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Opportunity cost, p. 5 Absolute advantage, p. 21 Supply schedule, p. 37
Microeconomics, p. 6 Terms of trade, p. 23 Supply curve, p. 37
Household, p. 6 Supply and demand model, p. 27 Law of supply, p. 37
Firm, p. 6 Demand schedule, p. 28 Change in supply, p. 39
Macroeconomics, p. 6 Quantity demanded, p. 28 Movement along the supply curve, p. 39
Model, p. 10 Demand curve, p. 28 Input, p. 41
“Other things equal” (ceteris paribus) Law of demand, p. 29 Substitutes in production, p. 41
assumption, p. 11 Change in demand, p. 30 Complements in production, p. 41
Production possibilities curve, p. 11 Movement along the demand curve, Equilibrium, p. 46
Efficient, p. 12 p. 30 Equilibrium price, p. 46
Economic growth, p. 15 Substitutes, p. 33 Equilibrium quantity, p. 46
Technology, p. 16 Complements, p. 33 Disequilibrium, p. 48
Trade, p. 19 Normal good, p. 34 Surplus, p. 49
Specialization, p. 19 Inferior good, p. 34 Shortage, p. 49
Comparative advantage, p. 21 Quantity supplied, p. 37

®
AP Exam Practice Questions

Multiple-Choice Questions d. the national rate of inflation
e. government efforts to end a recession
1. Which of the following pairs indicates a category of
resources and an example of that resource? Refer to the following table and information for Questions 5–8.
Category Example Suppose that Atlantis is a small, isolated island in the South
a. money investment Atlantic. The inhabitants grow potatoes and catch fish.
b. capital money The following table shows the maximum annual output
c. capital minerals combinations of potatoes and fish that can be produced.
d. land factory
e. land timber Maximum annual output Quantity of Quantity of fish
options potatoes (pounds) (pounds)
2. You can either go to a movie or study for an exam. A 1,000 0
Which of the following is an opportunity cost of
studying for the exam? B 800 300
a. a higher grade on the exam C 600 500
b. the price of a movie ticket D 400 600
c. the cost of paper, pens, books, and other study E 200 650
materials F 0 675
d. the enjoyment from seeing the movie
e. the sense of achievement from learning 5. Atlantis can produce which of the following
3. Which of the following situations is explained by combinations of output?
increasing opportunity costs? Pounds of potatoes Pounds of fish
a. More people go to college when the job market is a. 1,000 675
good. b. 600 600
b. More people do their own home repairs when hourly c. 400 600
wages fall. d. 300 800
c. There are more parks in crowded cities than in e. 200 675
suburban areas. 6. If Atlantis is efficient in production, what is the
d. Convenience stores cater to busy people. opportunity cost of increasing the annual output of
e. People with higher wages are more likely to mow potatoes from 600 to 800 pounds?
their own lawns.
a. 200 pounds of fish
4. Which of the following is a microeconomic issue? b. 300 pounds of fish
a. the unemployment rate in your country c. 500 pounds of fish
b. the gross domestic product for France d. 675 pounds of fish
c. the wage rate for employees at your school e. 800 pounds of fish

58 Macro • Unit 1 Basic Economic Concepts
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