Unit 1 Progress Check - AP Macro

Use the table to answer the question below. The table above shows the daily production possibilities for China and Malaysia in producing trucks and coffee 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?

1 ton of coffee for 4 trucks

5 Shifters of supply

1. Price of Resources 2. Number of Sellers 3. Technology 4. Taxes and Subsidies 5. Expectations for future proft

5 key economic assumptions

1. Society has unlimited wants and limited resources (scarcity). 2. Due to scarcity, choices must be made. Every choice has a cost (a trade-off). 3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in their own "self-interest." 4. Everyone makes decisions by comparing the marginal costs and marginal benefits of every choice. 5. Real-life situations can be explained and analyzed through simplified models and graphs.

5 shifters of demand

1. Tastes and Preferences 2. Number of Consumers 3. Price of Related Goods 4. Income 5. Future Expectations

Any change in PPC

1. change in reasource quantity 2. change in technology 3. change in trade

4 key assumptions

1. only 2 goods can be produced 2. full employment of resources 3. fixed resources 4. fixed technology (land, entrepreneurship, labor, capital)

Why does the Law of Demand occur?

1. substitution effect 2. income effect 3. law of diminishing marginal utility

Which of the following will increase the market supply for new automobiles?

An increase in subsidies to automobile manufacturers

Which of the following changes will increase the demand for bicycles?

An increase in the price of scooters, a substitute good

consumer surplus

Difference between what a consumer is willing to pay for a good and the amount actually paid CS= Buyers maxium-Price

Input

IOU, lowest number

double shift rule

If two curves shift at the same time, either price or quantity will be indeterminate

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?

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

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. Given this information which of the following is true?

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?

Negative relationship, illustrated by a downward-sloping demand curve

Output

OOO, higher number

Use the graphs to answer the question below. The shape of a PPC illustrates the type of opportunity costs involved in production. What type of costs do PPC1 and PPC2 illustrate?

PPC1PPC1 illustrates increasing opportunity costs and PPC2PPC2 illustrates constant opportunity costs.

Which of the following describes the relationship between price and quantity supplied according to the law of supply?

Positive relationship, illustrated by an upward-sloping supply curve

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 quantity in the Japanese Matcha tea market?

Price is indeterminate, and quantity increases.

Constant Opportunity Cost

Resources are easily adaptable for producing either good

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

Resources have alternative uses.

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

The table below shows the landscaping productivity of Simone and Irina during an eight hour workday. Simone can mow twelve lawns or trim twenty four trees in eight hours. Irina can mow nine lawns or trim twelve trees in eight hours. Based on the information in the table, which of the following is true?

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

Which of the following is not a scarce resource?

Stocks

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

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

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?

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

Use the table to answer the question below. When the price of a candy bar is $6.00, which of the following is true?

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?

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

marginal

additional

Ceteris Paribus

all other things held constant

trade off

an alternative that we sacrifice when we make a decision

Law of increasing costs

as you produce more of any good, the oppertunity cost (forgone production of another good will increase)

Positive

based on facts

producer surplus

difference between the price sellers receive and the minimum supply price needed to cover costs PS= Price-Seller minimum

Scarsity

exist when human wants exceed the amount that available resources can produce

inferior goods

goods for which demand tends to fall when income rises

normative

includes valve judgements

Normal goods

luxyry goods

marginal unit cost

opportunity cost/units gained

two types of efficiency

productive and allocative

productive efficiency

products are being produced in the least costly way

consumer good

products that are created for direct consumption

capital goods

products that are created for indirect consumption and are used in the production of other (consumer) goods

surplus

qd<qs

shortage

qd>qs

Price does not

shift of curve

oppertunity cost

the most desirable alternative given up as the result of a decision

allocative efficiency

the products being produced are the ones most desired by society

law of supply

there is a direct relationship between price and quantity supplied

Law of demand

there is an inverse relationship between price and quantity demanded