AP Economics–Practice Test Questions–Microeconomics–Unit 1–Multiple Choice
1. The basic economic problem is reflected in which of the following concepts?
I.
II.
III.
IV.
Opportunity Cost
Production possibilities
The fallacy of composition
Ceteris paribus
A.
B.
C.
D.
E.
I only
IV only
I and II only
II and III only
II, III and IV only
2. Which of the following goods would be considered scarce?
I
II
III
A.
B.
C.
D.
E.
Education
Gold
Time
I only
II only
III only
I and II only
I, II and III
3. A rational decision maker will choose to act only if
A. the marginal benefit of the action is greater than the average cost of that action
B. The marginal benefit of the action is greater than the marginal cost of that
action
C. The marginal benefit of the action is less than the average cost of that action
D. The average benefit of the action is less than the average cost of that action
E. The average benefit of the action is greater than the average cost of that
action, and the marginal benefit of the action is greater than the marginal cost
of that action.
4. According to the theory of comparative advantage, a good should be produced where
A.
B.
C.
D.
E.
its explicit costs are least
its opportunity costs are least
the cost of real resources used is least
production can occur with the greatest increase in employment
production can occur with the lowest increase in employment
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