AP Microeconomics Midterm Examination
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1. A production possibility frontier illustrates:
A. consumer preferences
B. market equilibrium
C. opportunity costs and trade-offs
D. price ceilings
Answer: C
Rationale: The production possibility frontier (PPF) shows the
maximum possible output combinations of two goods given limited
resources, highlighting opportunity costs and trade-offs when shifting
production between goods.
2. Which of the following best describes scarcity?
A. unlimited wants and unlimited resources
B. limited resources and unlimited wants
, C. unlimited resources and limited wants
D. equilibrium in all markets
Answer: B
Rationale: Scarcity refers to the fundamental economic problem
where human wants are unlimited but resources available to satisfy
them are limited.
3. Opportunity cost is defined as:
A. total monetary cost of production
B. cost of the next best alternative forgone
C. sunk cost of production
D. accounting profit minus revenue
Answer: B
Rationale: Opportunity cost represents the value of the next best
alternative that is sacrificed when a decision is made.
4. A shift of the demand curve to the right indicates:
A. a decrease in demand
B. an increase in supply
, C. an increase in demand
D. a decrease in price
Answer: C
Rationale: A rightward shift in demand means consumers are willing
and able to purchase more at every price level, indicating an increase
in demand.
5. The law of demand states that:
A. price and quantity demanded are directly related
B. price and quantity demanded are inversely related
C. supply increases when price falls
D. demand is unaffected by price
Answer: B
Rationale: The law of demand states that, ceteris paribus, when price
rises, quantity demanded falls, and vice versa.
6. Which factor will NOT shift the demand curve?
A. income changes
B. preferences
, C. price of the good itself
D. number of consumers
Answer: C
Rationale: A change in the good’s own price causes movement along
the demand curve, not a shift.
7. A price ceiling is:
A. a minimum legal price
B. a maximum legal price
C. a market equilibrium price
D. a tax on producers
Answer: B
Rationale: A price ceiling is a legal maximum price set below
equilibrium to make goods more affordable.
8. If demand is elastic, then:
A. quantity demanded is unresponsive to price
B. quantity demanded changes greatly with price
C. supply is perfectly inelastic
D. demand is vertical
Questions With Correct Answers (Verified
Answers) Plus Rationales 2026 Q&A | Instant
Download Pdf
1. A production possibility frontier illustrates:
A. consumer preferences
B. market equilibrium
C. opportunity costs and trade-offs
D. price ceilings
Answer: C
Rationale: The production possibility frontier (PPF) shows the
maximum possible output combinations of two goods given limited
resources, highlighting opportunity costs and trade-offs when shifting
production between goods.
2. Which of the following best describes scarcity?
A. unlimited wants and unlimited resources
B. limited resources and unlimited wants
, C. unlimited resources and limited wants
D. equilibrium in all markets
Answer: B
Rationale: Scarcity refers to the fundamental economic problem
where human wants are unlimited but resources available to satisfy
them are limited.
3. Opportunity cost is defined as:
A. total monetary cost of production
B. cost of the next best alternative forgone
C. sunk cost of production
D. accounting profit minus revenue
Answer: B
Rationale: Opportunity cost represents the value of the next best
alternative that is sacrificed when a decision is made.
4. A shift of the demand curve to the right indicates:
A. a decrease in demand
B. an increase in supply
, C. an increase in demand
D. a decrease in price
Answer: C
Rationale: A rightward shift in demand means consumers are willing
and able to purchase more at every price level, indicating an increase
in demand.
5. The law of demand states that:
A. price and quantity demanded are directly related
B. price and quantity demanded are inversely related
C. supply increases when price falls
D. demand is unaffected by price
Answer: B
Rationale: The law of demand states that, ceteris paribus, when price
rises, quantity demanded falls, and vice versa.
6. Which factor will NOT shift the demand curve?
A. income changes
B. preferences
, C. price of the good itself
D. number of consumers
Answer: C
Rationale: A change in the good’s own price causes movement along
the demand curve, not a shift.
7. A price ceiling is:
A. a minimum legal price
B. a maximum legal price
C. a market equilibrium price
D. a tax on producers
Answer: B
Rationale: A price ceiling is a legal maximum price set below
equilibrium to make goods more affordable.
8. If demand is elastic, then:
A. quantity demanded is unresponsive to price
B. quantity demanded changes greatly with price
C. supply is perfectly inelastic
D. demand is vertical
