Use of scarce resources

Motorcycles Automobiles Country X 50 80 Country Y 75 40 The table above shows the quantity of motorcycles and automobiles produced by two countries that use the same amount of resources. Which of the following is true? A Country X has an absolute and comparative advantage in the production of motorcycles. B Country X has an absolute and comparative advantage in the production of both goods. C Neither country has a comparative advantage in the production of motorcycles. D Country Y has an absolute and comparative advantage in the production of automobiles. E Country Y has an absolute and comparative advantage in the production of motorcycles.

E Country Y has an absolute and comparative advantage in the production of motorcycles.

Michael and Martha run a mechanic shop. In one hour Michael can perform eight oil changes or change ten tires. In one hour Martha can perform seven oil changes or change fourteen tires. Michael and Martha have the same amount of resources. Given this information which of the following is true? A Martha has a comparative advantage in changing oil. B Martha has an absolute advantage in changing oil. C Michael has a comparative advantage in changing tires. D Michael has an absolute advantage in changing tires. E Michael has an absolute and a comparative advantage in changing oil.

E Michael has an absolute and a comparative advantage in changing oil.

Which of the following describes the relationship between price and quantity demanded according to the law of demand? A Positive relationship, illustrated by an upward-sloping demand curve B Positive relationship, illustrated by a downward-sloping demand curve C Negative relationship, illustrated by a horizontal demand curve D Negative relationship, illustrated by an upward-sloping demand curve E Negative relationship, illustrated by a downward-sloping demand curve

E Negative relationship, illustrated by a downward-sloping demand curve

Assume that the market for bottled water is in equilibrium. If both the supply of and the demand for bottled water decrease, what will be the effect on equilibrium price and quantity? A Price Quantity Decrease Decrease B Price Quantity Decrease Increase C Price Quantity Increase Decrease D Price Quantity Increase Indeterminate E Price Quantity Indeterminate ​Decrease

E Price Quantity Indeterminate ​Decrease

In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee? A SupplyDemand IncreaseIncrease B SupplyDemand IncreaseDecrease C SupplyDemand DecreaseIncrease D SupplyDemand No changeIncrease E SupplyDemand DecreaseNo change

E SupplyDemand DecreaseNo change

Assume household income has fallen dramatically in Country X and the cost of construction materials for building new houses has increased. How will these changes affect the equilibrium price and equilibrium quantity for new houses? A The equilibrium price will increase, and the equilibrium quantity will decrease. B The equilibrium price will decrease, and the equilibrium quantity will decrease. C The equilibrium price will decrease, and the equilibrium quantity will increase. D The equilibrium price will decrease, and the equilibrium quantity will be indeterminate. E The equilibrium price will be indeterminate, and the equilibrium quantity will decrease.

E The equilibrium price will be indeterminate, and the equilibrium quantity will decrease.

Which of the following contributes to the economic problem of scarcity? A Human wants are insufficient. B Human wants are limited. C Resources are efficient. D Resources are expensive. E Resources are limited.

E resources are limited

Which of the following is not considered an economic resource? A Land B Labor C Capital D Entrepreneurship E Stocks

E stocks