AP Microeconomics Exam Module 1 Review
questions with complete solutions
Economics nn- nncorrect nnanswer-the nnstudy nnof nnhow nnwe nnattempt nnto nnovercome nnscarcity
Scarcity nn- nncorrect nnanswer-A nncondition nnthat nnexists nnwhen nnthere nnare nninsufficient nnresources nnto
nnsatisfy nnunlimited nnwants
Opportunity nnCost nn- nncorrect nnanswer-The nntrue nncost nnof nnsomething nnincluding nnwhat nnis nngiven nnup nnto
nnget nnit
4 nnfactors nnof nnproduction nn- nncorrect nnanswer-1) nnland
2) nnlabor
3) nncapital
4) nnentrepreneurship
Land nn- nncorrect nnanswer-natural nnresources
ex: nnwater, nntrees, nnmineral
Labor nn- nncorrect nnanswer-human nnresources
ex: nnlaborers, nnworkers
Capital nn- nncorrect nnanswer-building nntools, nnmachines nnused nnto nnproduce nngoods nnand nnservices
Entrepreneurship nn- nncorrect nnanswer-intelligence, nnimagination, nnability nnto nntake nnrisks nnneed nnto nnstart
nnup nnand nncreate nna nnbusiness
Incentives nn- nncorrect nnanswer-motivate nnpeople nnto nnbuy, nnsell nna nngood, nnor nnput nnin nnextra nnhours nnof
nnwork
,ex: nnproperty nnrights
Law nnof nnDiminishing nnMarginal nnReturns nn- nncorrect nnanswer-as nnyou nnincrease nnonly nnone nnfactor
nnproduction nn(like nnlabor), nneventually nnyour nnreturns nnfor nneach nnadditional nnemployee nnwill nndecrease.
Which nnof nnthe nnfollowing nnrepresents nnthe nnproblem nnof nnscarcity?
A) nnPoverty
B) nnHunger
C) nnThe nnpursuit nnof nnhigher nneducation
D) nnAll nnof nnthe nnAbove nn- nncorrect nnanswer-D) nnAll nnof nnthe nnabove
If nnSarah nndecides nnto nnspend nnthe nnday nnwindsurfing nninstead nnof nnstudying nnfor nnher nneconomics nnexam
nnthe nnopportunity nncost nnof nnwindsurfing nnis:
A) nnThe nncost nnof nnrenting nnthe nnwindsurfing nnequipment
B) nnThe nncost nnof nngas, nntolls, nnfoods, nnand nnall nnother nnmonetary nncosts nnof nnwindsurfing
C) nnthe nnamount nnof nntime nnspent nnwindsurfing
D) nnThe nnvalue nnof nnstudying nnfor nnthe nnexam, nnmeasured nnby nnthe nnpoints nnlost nnon nnthe nnexam. nn- nncorrect
nnanswer-D) nnThe nnvalue nnof nnstudying nnfor nnthe nnexam, nnmeasured nnby nnthe nnpoints nnlost nnon nnthe nnexam.
Which nnof nnthe nnfollowing nnis nnan nnexample nnof nnland, nnas nnan nneconomic nninput?
A) nnThe nnnumber nnof nndoctors nnin nna nnnation
B) nnCopper
C) nnThe nnamount nnof nninvestment nna nnnation nnhas
D) nnThe nnamount nnof nnrisk nntakers nnin nnthe nnhealth nncare nnindustry nn- nncorrect nnanswer-B) nnCopper
Which nnof nnthe nnfollowing nnis nnan nnexample nnof nnphysical nncapital?
A) nnMoney
B) nnThe nnlevel nnof nneducation nnin nna nnsociety nn
C) nnThe nnsupply nnof nnoil
D) nnComputer nnsoftware nn- nncorrect nnanswer-D) nnComputer nnsoftware
, Hong nnKong nnhas nnvirtually nnno nnnatural nnresources nnto nnspeak nnof nnbut nnis nnamazingly nnrich. nnWhat
nnresource nndoes nnHong nnKong nnmost nnlikely nnhave nnin nnabundance nnin nnorder nnto nnbe nnso nnrich?
A) nnLabor
B) nnCapital
C) nnEntrepreneurship
D) nnGovernmental nnOversight nn- nncorrect nnanswer-C) nnEntrepreneurship
A nngood nnsystem nnthat nndemonstrates nnhow nnincentives nnlead nnto nnefficiency nnin nna nnmarket nneconomy nnis:
A) nnGovernment nnoversight
B) nnPoverty nn
C) nnGross nnnational nnproduct
D) nnIndividual nnproperty nnrights nn- nncorrect nnanswer-D) nnIndividual nnProperty nnRights
Production nnPossibilities nnCurve/Frontier nn(PPC/PPF) nn- nncorrect nnanswer-the nngraphical nnrepresentation
nnof nnthe nncombinations nnof nntwo nngoods nnand/or nnservices nnthat nncan nnbe nnproduced nnby nnan nneconomy
nnwhen nnusing nnresources nnefficiently. nn
Photo:
https://classconnection.s3.amazonaws.com/1871/flashcards/758371/png/picture1.png
When nnPPF nncurve nnshifts nnto nnthe nnright, nnit nnis nn__________. nn- nncorrect nnanswer-Economic nnGrowth
Photo:
https://upload.wikimedia.org/wikipedia/commons/thumb/e/ef/PPF_expansion.svg/250px-
PPF_expansion.svg.png
Increasing nnOpportunity nnCosts nn- nncorrect nnanswer-as nnyou nnincrease nnproduction nnof nnone, nnyou nnmust
nntake nnaway nnresources nnfrom nnanother. nn
questions with complete solutions
Economics nn- nncorrect nnanswer-the nnstudy nnof nnhow nnwe nnattempt nnto nnovercome nnscarcity
Scarcity nn- nncorrect nnanswer-A nncondition nnthat nnexists nnwhen nnthere nnare nninsufficient nnresources nnto
nnsatisfy nnunlimited nnwants
Opportunity nnCost nn- nncorrect nnanswer-The nntrue nncost nnof nnsomething nnincluding nnwhat nnis nngiven nnup nnto
nnget nnit
4 nnfactors nnof nnproduction nn- nncorrect nnanswer-1) nnland
2) nnlabor
3) nncapital
4) nnentrepreneurship
Land nn- nncorrect nnanswer-natural nnresources
ex: nnwater, nntrees, nnmineral
Labor nn- nncorrect nnanswer-human nnresources
ex: nnlaborers, nnworkers
Capital nn- nncorrect nnanswer-building nntools, nnmachines nnused nnto nnproduce nngoods nnand nnservices
Entrepreneurship nn- nncorrect nnanswer-intelligence, nnimagination, nnability nnto nntake nnrisks nnneed nnto nnstart
nnup nnand nncreate nna nnbusiness
Incentives nn- nncorrect nnanswer-motivate nnpeople nnto nnbuy, nnsell nna nngood, nnor nnput nnin nnextra nnhours nnof
nnwork
,ex: nnproperty nnrights
Law nnof nnDiminishing nnMarginal nnReturns nn- nncorrect nnanswer-as nnyou nnincrease nnonly nnone nnfactor
nnproduction nn(like nnlabor), nneventually nnyour nnreturns nnfor nneach nnadditional nnemployee nnwill nndecrease.
Which nnof nnthe nnfollowing nnrepresents nnthe nnproblem nnof nnscarcity?
A) nnPoverty
B) nnHunger
C) nnThe nnpursuit nnof nnhigher nneducation
D) nnAll nnof nnthe nnAbove nn- nncorrect nnanswer-D) nnAll nnof nnthe nnabove
If nnSarah nndecides nnto nnspend nnthe nnday nnwindsurfing nninstead nnof nnstudying nnfor nnher nneconomics nnexam
nnthe nnopportunity nncost nnof nnwindsurfing nnis:
A) nnThe nncost nnof nnrenting nnthe nnwindsurfing nnequipment
B) nnThe nncost nnof nngas, nntolls, nnfoods, nnand nnall nnother nnmonetary nncosts nnof nnwindsurfing
C) nnthe nnamount nnof nntime nnspent nnwindsurfing
D) nnThe nnvalue nnof nnstudying nnfor nnthe nnexam, nnmeasured nnby nnthe nnpoints nnlost nnon nnthe nnexam. nn- nncorrect
nnanswer-D) nnThe nnvalue nnof nnstudying nnfor nnthe nnexam, nnmeasured nnby nnthe nnpoints nnlost nnon nnthe nnexam.
Which nnof nnthe nnfollowing nnis nnan nnexample nnof nnland, nnas nnan nneconomic nninput?
A) nnThe nnnumber nnof nndoctors nnin nna nnnation
B) nnCopper
C) nnThe nnamount nnof nninvestment nna nnnation nnhas
D) nnThe nnamount nnof nnrisk nntakers nnin nnthe nnhealth nncare nnindustry nn- nncorrect nnanswer-B) nnCopper
Which nnof nnthe nnfollowing nnis nnan nnexample nnof nnphysical nncapital?
A) nnMoney
B) nnThe nnlevel nnof nneducation nnin nna nnsociety nn
C) nnThe nnsupply nnof nnoil
D) nnComputer nnsoftware nn- nncorrect nnanswer-D) nnComputer nnsoftware
, Hong nnKong nnhas nnvirtually nnno nnnatural nnresources nnto nnspeak nnof nnbut nnis nnamazingly nnrich. nnWhat
nnresource nndoes nnHong nnKong nnmost nnlikely nnhave nnin nnabundance nnin nnorder nnto nnbe nnso nnrich?
A) nnLabor
B) nnCapital
C) nnEntrepreneurship
D) nnGovernmental nnOversight nn- nncorrect nnanswer-C) nnEntrepreneurship
A nngood nnsystem nnthat nndemonstrates nnhow nnincentives nnlead nnto nnefficiency nnin nna nnmarket nneconomy nnis:
A) nnGovernment nnoversight
B) nnPoverty nn
C) nnGross nnnational nnproduct
D) nnIndividual nnproperty nnrights nn- nncorrect nnanswer-D) nnIndividual nnProperty nnRights
Production nnPossibilities nnCurve/Frontier nn(PPC/PPF) nn- nncorrect nnanswer-the nngraphical nnrepresentation
nnof nnthe nncombinations nnof nntwo nngoods nnand/or nnservices nnthat nncan nnbe nnproduced nnby nnan nneconomy
nnwhen nnusing nnresources nnefficiently. nn
Photo:
https://classconnection.s3.amazonaws.com/1871/flashcards/758371/png/picture1.png
When nnPPF nncurve nnshifts nnto nnthe nnright, nnit nnis nn__________. nn- nncorrect nnanswer-Economic nnGrowth
Photo:
https://upload.wikimedia.org/wikipedia/commons/thumb/e/ef/PPF_expansion.svg/250px-
PPF_expansion.svg.png
Increasing nnOpportunity nnCosts nn- nncorrect nnanswer-as nnyou nnincrease nnproduction nnof nnone, nnyou nnmust
nntake nnaway nnresources nnfrom nnanother. nn
