AP Micro · Unit 1 · Basic Economic Concepts
131 AP-style multiple-choice questions and 3 free-response questions for AP Micro · Unit 1 · Basic Economic Concepts, sorted into 5 topics. Free sample questions for every topic.
Sample free-response question
Wexholm and Dravenna each produce solar panels and textiles with constant opportunity costs. The table shows the maximum quantity of each good each country can produce if it uses all of its resources for that good alone.
| Country | Solar Panels | Textiles |
|---|---|---|
| Wexholm | 60 | 180 |
| Dravenna | 100 | 100 |
(a) Calculate Wexholm's opportunity cost of producing one solar panel. Show your work.
(b) Identify the country that has a comparative advantage in producing solar panels.
(c) If each country specializes according to its comparative advantage, will the combined output of the two countries increase, decrease, or remain the same? Explain.
(d) Would terms of trade of 2 textiles for 1 solar panel benefit both countries? Explain.
(e) Would terms of trade of 4 textiles for 1 solar panel be acceptable to both countries? Explain.