AP Economy Review Packet
1. Economics is best described as a. the study of how scarce material wants are allocated between unlimited resources. b. the study of how scarce labor can be replaced by unlimited capital. c. the study of how decision makers choose the best way to satisfy their unlimited material wants with a scarce supply of resources. d. the study of how unlimited material wants can best be satisfied by allocating limitless amounts of productive resources. e. the study of how capitalism is superior to any other economic system. 2. A student decides that, having already spent three hours studying for an exam, she should spend one more hour studying for the same exam. …show more content…
5. Ray and Dorothy can both cook and can both pull weeds in the garden on a Saturday afternoon. For every hour of cooking, Ray can pull 50 weeds and Dorothy can pull 100 weeds. Based on this information, u. Ray pulls weeds since he has absolute advantage in cooking. v. Dorothy pulls weeds since she has absolute advantage in cooking. w. Dorothy cooks since she has comparative advantage in cooking. x. Ray cooks since he has comparative advantage in cooking. y. Dorothy pulls weeds since she has comparative advantage in cooking. 6. 2) What is this relationship between an economy 's growth, its production possibilities frontier (PPF), and the economy 's long-run aggregate supply curve (LRAS)?
(a) Growth is shown by a movement down the PPF and a movement up the LRAS.
(b) Growth is shown by an outward shift in both the PPF and the LRAS curve.
(c) Growth is shown by a leftward shift in the PPF and a rightward shift in the LRAS curve
(d) Growth is shown by an outward shift in the PPF and by a leftward shift in the LRAS curve
(e) Growth is shown by an inward shift in the PPF and an outward shift in the LRAS
ANSWERS AND EXPLANATIONS 1. C—It is important to remember that society has a limitless desire for material wants, but satisfaction of these wants is limited by scarce economic resources. Economics studies how to solve this problem in the best possible
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In analyzing factors attributable to the change in a firm's operating income from one year to the next, which of the following effect(s) may be included in the growth factor?
The terminal growth rate is the average growth rates from 2007 to 2011. Combining with previous cash flows of 5 years, the whole future cash flows are:
5. Growth rate of the industry: It is related to the speed at which a company goes through the phases of evolution and revolution. When it is a fast growing industry, the evolution period tends to be shorter than in a slow growing industry.
B. Graph AFC, AVC, ATC, and MC. Explain the law of diminishing returns influences the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain non-technical terms why the MC curve intersects both the AVC and ATC curves at their minimum points. Attach a graph to the sheet.
First, we assume that all of these entities have unlimited wants. This assumption forms the basis of economics. It is the study of how entities try to fulfill these unlimited wants when confronted with limited resources. Second, we assume that all of these entities are rational actors. We assume that they typically act in ways that will help to achieve their goals. This allows us to understand their actions which we would not be able to do if we assumed that they constantly acted on the basis of whims.
b) For the Sod the increase of erosion was not as much however it also did have a gradual increase. In the future, if precipitation numbers continue to increase then the eroded soil numbers will also increase.
Section III introduces three growth models which all depict an S-curve pattern. Section IV introduces the qualityadjusted price index and describes how it is incorporated into the three models. Section V describes the source of data and
1. In the last five years the growth in sales for the company has been around 10% per annum, except for the 1997, the growth was 18.78%. In the case, nothing is mentioned that company has made any drastic changes in its strategy to grow faster. In such a scenario, projected a consistent growth of 20% per annum for the next 5 years is too optimistic.
The basic economic problem refers to a situation where human wants are unlimited while human resources are finite; it is the economic problem of scarcity of resources. At any one particular time, the resources of the earth are capable of producing a limited number of goods and services, however, human wants exceed limited production possibilities and this gives rise to what is known as the economic problem of scarcity.
Figure 1 clearly shows PPF of a country which has no immigration in happening in it. It can either be position A or B depending on circumstances but A is its actual position where all production work is stable whereas B is a scenario which can occur if there is economic growth in a country which is