Advanced Placement Level
Microeconomics Practice Examination Solutions by James Chasey

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ISBN 0-03-026997-0
1. A production possibility curve might be shifted outward by each of the following EXCEPT;

A. Increase in immigration B. Movement toward a more open approach to free trade C. Decrease in unemployment D. Increase in educational levels of the general population E. All of the above would shift the PPC outward Answer C. Decrease in unemployment James Chasey

2. A production possibility frontier that is represented by a straight line rather than the usual bowed shape would indicate;

A. Increasing opportunity cost B. Decreasing opportunity cost C. Constant opportunity cost D. Absolute and Comparative Advantage E. Comparative but not absolute advantage Answer C. Constant opportunity cost James Chasey

[pic]
Figure 1

3. If the current price for the perfectly competitive firm represented in Figure 1 is $10.00, what would be the result of an increase in fixed cost on the firm’s profit maximizing price and quantity?

A. Price increase and Quantity increase B. Price increase and Quantity decrease C. Price constant and Quantity constant D. Price decrease and Quantity decrease E. Price decrease and Quantity increase Answer