AP Microeconomics Unit 1 All Quiz Questions
If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught the fisherman's price elasticity of supply for fresh fish is... A) Zero B) One C) Infinite D) Unable to be determined from this information
A
If a nation has a comparative advantage in the production of a good... A) It can produce that good at a lower opportunity cost than its trading partner B) It can produce that good using fewer resources than its trading partner C) It can benefit by restricting imports of that good D) It must be the only country with the ability to produce that good E) None of the above
A
If a supply curve for a good is price elastic, then... A) The quantity supplied is sensitive to changes in the price of that good B) The quantity supplied is insensitive to changes in the price of that good C) The quantity demanded is sensitive to changes in the price of that good D) The quantity demanded is insensitive to changes in the price of that good E) None of the above
A
If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are... A) Substitutes B) Compliments C) Normal goods D) Inferior goods E) None of the above
A
If the marginal benefit of the next slice of pizza exceeds the marginal cost, you will... A) Eat the slice of pizza B) Not eat the slice of pizza C) Be unable to choose between eating or not eating D) Eat half the slice E) More information is needed about how much the marginal benefit exceeds the marginal cost to determine if you will or will not eat the slice
A
Food Electronics Australia 20 5 Korea 8 4 Korea Should... A) Specialize in food production, export food, and import electronics B) Specialize in electronics production, export electronics, and import food C) Produce both goods because neither country has a comparative advantage D) Produce neither good because it has an absolute disadvantage in the production of both goods
B
Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of 1 unit of food in Korea is... A) 2 units of electronics B) 1/2 of a unit of electronics C) 4 units of electronics D) 1/4 units of electronics
B
Fruit Beef Peru 6 2 Argentina 10 5 Peru will export... A) Both fruit and beef B) Fruit C) Beef D) Neither fruit nor beef
B
If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is... A) Price inelastic B) Price elastic C) Unit price elasatic D) Income inelastic E) Income elastic
B
Suppose there is an increase in both the supply and demand for personal computers. Further, suppose the supply of personal computers increases more than demand for personal computers. In the market for personal computers, we would expect... A) The equilibrium quantity to rise and the equilibrium price to rise B) The equilibrium quantity to rise and the equilibrium price to fall C) The equilibrium quantity to rise and the equilibrium price to remain constant D) The equilibrium quantity to rise and the change in the equilibrium price to be ambiguous E) The change in the equilibrium quantity to be ambiguous and the equilibrium price to fall
B
The Latin term ceteris paribus means... A) After this, therefore because of this B) Other things being equal C) What is correct for the part is not correct for the whole D) On the margin E) When one variable increases, the other variable increases
B
The benefit of an activity is... A) Purely objective and measured in dollars B) The gain or pleasure that it brings C) The value of its sunk cost D) Measured by what must be given up to get one more unit of the activity E) Not measurable on the margin
B
The cost of a one-unit increase in an activity... A) Is the total one-unit cost B) Is called the marginal cost C) Decreases as you do more of the activity D) Is called the marginal benefit/cost E) Is called the sunk cost
B
The law of demand states that an increase in the price of a good... A) Decreases the demand for that good B) Decreases the quantity demanded for that good C) Increases the supply of that good D) Increases the quantity supplied of that good E) None of the above
B
The question "Should we produce houses using bricks or wood?" is an example of a ______ question. A) What B) How C) For Whom D) Where E) Why
B
Which of the following is an example of a normative statement? A) If cars become more expensive, fewer people will buy them B) Car prices should be affordable C) If wages increase, firms will fire some workers D) Fewer people die in larger cars than in smaller cars E) Cars emit pollution
B
(On quiz the following was represented by a PPF graph) Fruit Beef Peru 6 2 Argentina 10 5 Argentina has a comparative advantage in the production of... A) Both fruit and beef B) Fruit C) Beef D) Neither fruit nor beef
C
According to the principle of comparative advantage... A) Countries with a comparative advantage in the production of every good need not specialize B) Countries should specialize in the production of goods that they enjoy consuming C) Countries should specialize in the production of goods for which they use fewer resources in production than their trading partners D) Countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners
D
A monopolistic market has... A) Only one seller B) At least a few sellers C) Many buyers and sellers D) Firms that are price takers E) None of the above
A
An increase (rightward shift) in the demand for a good will tend to cause... A) An increase in the equilibrium price and quantity B) A decrease in the equilibrium price and quantity C) An increase in the equilibrium price and an increase in the equilibrium quantity D) A decrease in the equilibrium price and an increase in the equilibrium quantity E) None of the above
A
Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of 1 unit of electronics in Korea is... A) 2 units of food B) 1/2 of a unit of food C) 4 units of food D) 1/4 of a unit of food
A
Food Electronics Australia 20 5 Korea 8 4 Which of the following statements about comparative advantage is true? A) Australia has a comparative advantage in the production of food while Korea has a comparative advantage in the production of electronics B) Korea has a comparative advantage in the production of food while Australia has a comparative advantage in the production of electronics C) Australia has a comparative advantage in the production of both food and electronics D) Korea has a comparative advantage in the production of both food and electronics E) Neither country has a comparative advantage
A
In general, a flatter demand curve is more likely to be... A) Price elastic B) Price inelastic C) Unit price elastic D) None of the above
A
Scarcity results from the fact that... A) People's wants exceed the resources available to satisfy them B) Not all goals are desirable C) We cannot answer the major economic questions D) Choices made in self-interest are not always in the social interest E) The population keeps growing
A
Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade... A) The opportunity cost of 1 watch is 3 rings B) The opportunity cost of 1 watch is 1/3 of a watch C) The opportunity cost of 1 watch is 4 rings D) The opportunity cost of 1 watch is 1/4 of a ring E) The opportunity cost of 1 watch is 12 rings
A
Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice? A) Price will increase; quantity is ambiguous B) Price will increase; quantity will increase C) Price will increase; quantity will decrease D) Price will decrease; quantity is ambiguous E) The impact on both price and quantity is abmbiguous
A
Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples? A) There is an increase in the demand for apples and an increase in the quantity supplied of apples B) There is an increase in the demand and supply of apples C) There is an increase in the quantity demanded of apples and in the supply for apples D) There is an increase in the demand for apples and a decrease in the supply of apples E) There is a decrease in the quantity demanded of apples and an increase in the supply for apples
A
Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to... A) Reduce total revenue to farmers as a whole because the demand for food is inelastic B) Reduce total revenue to farmers as a whole because the demand for food is elastic C) Increase total revenue to farmers as a whole because the demand for food in inelastic D) Increase total revenue to farmers as a whole because the demand for food is elastic
A
The question "Should we produce video tapes or DVD discs?" is an example of a _______ question. A) What B) How C) For Whom D) Where E) Why
A
Which of the following shift the supply if watches to the right except... A) An increase in the price of watches B) An advance in the technology used to manufacture watches C) A decrease in the wage of workers employed to manufacture watches D) Manufacturers' expectation of lower watch prices in the future E) All of the above cause an increase in the supply of watches
A
If a nation has an absolute advantage in the population of a good... A) It can produce that good at a lower opportunity cost than its trading partner B) It can produce that good using fewer resources than its trading partner C) It can benefit by restricting imports of that good D) It will specialize in the production of that good and export it E) None of the above
B
If consumers always spend 15 percent of their income on food, then the income elasticity of demand for food is... A) 0.15 B) 1.00 C) 1.15 D) 1.50 E) None of the above
B
If supply is price inelastic, the value of the price elasticity of supply must be... A) Zero B) Less than 1 C) Greater than 1 D) Infinite E) None of the above
B
If the price of a good is above the equilibrium price... A) There is a surplus and the price will rise B) There is a surplus and the price will fall C) There is a shortage and the price will rise D) There is a shortage and the price will fall E) The quantity demanded is equal to the quantity supplied and the price remains unchanged
B
If there is excess capacity in a production facility, it is likely that the firm's supply curve is... A) Price inelastic B) Price elastic C) Unit price elastic D) None of the above
B
In general, a steeper supply curve is more likely to be... A) Price elastic B) Price inelastic C) Unit price elastic D) None of the above
B
Jamie has enough money to buy either a Mountain Dew, or a Pepsi, or a bag of chips. He chooses to buy the Mountain Dew. The opportunity cost of the Mountain Dew is... A) The Pepsi and the bag of chips B) The Pepsi or the bag of chips, whichever the highest-valued alternative forgone C) The Mountain Dew D) The Pepsi because it is a drink, as is the Mountain Dew E) Zero because he enjoys the Mountain Dew
B
Suppose a country's workers can produce 4 watches per hour or 12 rings per hour. If there is no trade... A) The domestic price of 1 ring is 3 watches B) The domestic price of 1 ring is 1/3 of a watch C) The domestic price of 1 ring is 4 watches D) The domestic price of 1 ring is 1/4 of a watch E) The domestic price of 1 ring is 12 watches
B
Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today? A) The impact on both price and quantity is ambiguous B) Price will increase; quantity is ambiguous C) Price will increase; quantity will increase D) Price will increase; quantity will decrease E) Price will decrease; quantity is ambiguous
B
Suppose that at a price of $30 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its price to $40 per month, the number of subscribers will fall to 20,000. At which of the following prices does Small Town Cablevision earn the greatest total revenue? A) Either $30 or $40 per month because the price elasticity of demand is 1.0 B) $30 per month C) $40 per month D) $0 per month
B
Suppose the world consists of two countries-the US and Mexico. Further, suppose there are only two goods-food and clothing. Which of the following statements is true? A) If the US has an absolute advantage in the production of food, then Mexico must have an absolute in the production of clothing B) If the US has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing C) If the US has a comparative advantage in the production of food, it must also have the comparative advantage in the production of clothing D) If the US has a comparative advantage in the production of food, Mexico might also have a comparative advantage in the production of food E) None of the above
B
A decrease (leftward shift) in the supply for a good will tend to cause... A) An increase in the equilibrium price and quantity B) A decrease in the equilibrium price and quantity C) An increase in the equilibrium price and a decrease in the equilibrium quantity D) A decrease in the equilibrium price and an increase in the equilibrium quantity E) None of the above
C
A perfectly competitive market has... A) Only one seller B) At least a few sellers C) Many buyers and sellers D) Firms that set their own prices E) None of the above
C
A positive statement... A) Must always be right B) Cannot be tested C) Can be tested against the facts D) Depends on someone's value judgement E) Cannot be negative
C
Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of 1 unit of electronics in Australia is... A) 5 units of food B) 1/5 of a unit of food C) 4 units of food D) 1/4 of a unit of food
C
If a decision is made and it is the best choice for society, the decision is said to be... A) A valid economic choice B) Made in self-interest C) Made in social interest D) Consistent with scarcity E) A want-maximizing choice
C
If an increase in the price of a good has no impact on the total revenue in the market, demand must be... A) Price inelastic B) Price elastic C) Unit price elastic D) All of the above
C
If demand is linear (a straight line), then price elasticity of demand is... A) Constant along the demand curve. B) Inelastic in the upper portion and elastic in the lower portion C) Elastic in the upper portion and inelastic in the lower portion D) Elastic throughout E) Inelastic throughout
C
If the cross-price elasticity between two goods is negative, the two goods are likely to be... A) Luxuries B) Necessities C) Compliments D) Substitutes
C
If the income elasticity of demand for a good is negative, it must be... A) A luxury good B) A normal good C) An inferior good D) An elastic good
C
If the price of a good is below the equilibrium price... A) There is a surplus and the price will rise B) There is a surplus and the price will fall C) There is a shortage and the price will rise D) There is a shortage and the price will fall E) The quantity demanded is equal to the quantity supplied and the price remains unchanged
C
Joe is a tax accountant. He receives $100 per hour doing tax returns. He can type 10,000 characters per hour into spreadsheets. He can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true? A) Joe should not hire an assistant because the assistant cannot type as fast as he B) Joe should hire the assistant as long as he pays the assistant less than $100 per hour C) Joe should hire the assistant as long as he pays the assistant less than $25 per hour D) None of the above
C
The following is table shows the units of output a worker can produce per month in Australia and Korea. Use this table for the next 8 questions Food Electronics Australia. 20. 5 Korea. 8 4 Which of the following statements about absolute advantage is true? A) Australia has an absolute advantage in the production of food while Korea has an absolute advantage in the production of electronics B) Korea has an absolute advantage in the production of food while Australia has an absolute advantage in the production of electronics C) Australia has an absolute advantage in the production of both food and electronics D) Korea has an absolute advantage in the production of both food and electronics
C
The price elasticity of demand is... A) The percentage change in price of a good divided by the percentage change in the quantity demanded of that good B) The percentage change in income divided by the percentage change in the quantity demanded C) The percentage change in the quantity demanded of a good divided by the percentage change in the price of that good D) The percentage change in the quantity demanded divided by the percentage change in income E) None of the above
C
Which of the following is a microeconomic issue? A) Why has unemployment risen nationwide? B) Why has economic growth been rapid in China? C) What is the impact on the quantity of Pepsi purchased if consumers' tastes change in favor of non-carbonated drinks? D) Why is the average income lower in Africa than in Latin America? E) Why did overall production within the United States increase last year?
C
Which of the following shifts the demand for watches to the right? A) A decrease in the price of watches B) A decrease in a consumer incomes if watches are a normal good C) A decrease in the price of watch batteries if watch batteries and watches are compliments D) An increase in the price of watches E) None of the above
C
Which of the following statements is true? A) Self-sufficient is the road to prosperity for most countries B) A self-sufficient country consumes outside its production possibilities frontier C) A self-sufficient country can, at best consume on its production possibilities frontier D) Only countries with with an absolute advantage in the production of every good should strive to be self-sufficient
C
A decrease (shift to the left) will increase total revenue in that market if... A) Supply is price elastic B) Supply is price inelastic C) Demand is price inelastic D) Demand is price inelastic
D
An inferior good is one for which an increase in income causes... A) An increase in supply B) A decrease in supply C) An increase in demand D) A decrease in demand
D
Food Electronics Australia 20 5 Korea 8 4 Prices of electronics can be stated in terms of units of food. What is the range of prices of electronics for which both countries could gain from trade? A) The price must be greater than 1/5 of a unit of food but less than 1/4 of a unit of food B) The price must be greater than 4 units of food but less than 5 units of food C) The price must be greater than 1/4 of a unit of food but less than 5 units of food D) The price must be greater than 2 units of food but less than 4 units of food
D
Food Electronics Australia 20 5 Korea 8 4 The opportunity cost of 1 unit of food in Australia is... A) 5 units of electronics B) 1/5 of a unit of electronics C) 4 units of electronics D) 1/4 of a unit of electronics
D
Fruit Beef Peru 6 2 Argentina 10 5 The opportunity cost of producing a metric ton of beef is Peru is... A) 1/3 ton of fruit B) 1 ton of fruit C) 2 tons of fruit D) 3 tons of fruit E) 6 tons of fruit
D
If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is... A) A complementary good B) A substitute good C) A normal good D) An inferior good E) None of the above
D
If consumers think that there are very few substitutes for a good, then... A) Supply would tend to be price elastic B) Supply would tend to be price inelastic C) Demand would tend to be price elastic D) Demand would tend to be price inelastic E) None of the above
D
Suppose that at a price of $30 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its price to $40 per month, the number of subscribers will fall to 20,000. Using the midpoint method for calculating the elasticity, what is the price elasticity of demand for cable TV in Small Town? A) 0.66 B) 0.75 C) 1.0 D) 1.4 E) 2.0
D
Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect... A) The equilibrium quantity to rise and the equilibrium price to rise B) The equilibrium quantity to rise and the equilibrium price to fall C) The equilibrium quantity to rise and the equilibrium price to remain constant D) The equilibrium quantity to rise and the change in the equilibrium price to be ambiguous E) The change in the equilibrium quantity to be ambiguous and the equilibrium price to rise
D
The demand for which of the following is likely to be the most price inelastic? A) Airline tickets B) Bus tickets C) Taxi rides D) Transportation
D
The law of supply states that an increase in the price of a good... A) Decreases the demand for that good B) Decreases the quantity demanded for that good C) Increases the supply of that good D) Increases the quantity supplied of that good E) None of the above
D
The marginal benefit of an activity is... i. The benefit from a one-unit increase in the activity ii. The benefit of a small, unimportant activity iii. Measured by what the person is willing to give up to get one additional unit of the activity A) i only B) ii only C) iii only D) i and iii E) ii and iii
D
Which of the following statements about trade is true? A) Unrestricted international trade benefits every person in a country equally B) People that are skilled at all activities cannot benefit from trade C) Trade can benefit everyone in society because it allows people to specialize in activities in which they have an absolute advantage D) Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage
D
Which of the following statements is true about the impact of an increase in the price of lettuce? A) The demand for lettuce will decrease B) The supply of lettuce will decrease C) The equilibrium price and quantity of salad dressing will rise D) The equilibrium price and quantity of salad dressing will fall E) Both A and D
D
Which of the following would cause a demand curve for a good to be price inelastic? A) There are a great number of substitutes for the good B) The good is inferior C) The good is a luxury D) The good is a necessity
D
If the price of a good is equal to the equilibrium price... A) There is a surplus and the price will rise B) There is a surplus and the price will fall C) There is a shortage and the price will rise D) There is a shortage and the price will fall E) The quantity demanded is equal to the quantity supplied and the price remains unchanged
E
The characteristic from which all economic problems arise is... A) Political Decisions B) Providing a minimal standard of living for every person C) How to make a profit D) Hunger E) Scarcity
E
To economists, scarcity means that A) Limited wants cannot be satisfied by the unlimited resources B) A person looking for work is not able to find work C) The number of people without jobs rises when economic times are bad D) There can never be answers to the what, how, or for whom questions E) Unlimited wants cannot be satisfied by the limited resources
E
