AP®︎ Macroeconomics: Unit 1 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Unit 1 of AP Macroeconomics – Basic Economic Concepts.
Questions List
Unit 1 (All Topics)
Question 1 Topic 1.1Easy
This question tests the following: MOD-1.A
What is the basic problem of economics that occurs when resources are limited?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Macroeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Unit 1: Basic Economic Concepts
This unit introduces foundational economic concepts such as scarcity, opportunity cost, the PPC, and comparative advantage to build the basis for macroeconomic thinking.
Topic 1.1: Scarcity
Learning Objective: MOD-1.A
Define scarcity and economic resources.
Essential Knowledge: MOD-1.A.1
Individuals and societies are forced to make choices because most resources are scarce.
Topic 1.2: Opportunity Cost and the Production Possibilities Curve (PPC)
Learning Objective: MOD-1.B
a. Define (using graphs as appropriate) the PPC and related terms. b. Explain (using graphs as appropriate) how the PPC illustrates opportunity costs, tradeoffs, inefficiency, efficiency, and economic growth or contraction under various conditions. c. Calculate (using data from PPCs or tables as appropriate) opportunity cost.
Essential Knowledge: MOD-1.B.1
The PPC is a model used to show the tradeoffs associated with allocating resources.
Essential Knowledge: MOD-1.B.2
The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, underutilized resources, and economic growth or contraction.
Essential Knowledge: MOD-1.B.3
The shape of the PPC depends on whether opportunity costs are constant, increasing, or decreasing.
Essential Knowledge: MOD-1.B.4
The PPC can shift because of changes in factors of production as well as changes in productivity/technology.
Essential Knowledge: MOD-1.B.5
Economic growth results in an outward shift of the PPC.
Topic 1.3: Comparative Advantage and Gains from Trade
Learning Objective: MKT-1.A
a. Define absolute advantage and comparative advantage. b. Determine (using data from PPCs or tables as appropriate) absolute and comparative advantage.
Essential Knowledge: MKT-1.A.1
Absolute advantage describes a situation in which an individual, business, or country can produce more of a good or service than any other producer with the same quantity of resources.
Essential Knowledge: MKT-1.A.2
Comparative advantage describes a situation in which an individual, business, or country can produce a good or service at a lower opportunity cost than another producer.
Learning Objective: MKT-1.B
a. Explain (using data from PPCs or tables as appropriate) how specialization according to comparative advantage with appropriate terms of trade can lead to gains from trade. b. Calculate (using data from PPCs or tables as appropriate) mutually beneficial terms of trade.
Essential Knowledge: MKT-1.B.1
Production specialization according to comparative advantage results in exchange opportunities that lead to consumption opportunities beyond the PPC.
Essential Knowledge: MKT-1.B.2
Comparative advantage and opportunity costs determine the terms of trade for exchange under which mutually beneficial trade can occur.
Topic 1.4: Demand
Learning Objective: MKT-2.A
a. Define (using graphs as appropriate) the law of demand. b. Explain (using graphs as appropriate) the relationship between the price of a good or service and the quantity demanded.
Essential Knowledge: MKT-2.A.1
The law of demand states there is an inverse relationship between price and quantity demanded, leading to a downward-sloping demand curve.
Learning Objective: MKT-2.B
Explain (using graphs as appropriate) the determinants of demand.
Essential Knowledge: MKT-2.B.1
Factors that influence consumer demand, such as changes in consumer income, cause the market demand curve to shift.
Topic 1.5: Supply
Learning Objective: MKT-2.C
a. Define (using graphs as appropriate) the law of supply. b. Explain (using graphs as appropriate) the relationship between the price of a good or service and the quantity supplied.
Essential Knowledge: MKT-2.C.1
The law of supply states there is a positive relationship between price and quantity supplied, leading to an upward-sloping supply curve.
Learning Objective: MKT-2.D
Explain (using graphs as appropriate) the determinants of supply.
Essential Knowledge: MKT-2.D.1
Factors that influence producer supply, such as changes in input prices, cause the market supply curve to shift.
Topic 1.6: Market Equilibrium, Disequilibrium, and Changes in Equilibrium
Learning Objective: MKT-2.E
Define (using graphs as appropriate) market equilibrium.
Essential Knowledge: MKT-2.E.1
Equilibrium is achieved at the price at which quantities demanded and supplied are equal.
Learning Objective: MKT-2.F
a. Define a surplus and shortage. b. Explain (using graphs as appropriate) how prices adjust to restore equilibrium in markets that are experiencing imbalances. c. Calculate (using graphs as appropriate) the surplus or shortage in the market experience an imbalance.
Essential Knowledge: MKT-2.F.1
Whenever markets experience imbalances— creating disequilibrium prices, surpluses, and shortages—market forces drive prices toward equilibrium.
Learning Objective: MKT-2.G
Explain (using graphs as appropriate) how changes in demand and supply affect equilibrium price and equilibrium quantity.
Essential Knowledge: MKT-2.G.1
Changes in the determinants of supply and/ or demand result in a new equilibrium price and quantity.
