Macro Unit 1 (AP)

What does scarcity mean in economics?

• Unlimited wants and limited resources
• Limited wants and unlimited resources
• Unlimited resources and unlimited wants
• Limited choices but unlimited resources

Answer explanation

Scarcity = unlimited wants + limited resources

Which of the following is an example of a trade-off?

• Buying pizza instead of a burger
• Having unlimited money
• Getting more with no cost
• Consuming everything at once

Answer explanation

Trade-off = giving up one choice for another

A point inside the PPC shows…

• Productive efficiency
• Allocative efficiency
• Underutilization of resources
• Economic growth

Answer explanation

Inside PPC = underutilization

If the PPC shifts outward, what does that represent?

• Economic growth
• Unemployment
• Efficiency
• Scarcity

Answer explanation

Outward PPC = growth

Which statement best defines opportunity cost?

• The total cost of producing all goods
• The money price of a product
• The next best alternative given up
• The benefit gained from a choice

Answer explanation

OC = next best alternative forgone

A farmer can grow corn or wheat. If they choose wheat, the opportunity cost is…

• Nothing
• Corn
• More wheat
• Scarcity

Answer explanation

Choosing wheat means giving up corn

A point outside the PPC is…

• Efficient
• Inefficient
• Unattainable
• Optimal

Answer explanation

Outside PPC = unattainable

A PPC bowed outward shows…

• Constant opportunity cost
• Increasing opportunity cost
• Decreasing opportunity cost
• No trade-offs

Answer explanation

Bowed PPC = increasing OC

New technology in steel production shifts the PPC…

• Inward
• Outward
• Along the curve
• No effect

Answer explanation

Tech increases capacity = outward

Which PPC point is productively efficient?

• Inside the curve
• On the curve
• Outside the curve
• Nowhere

Answer explanation

Efficiency = on PPC