AP Macroeconomics — Unit 1: Basic Economic Concepts
Practice questions, answers, and key terms for Unit 1, aligned to the College Board CED.
Exam weighting: Unit 1 is 5-10% of the AP Macroeconomics exam.
What AP Macroeconomics Unit 1 covers
The College Board Course and Exam Description breaks Unit 1 into 8 topics:
- 1.1 Scarcity
- 1.2 Opportunity Cost and the PPC
- 1.3 Comparative Advantage and Gains from Trade
- 1.4 Demand
- 1.5 Supply
- 1.6 Market Equilibrium
- Disequilibrium
- and Changes in Equilibrium
AP Macroeconomics Unit 1 practice questions
Even billionaires can’t buy more time. What economic concept explains why everyone — rich or poor — is forced to make choices?
Scarcity means resources are limited but wants are unlimited. Because of scarcity, every person and society is forced to make choices — you can't have everything.
You’re starting a food truck. You need a parking spot, a cook, the truck itself, and someone with the idea to make it happen. What four economic resources do these represent?
Land, Labor, Capital, and Entrepreneurship. The parking spot is Land, the cook Labor, the truck Capital, and the founder Entrepreneurship.
You skip studying tonight to go to a concert. An economist says you ‘paid’ for that concert even beyond the ticket price. What are they talking about?
The value of the next best alternative you give up. Not everything you gave up — just the single best option you skipped.
On a PPC (Production Possibilities Curve), what does a point inside the curve mean?
Underutilized resources — the economy isn't using all it has. It could produce more of both goods without giving anything up.
Why is the PPC usually bowed outward (concave) instead of a straight line?
Because of increasing opportunity costs as you shift production. Resources aren't perfectly adaptable, so each extra unit costs more of the other.
A country invests heavily in new technology and worker training. What happens to its PPC?
The PPC shifts outward — the economy can now produce more of both goods. This is economic growth.
A hurricane destroys half the factories in a country. What happens to the PPC?
The PPC shifts inward — the economy's productive capacity has decreased. It can now produce less of both goods at maximum efficiency.
What's the difference between absolute advantage and comparative advantage?
Absolute advantage = producing more with the same resources. Comparative advantage = producing at a lower opportunity cost. Trade is based on comparative advantage, not absolute.
+ 19 more AP Macroeconomics cards in the app.
Key terms in Unit 1
These 12 terms show up in the Unit 1 cards. Each one links to its definition in the AP Macroeconomics key-term reference.
Drill all of Unit 1 with spaced repetition
Free Unit 1 on every AP course. Smart spaced repetition. No subscription.