AP Microeconomics Exam Review / Key Questions & Expertly Verified Answers, 2025 / 2026.Quiz____?Economics - Answer✓✓ The study of how people, firms, and societies use their scarce productive resources to best satisfy their unlimited wants Quiz____?Factors of Production - Answer✓✓ Labor, Land, Capital, Entrepreneurial ability Quiz____?Physical capital - Answer✓✓ Manmade equipment like machinery, but also buildings, roads, vehicles, and computers Quiz____?Entrepreneurial Ability - Answer✓✓ The effort and know how to put the other resources (Factors of Production) together in a productive venture Page 1 of 47 1 / 4
Quiz____?Scarcity - Answer✓✓ The difference between unlimited wants and limited economic resources Quiz____?Trade-offs - Answer✓✓ The fact that we are faced with scarce resources implies that individuals, firms, and governments are constantly faced with trade-offs Quiz____?Opportunity Cost - Answer✓✓ The opportunity cost of doing something is what you sacrifice to do it (i.e.if you use a scarce resource to pursue activity X, the opportunity cost of activity X is activity Y, the next best use of that resource) Quiz____?Marginal Analysis - Answer✓✓ Rational individuals and firms weigh the additional benefits against the additional costs (They think at the margin) Page 2 of 47 2 / 4
Quiz____?Marginal - Answer✓✓ "the next one" or "additional" or "incremental" Quiz____?Marginal Cost - Answer✓✓ The additional cost incurred from the consumption of the next unit of a good or service Quiz____?Marginal Benefit - Answer✓✓ The additional benefit received from the consumption of the next unit of a good or service Quiz____?Production Possibilities Curve - Answer✓✓ A model of an individual or a nation that can choose to allocate its scarce resources between the production of two goods or services, it is assumed that those resources are being fully employed and used efficiently Quiz____?Points outside of the Production Possibilities Curve - Page 3 of 47 3 / 4
Answer✓✓ Any point outside the frontier is currently unattainable Quiz____?The slope of the PPF - Answer✓✓ The slope of the curve measures the opportunity cost of the good on the x axis The inverse of the slope measures the opportunity cost of the good on the y axis Quiz____?Shape of a realistic PPF - Answer✓✓ Concave or bowed outward Quiz____?Comparative Advantage - Answer✓✓ The ability to produce goods at a lower opportunity cost that another individual/firm/nation Quiz____?Specialization - Answer✓✓ Page 4 of 47
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