AP Econ Unit 1

After graduating from high school, Peggy Smith decided to enroll in a two year program at the local community college rather than a sept a job that offer the salary of $12,000 per year. If the annual tuition and fees are $4,600, the annual opportunity cost of attending the community college is

$16,600

After graduating from high school, Maria chose to go to college, while Omar chose to work full-time. Which of the following best describes the opportunity cost for their decisions

Maria's opportunity cost includes the salary she could have earned if she had gone to work

After graduating from high school, Maria chose to go to college, while Omar chose to work full- time. Which of the following best describes the opportunity costs for these decisions?

Maria's opportunity cost includes the salary she could have earned if she had gone to work.

Cindy and Martin both sew t-shirts in a small factory. Using the same resources, Martin can sew twelve t-shirts and Cindy can sew nine t-shirts in one day. Which of the following can be concluded from the given information?

Martin has an absolute advantage in sewing t-shirts.

A country produces computers and rice. If resources are fully employed and there is technological progress only in the production of rice, the opportunity costs of producing computers and rice will change in which of the following ways?

Opportunity Cost of Computers: Increase Opportunity Cost of Rice: Decrease

according to the production possibilities curve above, which of the following is true?

The opportunity cost of producing another unit of either good remains constant as the production of the other good increases

After graduating from high school, Peggy Smith decided to enroll in a two-year program at the local community college rather than to accept a job that offered a salary of $12,000 per year. If the annual tuition and fees are $4,600, the annual opportunity cost of attending the community college is

$16,600

According to the graph above, if a country is currently producing at point X, the opportunity cost of producing another consumer good is

20 capital goods

based on the production possibilities curve for books and pencils shown above what is the opportunity cost of producing a book?

3 pencils

A PPC can shift inward if there is

A natural disaster

assume that an economy produces televisions and shoes which of the following will cause a production possibility curve for this economy to shift outward?

An increase in the labor force

A professor hires two aides, assigning them the tasks of reading student papers and of typing lecture notes on a computer. One of the aides, Ben, can read 1 page of a student paper per minute or type 50 words of lecture notes per minute, and the other aide, Ann, can read 3 pages of a student paper per minute or type 60 words of lecture notes per minute. Which of the following statements is true?

Ann has a comparative advantage in reading student papers, and Ben has a comparative advantage in typing lecture notes.

The table above shows the amount of labor required to produce a unit of corn and a unit of shoes in Brazil and Spain. If both countries have equal numbers of workers, what pattern of international trade between Brazil and Spain is most likely to emerge?

Brazil will export corn and import shoes

The table above shows the costs and benefits for new construction projects the government is considering. Based on these costs and benefits, which of the construction projects should the government undertake?

Building a new bridge

Command economies differ from capitalist economies mainly because of which of the following?

Command economies have higher degree of government ownership of resources.

In which of the following situations is a good NOT scarce?

Consumer give up nothing to obtain more of the good.

According to the information in the table above, which of the following statements is true if both countries have the same number of workers? Country M.G S.G A . 100 . 300 B . 75 . 150

Country A has an absolute advantage in manufactured goods but a comparative advantage in service goods.

The diagram above shows the production possibilities curves for two countries, Country X and Country Y. Assume that both countries use equal amounts of resources in production. If the two countries engage in trade, both would be better off under which of the following conditions?

Country Y specialized in the production of cars, because it has a comparative advantage in the production of cars.

The graph above shows an economy's production possibilities frontier for the production of two goods, X and Y. Assume that the economy is currently at point B. The opportunity cost of moving from point B to point C is

HG units of good Y

For an economy with a straight-line production possibilities curve, which of the following must be true? I. The opportunity cost of producing another unit is constant. II. Resources are completely adaptable to alternative uses. III. Resources are used efficiently.

I and II

Scarcity is correctly described by which of the following statements? I. Scarcity exists if there are more uses for resources than can be satisfied at one time. II. Scarcity exists if decisions must be made about alternative uses for resources. III. Scarcity would not exist in a society in which people wanted to help others instead of themselves.

I and II only

An opportunity cost is entailed in which of the following situations? I. A student decides to attend college full-time. II. A family uses its $20,000 savings to purchase an automobile. III. A farmer decides to grow more wheat and less corn.

I, II, and III

The allocation of resources in a market economy is described by which of the following statements? I. The government decides which goods will be produced and which consumers will receive them. II. Buyers and sellers exchange goods and services on a voluntary basis. III. Prices and costs help producers decide whether they are producing too little or too much of a good.

II and III only.

The diagram above shows the production possibilities curve for Country Y. Which of the following statements is true?

If Country Y is producing at point C, it is using all its resources efficiently.

Which of the following best defines opportunity cost?

It is the amount of one product that must be given up in order to produce an additional unit of another product

using the same amount of time and resources, Jack can assemble either 10 bikes or 5 computers, whereas Sam can assemble either 5 bikes or 5 computers. Based on the data, which of the following statements is correct?

Jack has a comparative advantage in assembling bikes

The table below shows the number of hours it takes for Kim to install a computer or to paint a garage and for Maria to install a computer repair garage. If tasks are assigned according to comparative advantage which of the following is true?

Kim should install computers and Maria should paint garages

The basic economic problem of all economies is essentially one of deciding how to make the best use of

Limited resources to satisfy unlimited wants

given the production possibilities curve above, which of the following represents a movement from efficiency to inefficiency?

Point X to point W

Which of the following is true in a capitalist economy?

Prices serve as incentives for factors of production to move to the markets where they are most valued

The fundamental difference between a market economy and a command economy lies in which of the following?

Property rights and protection of private property

Which of the following is associated with a command economy?

Public ownership of the means of production

The table below shows the maximum number of palm leaves or coconuts that Robert and Frank can pick respectively in a single day which of the following is true?

Robert and Frank can both benefit from trade with each other if 1 coconut is traded for 3 palm leaves

If nations specialize according to their comparative advantage and engage in international trade with each other, each nation can

Shift PPC to the right

which of the following conditions is necessary for productive efficiency?

The firm is producing a given level of output with a least-cost combination of inputs

In contrast to a market economy, a command economy relies on which of the following?

The government to allocate resources

A country produces computers and rice. If resources are fully employed and there is technological progress only in the production of rice the opportunity cost of producing computers and rice will change in which of the following ways?

The opportunity cost of computers will increase while the opportunity cost of rice will decrease

relative to a command economy resources in a market economy or more commonly allocated by

The price (market) system

Using cost-benefit analysis, a local government would decide to build a new bridge if

The total costs of building the bridge are less than the total benefits from building the bridge.

Movement along a PPC shows which of the following?

The trade-offs society faces

Movement along a production possibilities curve shows which of the following?

The trade-offs society faces

A firm is producing the allocative we efficient level of output if....

They are producing a combination of goods that is most desired by society

The chart below shows the number of resource units the countries Gamma and Omega must use to produce one unit of food or one unit of clothing. Gamma Omega Food . 10 5 Clothing 9 . 3 Which of the following statements is true according to the chart above?

Trade should take place, with Gamma specializing in food production and Omega specializing in clothing production.

A production possibilities curve can shift inward if there is

a natural disaster

marginal analysis suggests that an individual will consume one additional unit of a good if the...

additional benefit is greater than the additional cost

improvements in technology for producing all goods must result in....

an outward shift of the production possibilities curve

Assume there are two goods in a market economy. The amount of each good produced is determined by

buyers and sellers' interactions in the market for each good

If nations specialize according to their comparative advantage and engage in international trade with each other, each nation can

consume outside its production possibilities curve

donna and Robin produce smoothies and pizza, in one hour Donna can make 20 smoothies or 10 pizzas in one hour Robin can make 18 smoothies or six pizzas. Which of the following statements is true?

donna has a comparative advantage in making pizzas, and robin has a comparative advantage in making smoothies

A farmer in Country A can harvest 20 bushels of wheat or 10 bushels of corn in a day, while a farmer in Country B can harvest 8 bushels of wheat or 8 bushels of corn in a day. If Country A and Country B specialize and trade, Country A will

export wheat and import corn

A production possibilities curve is bowed out, indicating increasing opportunity cost because of

imperfect adaptability of resources to alternative uses

And outward shift of the production possibilities curve can be caused by....

improving technology

which of the following explains why a production possibilities curve is often represented as concave (bowed out) from the origin?

increasing opportunity cost

which of the following is true about an economy's production possibility curve?

it shows the alternative combinations of goods that can be produced by fully employed scarce resources

The basic economic problem of all countries is the existence of

limited resources and unlimited wants

The diagram above shows an economy's current production possibilities curve for capital goods and consumer goods. If society chooses point B over point A, society is choosing

more future consumption in exchange for less current consumption

The amount of product Z that must be forgone in order to obtain/produce some amount of product why is called...

opportunity cost

which of the following is necessary in a well functioning capitalist and economy but not in a command economy?

protection of property rights

The study of economics exists because people are confronted with the basic problem of

scarcity

An outward shift in the production possibilities curve of an economy can be caused be an increase in

the labor force

As a factor of production, capital refers to the

tools and machinery used to produce goods and services

A country can consume beyond its present production possibilities curve when it

trades with other countries, thus taking advantages of different opportunity costs