AP Macroeconomics Exam Review Questions and Answers Solved 2023

AP Macroeconomics Exam Review Questions and Answers Solved 2023 Producing a good or service if he or she can make more of it with a given amount of time and resources. - Absolute Advantage Producing a good or service if the opportunity cost of producing the good or service is lower for that individual than for other people. - Comparative Advantage If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will - export machinery and import sweaters Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price that it charges for its motorcycles, we can expect: - The demand for and price of Honda will rise If tortilla chips are a normal good, what happens to equilibrium price and quantity when there is an increase in income? - It increases To encourage young people to go to college within their home state, state universities can: - Lower tuition A model that shows alternative ways that an economy can use its scarce resources. This model graphically demonstrates scarcity, trade-offs, opportunity costs, and efficiency. - Production Possibilities Curve or Frontier and label Shifters of the PPC/F - 1. Change in resource quantity or quality 2. Change in Technology 3. Change in Trade Maximum legal price a seller can charge for a product. Goal: Make affordable by keeping price from reaching Eq. - Price Ceiling Minimum legal price a seller can sell a product. Goal: Keep price high by keeping price from falling to Eq. - Price Floor An economy that has the lowest opportunity cost for producing a particular good is said to have a(n): - Comparative Advantage Holding everything else constant, if the price of X decreases and the demand for Y increases, then this most likely means that X and Y are: - Complimentary Goods Holding everything else constant, if the price of X increases and the demand for Y increases, then this most likely means that X and Y are: - Substitutionary Goods If the price goes up for a product, consumer but less of that product and more of another substitute product (and vice versa) - Substitution Effect If the price goes up for a product, consumer but less of that product and more of another substitute product (and vice versa) - Recession 13. When a chef creates a dinner plate of food for a customer, identify what represents the physical capital resource? - Any machinery used (toasters, ovens, whisks) An announcement that smoking will harm your ability to think clearly will most likely result in: - a decrease in demand for cigarettes If the supply and demand curves intersect at a price of $14, then any price below that would result in a(n): - shortage or ceiling