Name: __________________________________________

Date: _______________

Quiz name: AP PPC Quiz When the San Francisco city manager faces a complaint that the city council chamber podium is not accessible to individuals with disabilities, he responds that the one million dollar improvement will not happen because “that money could be spent building 70 curb ramps.” This statement best represents the economic concept of:

1. A

resources are scarce.

B

the implicit cost of something is what you must give up to get it.

C

“how much?” is a decision at the margin.

D

when markets don't achieve efficiency, government intervention can improve society's welfare.

E

there are gains from trade. Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment. This statement best represents the economic concept of:

2. A

the real cost of something is what you must give up to get it.

B

“how much?” is a decision at the margin.

C

people usually respond predictably to incentives.

D

there are gains from trade.

E

markets move toward equilibrium. Which of the following statements is a positive statement? Which is a normative statement? X. The federal minimum wage is increasing to $6.50 an hour. Y. The minimum wage should be high enough that families will not live in poverty. Z: A higher minimum wage typically increases the unemployment rate for teenagers.

3. A

X is positive; Y is normative; Z is positive

B

X is positive; Y is positive; Z is positive

C

X is normative; Y is positive; Z is normative

D

X is normative; Y is normative; Z is normative

E

X is positive; Y is normative; Z is normative

4.

5.

Based on the “Guns and Butter” Figure 3-1, points A, B, E, and F: A

indicate combinations of guns and butter that society can produce using all of its factors efficiently.

B

show that the opportunity cost of more guns increases, but that of more butter decreases.

C

indicate that society wants butter more than it wants guns.

D

indicate constant costs for guns and increasing costs for butter.

E

indicate that society is experiencing many idle resources. Use the “Consumer and Capital Goods” Figure 3-3. The movement from Curve 1 to Curve 2 indicates:

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A

economic growth.

B

change from unemployment to full employment.

C

a decrease in the level of technology.

D

instability.

E

the recovery from a recession. Use the “Tom's Production Possibilities” Figure 3-5. In the figure, which point or points represent a combination of wine and wheat that is not feasible for Tom to produce at this time?

6. A

A

B

A and B

C

B and D

D

C

E

None represented on Frontier At the point at which it is currently producing, the United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 1 tractor is ________ bicycles.

7. A

5

B

20

C

100

D

125

E

25 Use the “Production Possibility Curve for Tealand” Figure 3-4. In the figure, Tealand can only experience point E if the government:

8. A

pays unemployment benefits

B

raises taxes.

C

raises the age at which workers can retire.

D

decreases the use of technology.

E

increases barriers to trade with other nations.

9.

As a consumer, you decide to go to a movie: A

if the marginal cost of the movie exceeds its marginal benefit.

B

because all movies are enjoyable.

C

if the marginal benefit of the movie exceeds its marginal cost.

D

if your income will allow you to buy a ticket

E

if the movie costs more than going to a restaurant.

10.

In economics, the pleasure or satisfaction received from a product is called: A

marginal cost

B

utility

C

rational self-interest Page 2 of 5

D

efficiency

E

opportunity cost Which of the following would be considered a capital good? I. gold II. employee III. cash register

11. A

I only

B

II only

C

I and II only

D

II and III only

E

III only

12.

The basic concern of economics is: A

to keep business firms from losing money.

B

to prove that capitalism is better than socialism.

C

to study the choices people make.

D

to use unlimited resources to produce goods and services to satisfy limited wants.

E

to increase the amount of wealth in the economy. Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

13. A

$10,000.

B

whatever she would have purchased with the $10,000 instead.

C

whatever she would have purchased with the $10,000 minus whatever she would have earned had she not been in college.

D

whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college.

E

14.

whatever she would have earned had she had not been in college Although water is very abundant in most places, it is scarce because:

A

it has no alternative uses.

B

there is not enough of it to meet all needs at zero cost.

C

it is a free good.

D

scarce goods in general are not all that costly.

E

it is a public good.

15.

The law of increasing opportunity costs exists because: A

the additional output generated by workers decreases over time.

B

resources are not equally efficient in producing different goods.

C

inflation leads to a decrease in purchasing power over time.

D

producers are likely to overcharge consumers when there are shortages.

E

wage increase economies approach full employment

16.

The crucial problem of economics is A

establishing a fair tax system

B

providing social goods and services Page 3 of 5

C

developing a price mechanism that reflects the relative scarcities of products and resources

D

allocating scarce productive resources to satisfy wants

E

enacting a set of laws that protects resources from overuse When one decision is made, the next best alternative not selected is called

17. A

economic resource

B

opportunity cost

C

scarcity

D

comparative disadvantage

E

production Which of the following would cause an outward or rightward shift in the production possibilities curve?

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

19. 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 population Which of the following is true of the concept of increasing opportunity cost?

20. A

It is unimportant in command economies 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

E

It suggests that unlimited wants can be fulfilled It means that resources are plentiful and opportunities to produce greater amounts of goods and services are unlimited

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

21. A

I only

B

I and II only

C

II and III only

D

I and III only

E

I, II and II The opportunity cost of building a new high school is

22. A

the expense of hiring more teachers for the new high school

B

the expense of new desks, chalkboards and books for the the new high school.

C

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

D E

overcrowded classrooms. the bond levy needed to build the new high school.

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