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AP Macroeconomics › Unit 1
AP Macroeconomics Unit 1: Basic Economic Concepts
5 to 10% of the exam · 180 practice questions · 12 free-response questions
Every economy faces scarcity, so every choice has an opportunity cost. This unit builds the tools you will use all year: the production possibilities curve, comparative advantage, and supply and demand. Expect to read opportunity costs off a PPC or a table, decide which country should specialize, and show how a shock shifts a market graph. A classic error is finding comparative advantage from total output instead of opportunity cost. Another is confusing a movement along the demand curve with a shift of the whole curve.
Practice this unit
White belt covers core terms and foundational ideas, Regular is set at exam level, and Black belt has harder multi-step questions.
Topics in this unit
- 1.1 Scarcity (16 questions)
- 1.2 Opportunity Cost and the Production Possibilities Curve (41 questions)
- 1.3 Comparative Advantage and Gains from Trade (37 questions)
- 1.4 Demand (26 questions)
- 1.5 Supply (22 questions)
- 1.6 Market Equilibrium, Disequilibrium, and Changes in Equilibrium (38 questions)
Free-response questions
- Zorland: Capital Goods, Consumer Goods, and Growth (Long question, 10 points)
- Ardan and Belmar: Specialization and Total Output (Long question, 10 points)
- Market for Electric Scooters (Long question, 10 points)
- The Bread Market: Surplus and Shifts (Short question, 5 points)
- Gondor’s Wheat and Cloth (Short question, 5 points)
- Chairs and Tables: Hours to Produce (Short question, 5 points)
- Coffee, Tea, and Mugs (Long question, 10 points)
- Concert Tickets Below Equilibrium (Short question, 5 points)
- Landia and Seaton Consider Three Offers (Short question, 5 points)
- Two Events in the Tablet Market (Short question, 5 points)
- Canned Soup: New Sellers and Rising Incomes (Short question, 5 points)
- Tamberia: A Recession or a Hurricane? (Short question, 5 points)
Sample questions
These are taken from the Regular set, with the answer and explanation shown.
Topic 1.1 Scarcity
1. A town owns one plot of land. It can use the land for a new hospital or for a new park, but not for both. This situation best illustrates
- Ascarcity, which forces a choice among alternative uses
- Ba shortage of land that a higher price for land would eliminate
- Can absolute advantage in producing health care services
- Dan inefficient use of the town's resources
- Ea surplus of land caused by low demand for parks
Answer: A. The land is a limited resource with more than one valuable use, so the town must choose. That is scarcity. A shortage is a market condition at a price below equilibrium, and raising a price does not create more land.
Common trap: Calling it a shortage. A shortage disappears when the price rises; scarcity does not.
Topic 1.3 Comparative Advantage and Gains from Trade
2. In one day, a worker in Country M can make 8 baskets or 6 pots. A worker in Country N can make 4 baskets or 4 pots. Which of the following is true?
- ACountry M has a comparative advantage in both goods
- BCountry N has an absolute advantage in pots
- CCountry N has a comparative advantage in pots
- DCountry M has a comparative advantage in pots
- ENeither country can gain from trading with the other
Answer: C. In Country N, a pot costs 4 ÷ 4 = 1 basket. In Country M, a pot costs 8 ÷ 6, about 1.33 baskets. N gives up less to make a pot, so N has the comparative advantage in pots, even though M makes more pots per worker.
Common trap: Picking A. M has the absolute advantage in both goods, but no country can have the lower opportunity cost in both. Making more is absolute advantage, not comparative advantage.
Topic 1.5 Supply
3. Supply curves slope upward mainly because
- Ahigher prices increase consumer demand
- Bhigher prices cover the rising cost of producing more
- Cproducers' costs per unit fall as they produce more units
- Dconsumers buy more of a good at higher prices
- Efirms can always sell everything they produce
Answer: B. Producing more usually means using resources that are less suited to the task, which raises the cost of each extra unit. Producers supply more only when the price is high enough to cover those higher costs.
Common trap: Choosing an answer about consumers. The supply curve describes sellers' costs and decisions.