AP Micro Review Exam

The Invisible Hand concept explains

• consumers and producers working together with no one directing them

• businesses taking advantage of customers

• helping those who are disadvantaged

• economic planning and direction by experts

Which factor of production is this?

• capital

• entrepreneur

• land

• labor

What does point Y represent on the PPC?

• Efficiency

• Unattainable / impossible

• Inefficency

• Nothing

What does point B represent?

• Production at greater than the country's minimum potential

• Production is less than the country's minimum potential

• Productive inefficiency

• Productive efficiency

Which of the following constitute the fundamental questions every economic system must answer?

• I, III, V only

• I, II, and IV only

• I, II, and V only

• II, IV, and V only

Two alternative production possibility frontiers for apples and wheat are shown in the figures. As more wheat is produced, how will the opportunity cost of producing wheat, as represented in Figures 1 and 2, be affected? 

• Figure 1: Decrease / Figure 2: Increase

• Figure 1: Increase / Figure 2: Decrease

• Figure 1: No Change / Figure 2: Increase

• Figure 1: No Change / Figure 2: Decrease

What is the primary focus of microeconomics?

• A) The study of individual markets and players

• B) The study of national economies

• C) The study of global trade

• D) The study of economic history

Which of the following best describes the concept of opportunity cost?

• A) The cost of an alternative that must be forgone to pursue a certain action

• B) The total cost of production

• C) The cost of labor and materials

• D) The cost of living

In a perfectly competitive market, what is the role of individual firms?

• A) Price takers

• B) Price makers

• C) Monopolists

• D) Regulators

What does the law of demand state?

• A) As the price of a good increases, quantity demanded decreases

• B) As the price of a good increases, quantity demanded increases

• C) Demand is always constant

• D) Demand is independent of price