AP Macroeconomics Midterm Unit 1

Increase the market supply for new automobiles?

An increase in subsidies to automobile manufacturers

Will increase the demand for bicycles?

An increase in the price of scooters, a substitute good

Which of the following is not considered an economic resource?

Economic source: Land, Labor, Capital Entrepreneurship

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?

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

Describes the relationship between price and quantity demanded according to the law of demand?

Negative relationship, illustrated by a downward-sloping demand curve

Describes the relationship between price and quantity supplied according to the law of supply?

Positive relationship, illustrated by an upward-sloping supply curve

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?

Scarcity

Which of the following illustrates the effect of a decrease in an economy's resources using a production possibilities curve (PPC)?

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

Which of the following contributes to the economic problem of scarcity?

resources are limited