AP Econ - Unit One :) || A+ Verified Solutions.
A country's infrastructure refers to its correct answers public capital goods such as highways
Scarcity correct answers *Wants exceed resources*
- All resources are scarce so all goods are scarce
- Scarcity is the reason we study economics
All societies face a trade-off for every decision for what reason? correct answers Resources are
scarce
Human Capital correct answers The training and education of workers
Economics correct answers Study of how individuals make decisions to use their limited
resources to satisfy unlimited wants
Factors of Production correct answers Land, labor, and capital
(also entrepreneurship)
Land correct answers Natural resources
Labor correct answers Workers and human capital (human capital is the knowledge/education of
workers)
Capital correct answers Physical capital - any man-made resource
Ex: technology, equipment, factory space
Entreprenuer correct answers Person who puts all these together (land, labor, capital)
- Idea holder
Opportunity Cost correct answers Most desirable alternative given up
- not a benefit
- what you gave up
Ex: money, time, another good
Trade Offs correct answers All the alternatives given up
- opportunity cost + everything else
How do we know if we made a good decision? correct answers *The benefits have to outway the
costs*
Incentives correct answers Factors that motivate individuals
- Ex: money, grades, freetime
Microeconomics correct answers Study of individual and business decisions
, Macroeconomics correct answers Study government decisions and economy as a whole
Which of the following is the most fundamental issue that economics addresses? correct answers
Use of scarce resources
The concept of opportunity cost would no longer be relevant if what? correct answers the supply
of all resources were unlimited
Unlike a market economy, a command economy uses what? correct answers more centralized
planning in economic decision making
A production possibilities curve that is concave to the origin (bowed out) implies that as more of
a good is produced, the opportunity cost does what? correct answers increases
Any point inside a production possibilities curve is what? correct answers Any point inside a
production possibilities curve is
Economic System correct answers A system developed by a group to address the issue of
scarcity
- Each group must decide how to use their resources to meet their goals
Types of Economic Systems correct answers - Traditional
- Centrally Planned
- Free Market
- Mixed - combination of all 3
Three Economic Questions correct answers - What to produce?
- How to produce it?
- Who do we produce it for?
Production Possibility Graph (PPG) correct answers Illustrates all the possible combinations that
an economy can use its resources
As nations specialize in production and trade in international markets, they can expect what of
the following domestic improvements? correct answers Allocation of domestic resources and
Standard of living
Assume that Country A exports one bushel of wheat in exchange for 2.5 bushels of corn from
Country B. If the terms of trade are beneficial to both countries, what must be true? correct
answers The cost of producing a bushel of wheat in Country A is less than 2.5 bushels of corn.
Nations A and B produce only chairs and bicycles. If each laborer in Nation A can produce twice
as many chairs as each laborer in Nation B, then which of the following is necessarily true?
correct answers Nation A has an absolute advantage in chairs.
Constant Costs correct answers - Straight line
A country's infrastructure refers to its correct answers public capital goods such as highways
Scarcity correct answers *Wants exceed resources*
- All resources are scarce so all goods are scarce
- Scarcity is the reason we study economics
All societies face a trade-off for every decision for what reason? correct answers Resources are
scarce
Human Capital correct answers The training and education of workers
Economics correct answers Study of how individuals make decisions to use their limited
resources to satisfy unlimited wants
Factors of Production correct answers Land, labor, and capital
(also entrepreneurship)
Land correct answers Natural resources
Labor correct answers Workers and human capital (human capital is the knowledge/education of
workers)
Capital correct answers Physical capital - any man-made resource
Ex: technology, equipment, factory space
Entreprenuer correct answers Person who puts all these together (land, labor, capital)
- Idea holder
Opportunity Cost correct answers Most desirable alternative given up
- not a benefit
- what you gave up
Ex: money, time, another good
Trade Offs correct answers All the alternatives given up
- opportunity cost + everything else
How do we know if we made a good decision? correct answers *The benefits have to outway the
costs*
Incentives correct answers Factors that motivate individuals
- Ex: money, grades, freetime
Microeconomics correct answers Study of individual and business decisions
, Macroeconomics correct answers Study government decisions and economy as a whole
Which of the following is the most fundamental issue that economics addresses? correct answers
Use of scarce resources
The concept of opportunity cost would no longer be relevant if what? correct answers the supply
of all resources were unlimited
Unlike a market economy, a command economy uses what? correct answers more centralized
planning in economic decision making
A production possibilities curve that is concave to the origin (bowed out) implies that as more of
a good is produced, the opportunity cost does what? correct answers increases
Any point inside a production possibilities curve is what? correct answers Any point inside a
production possibilities curve is
Economic System correct answers A system developed by a group to address the issue of
scarcity
- Each group must decide how to use their resources to meet their goals
Types of Economic Systems correct answers - Traditional
- Centrally Planned
- Free Market
- Mixed - combination of all 3
Three Economic Questions correct answers - What to produce?
- How to produce it?
- Who do we produce it for?
Production Possibility Graph (PPG) correct answers Illustrates all the possible combinations that
an economy can use its resources
As nations specialize in production and trade in international markets, they can expect what of
the following domestic improvements? correct answers Allocation of domestic resources and
Standard of living
Assume that Country A exports one bushel of wheat in exchange for 2.5 bushels of corn from
Country B. If the terms of trade are beneficial to both countries, what must be true? correct
answers The cost of producing a bushel of wheat in Country A is less than 2.5 bushels of corn.
Nations A and B produce only chairs and bicycles. If each laborer in Nation A can produce twice
as many chairs as each laborer in Nation B, then which of the following is necessarily true?
correct answers Nation A has an absolute advantage in chairs.
Constant Costs correct answers - Straight line
