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AP Microeconomics Choice in a World of Scarcity — practice questions

Explore 19 free Choice in a World of Scarcity questions in AP Microeconomics Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Choice in a World of Scarcity questions and exercises with answers

Showing questions 1–19 of 19.

Costs incurred in the past that cannot be recovered are called:Read the answer and worked solution →Examining the benefits and costs of a little more or a little less of a good is:Read the answer and worked solution →The model used to show the constraints a whole society faces is the:Read the answer and worked solution →A line showing every combination of two goods that exhausts a consumer's money is a:Read the answer and worked solution →The condition of having limited means to satisfy given ends is called:Read the answer and worked solution →The pattern where each extra unit of a good gives less additional satisfaction is the law of:Read the answer and worked solution →The three critical concepts introduced alongside scarcity are marginal decision making, diminishing returns and:Read the answer and worked solution →Sunk costs should not affect a current decision because they:Read the answer and worked solution →A society does not need to produce every good it consumes because of:Read the answer and worked solution →Points on a budget constraint all share which property?Read the answer and worked solution →Marginal utility declining as more of a good is consumed means that total utility:Read the answer and worked solution →Scarcity is described as a condition that is:Read the answer and worked solution →Marginal analysis is contrasted in the text with choices that are:Read the answer and worked solution →The production possibilities frontier and the budget constraint are analogous because both show:Read the answer and worked solution →Match each economics termRead the answer and worked solution →Relevant to the decision?Read the answer and worked solution →True or false: scarcity and choiceRead the answer and worked solution →Individual limit or society limit?Read the answer and worked solution →Complete the choice rulesRead the answer and worked solution →

Worked practice questions

Costs incurred in the past that cannot be recovered are called:

  1. Sunk costs
  2. Marginal costs
  3. Fixed costs
  4. Average costs
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Correct answer: A. Sunk costs

1. Some money spent can never be got back whatever you now decide. 2. Sunk costs are costs that were incurred in the past and cannot be recovered. 3. The budget constraint framework assumes they should not affect the current decision. 4. Marginal cost concerns the next unit rather than money already spent. _Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 2 'Choice in a World of Scarcity', sections 2.1-2.3_

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Examining the benefits and costs of a little more or a little less of a good is:

  1. Sunk analysis
  2. Marginal analysis
  3. Average analysis
  4. Total analysis
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Correct answer: B. Marginal analysis

1. Real decisions are rarely all-or-nothing. 2. Most choices involve marginal analysis. 3. That means examining the benefits and costs of choosing a little more or a little less of a good. 4. Thinking in totals would treat every choice as a decision to have all or none. _Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 2 'Choice in a World of Scarcity', sections 2.1-2.3_

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The model used to show the constraints a whole society faces is the:

  1. Supply and demand curve
  2. Circular flow diagram
  3. Possibilities frontier
  4. Budget constraint line
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Correct answer: C. Possibilities frontier

1. An individual and a society both face limits, described by different models. 2. The constraints society faces are explained using a model called the production possibilities frontier. 3. It shows the combinations of goods a society can produce with its resources. 4. A budget constraint does the same job for a single consumer. _Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 2 'Choice in a World of Scarcity', sections 2.1-2.3_

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