AP Econ Unit 1

Question 1

Increasing opportunity cost

Answer 1

• When the PPC is a bowed-out curve
• As more of a good is produced, it’s opportunity cost increases because well-suited inputs are used up and less adaptable inputs must be used instead

Question 2

Economic growth

Answer 2

-An expansion of the economy’s production possibilities, so the economy can produce more of everything

Question 3

Factors needed for economic growth

Answer 3

• More technology
• More research
• Better quality of resources

Question 4

Trade

Answer 4

In a market economy, when individuals provide goods and services to others and receive goods and services in return

Question 5

Grains from trade

Answer 5

People can get more of what they want through trade than they could if they tried to be self-sufficient

Question 6

Specialization

Answer 6

Each person or country specializes in the task that he or she is best at performing, which causes an increase in output

Question 7

Comparative advantage

Answer 7

When producing a good or service, if the opportunity cost of producing the good or service is lower for that person then for the other people

Question 8

Absolute advantage

Answer 8

When a person can produce more output with a given amount of input than another for two different goods

Question 9

Constant opportunity cost

Answer 9

When the PPC has a constant slope