- Following are two production possibilities curves
for Country 1 and Country 2. Both countries
produce plastic and metal. According to the graph,
what should Country 1 do?
A. Import plastic, export metal
B. Export plastic, import metal
C. Import plastic, import metal
D. Export plastic, export metal
E. Not trade- A firm in a perfectly competitive industry is
producing at a point where price is below the total
cost curve but above the average variable cost
curve. If the firm wants to maximize profits, it
should:
A. Try to make positive economic profits.
B. Increase quantity supplied.
C. Produce where marginal cost is above
marginal revenue.
D. Reduce the amount of inputs.
E. The firm is already earning maximum
profits. - A negative externality is when:
A. A firm is earning negative economic profits.
B. A firm has an internal cost which it can
reduce with new technology.
C. An external cost is imposed on the public.
D. An external benefit is imposed on the public.
E. The price of a product goes up after an
increase in demand for that product.
45. A firm who has an elastic demand curve for its
product can:
A. Raise the price of its product and expect an
increase in profits.
B. Increase output and expect an increase in
economic profits.
C. Lower costs by increasing supply.
D. Raise the price of its product and expect
a significant decrease in demand.
E. Raise the price of its product and expect
a significant increase in demand.
46. Which of the following is true for a good with a
price inelastic demand curve?
I. The quantity demanded is constant at any
price.
II. The price is constant at all quantities demanded.
III. Producers of the good will have increased
revenue if the price increases.
A. I only
B. II only
C. III only
D. I and III only
E. II and III only- What best explains why a supply curve is upward
sloping?
A. The equilibrium is where the supply curve
meets the demand curve.
B. A higher price induces producers to produce
a higher quantity.
C. A lower price induces producers to produce a
higher quantity.
D. An increase in price will reduce the quantity
demanded.
E. An increase in price will raise the quantity
demanded. - Which of the following ideas best describes the
concept of diminishing marginal returns to labor?
A. Each additional worker has a smaller
marginal product than the previous.
B. The first worker has the comparative
advantage.
C. The first worker has a largest opportunity
cost.
D. The wages paid to each additional worker are
smaller than the previous.
E. Workers become less productive when they
are paid a lower wage.
Metal
10 2 020PlasticPPF 1PPF 2Part IV: AP Macroeconomics & Microeconomics Tests