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AP Microeconomics Final Exam Test Review questions with complete solutions
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AP Microeconomics Final Exam Test Reviewquestions with complete solutions
Scarcity nnin nneconomics nnmeans: nn- nncorrect nnanswer-society nnis nnunable nnto nnproduce nnall nnthe nngoods nnand
nnservices nnwe nnwant nnwith nnexisting nnresources.
What nnare nnthe nnthree nnprimary nnquestions nnall nneconomic nnsystems nnmust nnaddress: nn- nncorrect nnanswer-
What nnto nnproduce; nnHow nnto nnproduce; nnand nnFor nnwhom nnto nnproduce.
The nnproblem nnof nndetermining nnwhat nngoods nnand nnservices nnsociety nnshould nnproduce nnexists nnbecause nn-
nncorrect nnanswer-there nnare nnnot nnenough nnresources nnto nnprovide nnall nnthe nngoods nnand nnservices nnthat
nnpeople nnwant nnto nnpurchase.
Elbonia nnproduces nnpotatoes nnat nnthe nnlowest nnpossible nncost nnper nnacre nnto nnits nncompetitors, nnwhereas
nnSlobenia nnproduces nnsugar nnbeets nnat nnthe nnlowest nnpossible nncost nnper nnacre nneven nnthough nnboth nncould
nnproduce nnpotatoes nnand nnbeets. nnThis nnis nnan nnexample nnof: nn- nncorrect nnanswer-Comparative nnadvantage
The nnbest nnmeasure nnof nnthe nnopportunity nncost nnof nnany nnchoice nnis: nn- nncorrect nnanswer-whatever nnyou
nnhave nngiven nnup nnto nnmake nnthat nnchoice, nneven nnif nnno nnmonetary nncosts nnare nninvolved.
The nnstudy nnof nncosts nn& nnbenefits nnof nndoing nnmore nnof nnan nnactivity nnversus nnless nnis nnknown nnas: nn-
nncorrect nnanswer-Marginal nnanalysis.
If nnthe nnprice nnof nngasoline nnfalls nnand nnstays nnlow nnfor nnan nnextended nnperiod nnof nntime, nnwe nnexpect
nnpeople nnto: nn- nncorrect nnanswer-buy nnlarger nnand nnless nnfuel-efficient nnvehicles.
Which nnof nnthe nnfollowing nnbest nndefines nncomparative nnadvantage? nn- nncorrect nnanswer-An nneconomy's
nnability nnto nnproduce nna nnparticular nngood nnat nna nnlower nnopportunity nncost nnthan nnits nntrading nnpartners.
Which nnof nnthe nnfollowing nnwould nnbe nna nnnormative nneconomic nnstatement? nn- nncorrect nnanswer-
Government nnhas nngrown nntoo nnlarge nnand nnshould nnbe nnreduced.
, Which nnof nnthe nnfollowing nnbest nndefines nnabsolute nnadvantage? nn- nncorrect nnanswer-Absolute nnadvantage
nnis nnthe nnability nnof nnan nnindividual, nncompany, nnregion, nnor nncountry nnto nnproduce nna nngreater nnquantity nnof
nna nngood nnor nnservice nnwith nnthe nnsame nnquantity nnof nninputs nnper nnunit nnof nntime, nnor nnto nnproduce nnthe
nnsame nnquantity nnof nna nngood nnor nnservice nnper nnunit nnof nntime nnusing nna nnlesser nnquantity nnof nninputs, nnthan
nnits nncompetitors.
Adam nnowns nnPins-R-Us, nna nnpin nnfactory nnin nnPinstown, nnPinsyltucky. nnHaving nnread nn"Wealth nnof nnNations"
nnhe nndecides nnthat nneach nnworker nnwill nnonly nnperform nnone nnfunction nnin nnthe nnpin nnmaking nnprocess
nnduring nntheir nnrespective nnshifts. nnHaving nnpinned nnhis nnsuccess nnor nnfailure nnon nnthis nndecision, nnAdam
nndiscovers nnthat nnthe nnquantity nnof nnpins nnproduced nngoes nnup nnsubstantially, nncompared nnto nneach nnworker
nnmaking nneach nnpin nnfrom nnstart nnto nnfinish, nnthus nnincreasing nnoutput nnwhile nnefficiently nnusing nninputs.
nnUpon nnwhat nneconomic nnprinciple nnwould nnyou nnpin nnAdam's nnaction? nn- nncorrect nnanswer-Specialization
nn(or nnDivision) nnof nnLabor.
Comparing nnaccounting nnprofit nnto nneconomic nnprofit, nnaccounting nnprofit nncan: nn- nncorrect nnanswer-Be
nnequal nnto nnor nnmore nnthan nneconomic nnprofit.
Assume nna nnperfectly nncompetitive nnfirm nnis nnproducing nnat nna nnlevel nnof nnoutput nnwhere nnmarginal
nnrevenue nnis nngreater nnthan nnmarginal nncost. nnTo nnmaximize nnprofits, nnthe nnfirm nnshould: nn- nncorrect
nnanswer-increase nnoutput
Diminishing nnmarginal nnreturns nnalways nninvolve nn- nncorrect nnanswer-A nnfixed nninput
If nnlabor nnis nnthe nnonly nnvariable nninput nnand nnthe nnwage nnrate nnis nnconstant, nnmarginal nncost nnreaches nnits
nnminimum nnwhen nn- nncorrect nnanswer-Marginal nnproduct nnreaches nnits nnmaximum
Monopolistically nncompetitive nnindustries nnare nncharacterized nnby nn- nncorrect nnanswer-differentiated
nnproducts, nnmany nnfirms nnand nneasy nnentry nnexit
Compared nnto nna nnmonopolistically nncompetitive nnindustry, nnan nnoligopoly nnhas nn- nncorrect nnanswer-a
nnhigher nnHerfindahl-Hirschman nnIndex, nnfewer nnfirms, nnand nnmore nnbarriers nnto nnentry
The nnfour nnprincipal nnclasses nnof nnfactors nnof nnproduction nnare: nn- nncorrect nnanswer-land, nnlabor, nncapital
nnand nnentrepreneurship.
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