AP Macroeconomics Unit 1 practice questions
Try 10 multiple-choice questions from Unit 1 here. Pick an answer to see why it's right or wrong, then take the timed test above for a full AP-style set.
Question 1
A consumer purchases 50 units of a good when the price is $10 per unit. When the price rises to $15 per unit, the consumer purchases 35 units. Which of the following best describes the economic principle illustrated by this behavior?
The law of demand, which states that price and quantity demanded have an inverse relationship
The law of supply, which states that price and quantity supplied have a direct positive relationship
The substitution effect, which states that consumers ALWAYS switch to alternative goods at any price
The income effect, which states that price changes ONLY affect purchasing through real income changes
The price elasticity of demand, which measures how responsive consumers are to price changes
Show answer
Answer: (A)
Recognizing the inverse relationship between price and quantity demanded is central to understanding the law of demand. As price increased from $10 to $15, quantity demanded decreased from 50 to 35 units, demonstrating the fundamental principle that higher prices lead to lower quantities demanded.
Question 2
A small island economy can produce either coconuts or fish. With all resources devoted to coconuts, the island produces 100 coconuts and 0 fish. With all resources devoted to fish, the island produces 50 fish and 0 coconuts. Assuming constant opportunity costs, what is the opportunity cost of producing one additional fish?
2 coconuts must be sacrificed to obtain each additional fish produced
0.5 coconuts must be sacrificed to obtain each additional fish produced
50 coconuts must be sacrificed to obtain each additional fish produced
100 coconuts must be sacrificed to obtain each additional fish produced
1 coconut must be sacrificed to obtain each additional fish produced
Show answer
Answer: (A)
Calculating opportunity cost requires dividing what is given up by what is gained. Moving from 100 coconuts to 0 coconuts sacrifices 100 coconuts to gain 50 fish, yielding 100/50 = 2 coconuts per fish.
Question 3
In the market for organic apples, the current price is $4 per pound. At this price, farmers are willing to supply 8,000 pounds per week, while consumers want to purchase 5,000 pounds per week. The difference of 3,000 pounds represents which economic concept?
A market surplus, where quantity supplied exceeds quantity demanded at the current price level
A market shortage, where quantity demanded exceeds quantity supplied at the current price level
Market equilibrium, where quantity supplied equals quantity demanded at the current price level
A demand shift, where consumer preferences have changed at the current market price level
A supply shift, where production technology has improved at the current price level
Show answer
Answer: (A)
Calculating the difference between quantity supplied (8,000) and quantity demanded (5,000) yields 3,000 pounds. When quantity supplied exceeds quantity demanded at a given price, this represents a surplus condition indicating the price is above equilibrium.
Question 4
In a competitive market for organic coffee beans, the current price is $8 per pound, at which consumers want to purchase 500,000 pounds and producers want to sell 500,000 pounds. If consumer preferences shift toward organic products due to health concerns, what will most likely happen to the equilibrium price and equilibrium quantity?
Equilibrium price will increase and equilibrium quantity will increase as demand shifts rightward
Equilibrium price will increase and equilibrium quantity will decrease as demand shifts rightward
Equilibrium price will decrease and equilibrium quantity will increase as supply shifts rightward
Equilibrium price will remain unchanged while equilibrium quantity increases due to higher demand
Equilibrium price will decrease and equilibrium quantity will increase as demand shifts rightward
Show answer
Answer: (A)
Applying demand shift analysis to market equilibrium reveals that increased consumer preferences shift demand rightward. At the original price, quantity demanded exceeds quantity supplied, creating upward pressure on price. The new equilibrium occurs at both a higher price and higher quantity.
Question 5
Country A can produce 100 tons of wheat or 50 tons of steel using all available resources. Country B can produce 40 tons of wheat or 40 tons of steel using all available resources. Which of the following explains the trade pattern that would maximize total output?
Country B exports steel because it has a lower opportunity cost than Country A.
Country A exports steel because it has a lower opportunity cost than Country B.
Country B exports steel because it has a greater absolute output than Country A.
Country A exports steel because it has a greater absolute output than Country B.
Show answer
Answer: (A)
Calculating opportunity costs reveals that Country B gives up 1 ton of wheat per ton of steel, while Country A gives up 2 tons. Specializing based on this lower opportunity cost maximizes efficiency.
Question 6
Producing one computer requires 100 labor hours in Nation X and 120 labor hours in Nation Z. Producing one monitor requires 20 labor hours in Nation X and 40 labor hours in Nation Z. Which statement accurately explains the basis for trade between these nations?
Nation Z exports computers because it produces them at a lower opportunity cost.
Nation X exports computers because it produces them at a lower opportunity cost.
Nation Z exports computers because it produces them with greater absolute efficiency.
Nation X exports computers because it produces them with greater absolute efficiency.
Show answer
Answer: (A)
Comparing input ratios shows Nation Z gives up 3 monitors per computer (120/40) while Nation X gives up 5 monitors (100/20). Nation Z specializes where its opportunity cost is lowest.
Question 7
Country J can produce 200 units of copper or 100 units of zinc. Country K can produce 50 units of copper or 50 units of zinc. Which terms of trade would allow both countries to benefit from exchange?
1 unit of zinc for 1.5 units of copper
1 unit of zinc for 2.5 units of copper
1 unit of zinc for 0.5 units of copper
1 unit of zinc for 3.0 units of copper
1 unit of zinc for 0.75 units of copper
Show answer
Answer: (A)
Identifies a ratio that falls between the two nations' opportunity costs. Country J's cost is 2 copper/zinc and Country K's is 1 copper/zinc; any price between 1 and 2 benefits both.
Question 8
Two nations with different opportunity costs of production decide to specialize and trade. Which of the following best explains the economic outcome of this decision?
Total output increases because resources are allocated to their lowest opportunity cost uses.
Total output increases because resources are allocated to their highest absolute efficiency uses.
Total output decreases because specialization restricts the variety of goods available domestically.
Total output remains constant because trade gains in one nation are offset by losses in the other.
Total output increases because each nation specializes in its absolute advantage.
Show answer
Answer: (A)
Connects the mechanism of specialization to the outcome of increased production. By shifting resources to where they are most efficient relative to other options, global output rises.
Question 9
Which of the following statements accurately defines the law of supply?
As the price of a good rises, the quantity supplied of that good increases, ceteris paribus.
As the price of a good rises, the quantity supplied of that good decreases, ceteris paribus.
As the price of a good rises, producers are willing to supply less of that good at each price level, ceteris paribus.
As the price of a good rises, the quantity supplied of that good increases until the supply curve shifts left, ceteris paribus.
As the price of a good rises, the quantity supplied of that good increases until producers reach their maximum capacity, ceteris paribus.
Show answer
Answer: (A)
This describes the direct, positive relationship between price and quantity supplied, which is the definition of the law of supply.
Question 10
Which of the following best explains why the market supply curve is typically upward sloping?
Higher prices are necessary to cover the rising marginal costs of production as output increases.
Lower prices are necessary to encourage consumers to purchase additional units as output increases.
Higher prices allow firms to decrease their total fixed costs as output increases.
Constant prices are necessary to maintain long-run equilibrium as output increases.
Firms can earn greater profits by producing more units when prices are higher, regardless of marginal costs.
Show answer
Answer: (A)
Due to diminishing marginal returns, the cost of producing additional units eventually rises, requiring higher prices to justify increased production.
What's on the AP Macroeconomics Unit 1 practice test
The standard version takes about 63 minutes and follows the timing and directions of the AP exam, sized to one unit:
- 20 Multiple Choice Questions (23 minutes)
- 1 FRQ – FRQ 1 – Long (20 minutes)
- 1 FRQ – FRQ 2 – Short (20 minutes)
Questions are drawn from 1321 multiple-choice questions and 60 FRQs written for Unit 1, Basic Economic Concepts.
Practice AP Macroeconomics Unit 1 FRQs
Answer the unit's free-response questions one at a time and get a score on every part.
- FRQ 1 – Long (20 questions)
- FRQ 2 – Short (20 questions)
- FRQ 3 – Short (20 questions)
Review Unit 1 before you start
- 1.1 Scarcity
- 1.2 Opportunity Cost and the Production Possibilities Curve (PPC)
- 1.3 Comparative Advantage and Trade
- 1.4 Demand
- 1.5 Supply
- 1.6 Market Equilibrium, Disequilibrium, and Changes in Equilibrium