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The crucial problem of economics is

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allocating scarce productive resources to satisfy wants

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When one decision is made, the next best alternative not selected is called

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Opportunity Cost

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Which of the following is true if the production possibilities curve is a curved line concave to the origin? A. Resources are perfectly substitutable between the production of the two goods B. It is possible to produce more of both products. C. Both products are equally capable of satisfying consumer wants D. The prices of the two products are the same. E. As more of one good is produced, more and more of the other good must be given up.

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E. As more of one good is produced, more and more of the other good must be given up.

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Which of the following is true of the concept of increasing opportunity cost? A. it is unimportant in command economics because of central planning. (B) It suggests that the use of resources to produce a set of goods and services means that as more of one is produced, some of the other must be sacrificed. C. It is irrelevant if the production possibilities curve is convex to the origin. D. It suggests that unlimited wants can be fulfilled. E. It means that resources are plentiful and opportunities to produce greater amounts of goods and services are unlimited.

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(B) It suggests that the use of resources to produce a set of goods and services means that as more of one is produced, some of the other must be sacrificed.

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To be considered scarce, an economic resource must be which of the following? I. Limited II. Free III. Desirable

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I and III only Limited and Desirable

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question

The basic economic problem is reflected in which of the following concepts? I. Opportunity Cost II. Production Possibilities III. The fallacy of composition IV. Ceteris paribus

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I and II only Opportunity cost and production possibilities

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question

Which of the following goods would be considered scarce? I. Education II. Gold III. Time

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All (I, II and III)

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question

The value of the best alternative forgone when a decision is made defines

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Opportunity Cost

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Which of the following problems do all economic systems face? I. How to allocate scarce resources among unlimited wants II. How to distribute income equally among all the citizens III. How to decentralize markets IV.How to decide what to produce, how to produce and for whom to produce

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I and IV only How to allocate scarce resources among unlimited wants & How to decide what to produce, how to produce and for whom to produce

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question

The opportunity cost of building a new high school is

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other goods and services, which must now be sacrificed to build the new school

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question

In which way does a straight-line production possibilities curve differ from a concave production possibilities curve?

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A straight-line production possibilities curve has a constant opportunity cost

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question

The law of increasing opportunity cost is reflected in the shape of the

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production possibilities curve concave to the origin.

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question

The opportunity cost of producing an additional unit of product A is

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The amount of product B that cannot now be produced because of product A.

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question

Which of the following would cause a leftward shift of the production possibilities curve?

answer

A decrease in working age population

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AP Macroeconomics Unit 1 Practice Questions – Flashcards

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