AP Microeconomics Final Review Exam
Questions With Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following best describes the concept of opportunity
cost?
A. The total monetary cost of a decision
B. The next best alternative foregone when making a choice
C. The cost of all alternatives combined
D. The sunk cost of a decision
Answer: B
Rationale: Opportunity cost refers to the value of the next best
alternative that must be sacrificed when a choice is made. It is not the
total cost of all alternatives or sunk costs, which are irrelevant to
future decisions.
2. A production possibilities curve (PPC) that is bowed outward
indicates:
, A. Constant opportunity costs
B. Increasing opportunity costs
C. Decreasing opportunity costs
D. No opportunity costs
Answer: B
Rationale: A bowed-out PPC reflects increasing opportunity costs
because resources are not equally suited for producing all goods.
3. What is a characteristic of a market economy?
A. Government sets all prices
B. Central planning determines production
C. Prices are determined by supply and demand
D. Resources are equally distributed
Answer: C
Rationale: In a market economy, prices and production decisions are
guided by supply and demand rather than central planning.
4. A change in quantity demanded is caused by:
A. A shift in demand curve
B. A change in price of the good itself
, C. A change in consumer income
D. A change in preferences
Answer: B
Rationale: Quantity demanded changes only due to a change in the
good’s own price, not non-price factors.
5. Which factor will shift the demand curve to the right?
A. Increase in price
B. Decrease in income for normal goods
C. Increase in consumer income (normal goods)
D. Increase in production costs
Answer: C
Rationale: For normal goods, higher income increases demand,
shifting the curve rightward.
6. The law of supply states that:
A. Price and quantity demanded are inversely related
B. Price and quantity supplied are directly related
C. Supply decreases as price increases
D. Demand increases as price increases
, Answer: B
Rationale: The law of supply states that higher prices incentivize
producers to supply more.
7. A price ceiling set below equilibrium will result in:
A. Surplus
B. Shortage
C. No change
D. Market equilibrium
Answer: B
Rationale: A binding price ceiling creates excess demand, leading to
shortages.
8. Elasticity measures:
A. Total revenue
B. Responsiveness of quantity to price changes
C. Market equilibrium
D. Production efficiency
Questions With Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following best describes the concept of opportunity
cost?
A. The total monetary cost of a decision
B. The next best alternative foregone when making a choice
C. The cost of all alternatives combined
D. The sunk cost of a decision
Answer: B
Rationale: Opportunity cost refers to the value of the next best
alternative that must be sacrificed when a choice is made. It is not the
total cost of all alternatives or sunk costs, which are irrelevant to
future decisions.
2. A production possibilities curve (PPC) that is bowed outward
indicates:
, A. Constant opportunity costs
B. Increasing opportunity costs
C. Decreasing opportunity costs
D. No opportunity costs
Answer: B
Rationale: A bowed-out PPC reflects increasing opportunity costs
because resources are not equally suited for producing all goods.
3. What is a characteristic of a market economy?
A. Government sets all prices
B. Central planning determines production
C. Prices are determined by supply and demand
D. Resources are equally distributed
Answer: C
Rationale: In a market economy, prices and production decisions are
guided by supply and demand rather than central planning.
4. A change in quantity demanded is caused by:
A. A shift in demand curve
B. A change in price of the good itself
, C. A change in consumer income
D. A change in preferences
Answer: B
Rationale: Quantity demanded changes only due to a change in the
good’s own price, not non-price factors.
5. Which factor will shift the demand curve to the right?
A. Increase in price
B. Decrease in income for normal goods
C. Increase in consumer income (normal goods)
D. Increase in production costs
Answer: C
Rationale: For normal goods, higher income increases demand,
shifting the curve rightward.
6. The law of supply states that:
A. Price and quantity demanded are inversely related
B. Price and quantity supplied are directly related
C. Supply decreases as price increases
D. Demand increases as price increases
, Answer: B
Rationale: The law of supply states that higher prices incentivize
producers to supply more.
7. A price ceiling set below equilibrium will result in:
A. Surplus
B. Shortage
C. No change
D. Market equilibrium
Answer: B
Rationale: A binding price ceiling creates excess demand, leading to
shortages.
8. Elasticity measures:
A. Total revenue
B. Responsiveness of quantity to price changes
C. Market equilibrium
D. Production efficiency
