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AP Microeconomics UPDATED ACTUAL Questions and CORRECT Answers
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AP Microeconomics UPDATED ACTUAL Questions and CORRECT Answers Economics - CORRECT ANSWER- The study of how people, firms, and societies use their scarce productive resources to best satisfy their unlimited material wants. Resources - CORRECT ANSWER- Factors of production, 4 categories: labor...

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  • October 31, 2024
  • 12
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • ap microeconomics
  • microeconomics
  • ap microeconomics updated actual questions and co

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  • AP Microeconomics
  • AP Microeconomics

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AP Microeconomics UPDATED ACTUAL
Questions and CORRECT Answers
Economics - CORRECT ANSWER✔✔- The study of how people, firms, and societies use
their scarce productive resources to best satisfy their unlimited material wants.


Resources - CORRECT ANSWER✔✔- Factors of production, 4 categories: labor, physical
capital, land/natural resources, and entrepreneurial ability


Scarcity - CORRECT ANSWER✔✔- The imbalance between limited productive resources
and unlimited human wants


Opportunity Cost - CORRECT ANSWER✔✔- The most desirable alternative given up as the
result of a decision


Marginal Benefit (MB) - CORRECT ANSWER✔✔- The additional benefit received from the
consumption of the next unit of a good or service


Marginal Cost (MC) - CORRECT ANSWER✔✔- The additional cost incurred from the
consumption of the next unit of a good or a service


Marginal Analysis - CORRECT ANSWER✔✔- The rational decision maker chooses an
action if MB ≥ MC


Law of Increasing Costs - CORRECT ANSWER✔✔- The more of a good that is produced,
the greater the opportunity cost of producing the next unit of that good


Absolute Advantage - CORRECT ANSWER✔✔- Exists if a producer can produce more of a
good than all other producers


Comparative Advantage - CORRECT ANSWER✔✔- Exists if a producer can produce a good
at lower opportunity cost than all other producers

, Specialization - CORRECT ANSWER✔✔- When firms focus their resources on production
of goods for which they have comparative advantage


Productive Efficiency - CORRECT ANSWER✔✔- Production of maximum output for a
given level of technology and resources. All points on the PPF are productively efficient


Allocative Efficiency - CORRECT ANSWER✔✔- Production of the combination of goods
and services that provides the most net benefit to society. The optimal quantity of a good is
achieved when the MB = MC of the next unit and only occurs at one point on the PPF


Economic Growth - CORRECT ANSWER✔✔- Occurs when an economy's production
possibilities increase. This can be a result of more resources, better resources, or
improvements in technology.


Market Economy (Capitalism) - CORRECT ANSWER✔✔- An economic system based upon
the fundamentals of private property, freedom, self-interest, and prices


Law of Demand - CORRECT ANSWER✔✔- Holding all else equal, when the price of a
good rises, consumers decrease their quantity demanded for that good


Absolute prices - CORRECT ANSWER✔✔- The price of a good measured in units of
currency


Relative Prices - CORRECT ANSWER✔✔- The number of units of any other good Y that
must be sacrificed to acquire good X. Only relative prices matter


Substitution Effect - CORRECT ANSWER✔✔- The change in quantity demanded resulting
from a change in the price of one good relative to other goods


Income Effect - CORRECT ANSWER✔✔- The change in quantity demanded that results
from a change in the consumer's purchasing power (or real income)

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