A.P. Macroeconomics
UNIT 2 QUIZ
DO NOT WRITE ON THIS TEST
Directions: Read each question entirely and record your answers on your own sheet of paper.
CIRCULAR FLOW MODEL
1. Which of the following is NOT a part of the circular
flow diagram?
A. Money Market
B. Businesses
C. Resource Market
D. Households
2. The resource market is the place where:
A. households sell products and businesses buy
products.
B. businesses sell resources and households sell
products.
C. households sell resources and businesses buy
resources.
D. businesses sell resources and households buy
resources.
3. Which of the following would be determined in
the product market?
A. a manager’s salary
B. the price of equipment used in a bottling plant
C. the price of 80 acres of farmland
D. the price of a new pair of athletic shoes
4. In the circular flow diagram, which of the
following is true in the product market?
A. Households sell goods and services to business
firms.
B. Households sell resources to business firms.
C. Business firms sell resources to households.
D. Business firms sell goods and services to
households.
5. In the circular flow diagram, which of the
following is true in resource or factor markets?
A. Households buy resources from business firms.
B. Households sell products to business firms.
C. Households sell resources to business firms.
D. Business firms sell goods and services to
households.
6. In the circular flow diagram, in which direction do
land, labor, capital and entrepreneurial ability
flow?
A. from businesses through the resource market
B. from households through the resource market
C. from businesses through the product market
D. from households through the product market
COMPARATIVE ADVANTAGE
Use the following information and graph to
answer the next three questions.
Kenya and Laos produce only soybeans and
robots. The following graph (not to scale) shows
the linear production possibility frontiers for both
Kenya and Laos:
soybeans
(in Tons)
soybeans
(in Tons)
300
Kenya
100
200
robots
Laos
50
7. Which of the following statements is true?
A. Laos has the comparative advantage in the
production of robots but no absolute advantage in
production of either good.
B. Laos has the comparative advantage in the
production of robots and the absolute advantage
in the production of soybeans.
C. Kenya has the comparative advantage in the
production of robots and the absolute advantage
in the production of soybeans.
D. Both Kenya and Laos have absolute advantage
in the production of soybeans.
robots
8. Which of the following statements is true?
A. Kenya should specialize in soybeans and Laos in
robots.
B. Kenya should specialize in robots and Laos in
soybeans.
C. Kenya should specialize in both soybeans and
robots.
D. Laos should specialize in both soybeans and
robots.
9. What is the opportunity cost for Kenya in terms of
robots (R) per ton of soybeans (S)?
A. 1/2 R
B. 1 R
C. 3 R
D. 1/3 R
Use the following information and graph to
answer the next three questions.
Germany and Portugal are two countries
producing peanuts and mirrors. Both of them have
40 hours of labor. The following table shows the
number of hours of labor needed to produce one
pound of peanuts or one mirror.
Labor hours needed to produce one
pound of peanuts
mirror
Germany
4
8
Portugal
8
20
10. What is the opportunity cost for Germany in terms
of mirrors (M) per pound of peanuts (P)?
A. 1 M
B. 2 M
C. 1/4 M
D. 1/2 M
11. What is the opportunity cost for Portugal in terms
of mirrors (M) per pound of peanuts (P)?
A. 2/5 M
B. 5/4 M
C. 1/2 M
D. 2 M
12. Which country has the absolute advantage in the
production of peanuts?
A. Germany
B. Portugal
C. Both countries
D. Neither country
13. Which country should specialize in the production
of mirrors?
A. Germany
B. Portugal
C. Both countries
D. Neither country