Log In

AP Microeconomics · Unit 1 · Basic economic concepts · last updated

Basic economic concepts practice questions (AP Microeconomics)

Unit 1 covers scarcity, resource allocation, the production possibilities curve, comparative advantage and trade, cost-benefit analysis, and marginal analysis of consumer choice. Below are all 2 free AP Microeconomics questions on it from our free exams, each with a worked answer behind a toggle, then 6 key terms with the formulas typeset, and a door to make an AP Microeconomics-style paper on this unit from your own notes. The free exams are typeset PDFs with an answer key; the exam downloads without a signup.

Make a practice exam from your notes →Upload your notesAP Microeconomics style preselected; tick "Unit 1 · Basic economic concepts" on the next screen. Free to try, no card.

Sample questions

All 2 free AP Microeconomics questions on this unit, from the free AP Microeconomics Practice Exam. Each answer is behind its own toggle; the whole paper, its PDF and the full answer key are on the exam page.

  1. Question 12 marks · Scarcity & opportunity cost
    Maria can spend her Saturday afternoon working a shift that pays 60 dollars, studying for an exam, or hiking with friends. She chooses to study. The opportunity cost of studying is:
    • A.
      the 60 dollars plus the enjoyment of the hike
    • B.
      zero, because studying improves her exam score
    • C.
      the 60 dollars, because money is measurable
    • D.
      whichever single alternative Maria values most highly
    • E.
      the sum of the values of all alternatives forgone
    From the free AP Microeconomics Practice Exam →
  2. Question 22 marks · Comparative advantage
    In one hour, Ann can produce 4 loaves of bread or 2 sweaters, while Ben can produce 3 loaves of bread or 1 sweater. Which of the following is true?
    • A.
      Ann has a comparative advantage in both goods
    • B.
      Ben has a comparative advantage in sweaters
    • C.
      Ann has a comparative advantage in sweaters, Ben in bread
    • D.
      Ben has an absolute advantage in bread
    • E.
      Neither can gain from specialization and trade
    From the free AP Microeconomics Practice Exam →

Key terms

The definitions and formulas AP Microeconomics expects for basic economic concepts, typeset as they appear on the paper.

Scarcity and opportunity cost
Limited resources against unlimited wants force choices, and every choice has an opportunity cost: the next best alternative forgone. Sunk costs are not part of it.
Production possibilities curve (PPC)
All efficient combinations of two goods an economy can produce. Constant opportunity cost gives a straight line; increasing opportunity cost gives a curve bowed out from the origin.
Comparative advantage
Producing a good at a lower opportunity cost than another producer. Each party should specialise in its comparative advantage; the terms of trade must lie between the two opportunity costs for both to gain.
Utility maximization rule
A consumer with a fixed budget maximises total utility by spending so that the marginal utility per dollar is equal across goods.
MUxPx=MUyPy\frac{MU_x}{P_x} = \frac{MU_y}{P_y}
Diminishing marginal utility
Each extra unit of a good adds less satisfaction than the one before. It explains why demand curves slope down and why consumers spread spending across goods.
Marginal analysis
Compare the marginal benefit and marginal cost of one more unit; the optimal quantity is where they are equal. This rule reappears as MR=MCMR = MC for firms and MRP=MFCMRP = MFC in factor markets.
MB=MCMB = MC

Frequently asked questions

Are there free basic economic concepts practice questions for AP Microeconomics?

Yes. 2 questions on basic economic concepts appear in the free AP Microeconomics Practice Exam, and the sample questions on this page come from it with worked answers. Each exam can be read online or downloaded as a typeset PDF without signing up, and its full answer key is emailed on request.

How do I make an AP Microeconomics practice paper on basic economic concepts from my notes?

Open the create page with the AP Microeconomics style preselected, tick "Unit 1 · Basic economic concepts" under the units to cover (or upload your notes and slides on it), choose the question mix and time limit, and generate. You get a typeset PDF in the AP format with a separate answer key, in about a minute. It is free to try, no card needed.

What does AP Microeconomics expect you to know about basic economic concepts?

Unit 1 covers scarcity, resource allocation, the production possibilities curve, comparative advantage and trade, cost-benefit analysis, and marginal analysis of consumer choice. The terms to have cold: Scarcity and opportunity cost, Production possibilities curve (PPC), Comparative advantage, Utility maximization rule, Diminishing marginal utility. Each is defined below with its formula typeset where one applies.

What is the AP Microeconomics exam format?

The AP Microeconomics guide explains the papers, their timing and mark allocation, with a sample question and mark scheme and the common mistakes, and links to the generator with the AP Microeconomics style preselected.

Other AP Microeconomics topics

All AP Microeconomics topics · AP Microeconomics exam guide · All free practice exams

Make an AP Microeconomics paper on basic economic concepts from your notes

Open "Pick your exam" with the AP Microeconomics style preselected and tick "Unit 1 · Basic economic concepts", or upload your notes on it. You get a typeset paper in the AP format with a separate answer key.

Make a practice exam from your notes →Upload your notes