UNIT 1 Microeconomics SAMPLE QUESTIONS MULTIPLE-CHOICE

1 SAMPLE MULTIPLE-CHOICE QuestionsAdvanced Placement Economics Microeconomics :Student Activities National Council on economic Education,New York, the letter ofeach correct crucial problem ofeconomics is(A)establishing a fair tax system.(B)providing social goods and services.(C)developing a price mechanism that reflectsthe relative scarcities ofproducts andresources.(D)allocating scarce productive resources tosatisfy wants.(E)enacting a set oflaws that protectsresources from one decision is made,the next best alter-native not selected is called(A) economic resource.

2 (B)opportunity cost.(C)scarcity.(D)comparative disadvantage.(E) ofthe following is true ifthe produc-tion possibilities curve is a curved line concaveto the origin?(A)Resources are perfectly substitutablebetween the production ofthe two goods.(B)It is possible to produce more ofbothproducts.(C)Both products are equally capable ofsatis-fying consumer wants.(D)The prices ofthe two products are the same.(E)As more ofone good is produced,more andmore ofthe other good must be given ofthe following is true ofthe conceptofincreasing opportunity cost?(A)It is unimportant in command economiesbecause ofcentral planning.

3 (B)It suggests that the use ofresources to pro-duce a set ofgoods and services means thatas more ofone is produced,some oftheother must be sacrificed.(C)It is irrelevant ifthe production possibili-ties curve is convex to the origin.(D)It suggests that unlimited wants can be ful-filled.(E)It means that resources are plentiful andopportunities to produce greater amounts ofgoods and services are be considered scarce,an economic resourcemust be which ofthe following? (A)I only (B)I and II only (C)II and III only (D)I and III only (E)I,II and basic economic problem is reflected inwhich ofthe following concepts?

4 Cost fallacy paribus(A)I only (B)IV only (C)I and II only (D)II and III only (E)II,III and IV only1 MicroeconomicsSAMPLEQUESTIONS multiple -CHOICEUNIT36 Advanced Placement Economics Microeconomics :Student Activities National Council on economic Education,New York, ofthe following goods would be con-sidered scarce? (A)I only (B)II only (C)III only (D)I and II only (E)I,II and value ofthe best alternative forgone whena decision is made defines(A) economic good.(B)opportunity cost.(C)scarcity.(D)trade-off.(E)compara tive ofthe following problems do alleconomic systems face?

5 To allocate scarce resources amongunlimited to distribute income equally amongall the to decentralize to decide what to produce,how toproduce and for whom to produce(A)I only (B)I and IV only(C)II and III only (D)I,II and III only (E)I,II,III and which way does a straight-line productionpossibilities curve differ from a concave pro-duction possibilities curve? (A)A straight-line production possibilitiescurve has a decreasing opportunity cost.(B)A straight-line production possibilitiescurve has a constant opportunity cost.(C)A straight-line production possibilitiescurve has an increasing opportunity cost.

6 (D)A straight-line production possibilitiescurve does not show opportunity cost.(E)There is no difference between the twoproduction possibilities law ofincreasing opportunity cost isreflected in the shape ofthe (A)production possibilities curve concave tothe origin.(B)production possibilities curve convex tothe origin.(C)horizontal production possibilities curve.(D)straight-line production possibilities curve.(E)upward-sloping production multiple -CHOICEUNIT(continued)Advanced Placement Economics Microeconomics :Student Activities National Council on economic Education,New York, figure below is used for QUESTIONS 12 shows the production possibilities curve for acountry with full employment ofa given-size country is currently producing at PointC,it can produce more computers by doingwhich ofthe following?

7 (A)Moving to Point A(B)Moving to Point B(C)Moving to Point D(D)Moving to Point E(E)Remaining at Point C,since computer pro-duction is ofthe following statements about theproduction possibilities curve is true?(A)Point A is not attainable in a developedsociety.(B)Point Dis not attainable given the society sresources.(C)The relative position ofPoints C and Dreflect production alternatives rather thanrelative prices.(D)Elimination ofunemployment will movethe production possibilities curve to theright,closer to Point E.(E)Point E lies outside the production possi-bilities curve because it represents a combi-nation ofresources not desired by the citi-zens ofthe might Point E be attained?

8 (A)Ifthe country s resources were more fullyemployed(B)Ifthe country s resources were shifted toencourage more efficient use ofscarceresources(C)Ifimprovements in technology occurred ineither the computer sector or the farm-products sector(D)Iffirms decreased their output ofcomputers(E)Ifthe nation used more ofits scarceresources to produce farm production possibilities curve ofthe coun-try would be most likely to shift to the right ifthe country were currently producing at whichofthe following points?(A)Point A(B)Point B(C)Point C(D)Point D(E)Point ECOMPUTERSFARM PRODUCTSBCEADF1 MicroeconomicsSAMPLEQUESTIONS multiple -CHOICEUNIT(continued)38 Advanced Placement Economics Microeconomics :Student Activities National Council on economic Education,New York, figure below is used for QUESTIONS 16,17 and shows the production possibilities curve for twotypes ofgoods for a country with full employmentofa given-size labor country is currently producing at PointC,it can produce more capital goods by mov-ing in the direction of(A)Point A.

9 (B)Point B.(C)Point D.(D)Point W.(E)Point country moves from Point C to Point D,future economic growth will(A)decrease.(B)increase.(C)not change,but consumer satisfaction willincrease.(D)not change,but unemployment willincrease.(E)not change,but inflation will ofthe following is most likely to causethe production possibilities curve to shift out-ward toward Point W? (A)Employing the country s resources more fully(B)Shifting the country s resources to encouragemore efficient use ofscarce resources(C)Improving the technology for the productionofeither consumer or capital goods(D)Decreasing production ofcapital goods(E)Shifting some scarce resources to produceconsumer goods in the current opportunity cost ofproducing anadditional unit ofproduct A is (A)all ofthe human and capital resources usedto produce product A.

10 (B)the retail price paid for product A.(C)the wholesale price ofproduct A.(D)the amount ofproduct B that cannot nowbe produced because ofproduct A.(E)the profit that was earned from producingproduct ofthe following would cause a leftwardshift ofthe production possibilities curve? (A)An increase in unemployment(B)An increase in inflation(C)An increase in capital equipment(D)A decrease in consumer demand(E)A decrease in working-age ofthe following would cause anoutward or rightward shift in the productionpossibilities curve?(A)An increase in unemployment(B)An increase in inflation(C)An increase in capital equipment(D)A decrease in natural resources(E)A decrease in the number ofworkers1 MicroeconomicsSAMPLEQUESTIONS multiple -CHOICEUNIT(continued)CAPITAL GOODSCONSUMER GOODSABCXDEWA dvanced Placement Economics Microeconomics .