Cracking the AP Economics Micro & Macro Exams, 2020 Edition by The Princeton Review

Author:The Princeton Review
Language: eng
Format: epub
Publisher: Random House Children's Books
Published: 2019-10-07T16:00:00+00:00

4. A

When your choices include “None of the above,” it is important to eliminate all other choices before settling on your answer. In this case, the change is from point M to point M’ in the figure below. This change necessarily results in a lower equilibrium price, but undetermined equilibrium quantity. Therefore the answer is (A).

5. C

According to the graph, Country A can produce 40 TVs or 30 DVD players (or some combination in the middle). Therefore 1 DVD player costs 1.3 TVs in Country A. Similarly, in Country B, 1 DVD player costs 2.0 TVs. Trade would benefit both countries—eliminate (A)—and the opportunity (relative) costs of DVD players to TVs in (D) and (E) don’t match the calculations above—eliminate (D) and (E). As DVD players cost less in Country A compared to Country B, Country A has a comparative advantage in DVD players. Therefore the answer is (C).

6. D

Choices (A), (B), (C), and (E) all refer to factors of production. The cost of the car designer’s studio can be considered either land or capital. The car designer’s time is labor, and the car designer’s creativity can be considered either labor or entrepreneurship. Steel is capital, and rubber is a natural resource. (D) refers to opportunity cost, which is not a factor of production. Therefore, the correct answer is (D).

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