1. Content from chapters 5-9
AP Style Review
Content from chapters 5-9

2. 1. If an economy is being allocatively efficient, then this means that the economy is
(A) using the least-costly production techniques.
(B) fully employing all economic resources.
(C) maximizing the returns to factors of production.
(D) maximizing the difference between marginal benefit and marginal cost.
(E) maximizing the sum of both consumer and producer surplus.

3. 2. An effective rent control law would most likely affect the housing market in the following way
(A) lead to a surplus of housing.
(B) lead to a shortage of housing.
(C) lead to market equilibrium.
(D) lead to an increase in the supply of housing.
(E) lead to an increase in the number of home purchases.

4. 3. When there is a surplus in an unregulated, free market,
(A) price will increase and the quantity demanded will also increase.
(B) price will increase and the quantity demanded will decrease.
(C) price will decrease and the quantity demanded will increase.
(D) price will decrease and the quantity demanded will also decrease.
(E) price will remain constant and the quantity demanded will increase.

5. 4. Suppose that an effective minimum wage is imposed in a labor market
4. Suppose that an effective minimum wage is imposed in a labor market. Holding all else constant, if the labor supply increases, which of the following statements is true?
(A) Unemployment in the market will increase.
(B) The quantity of labor supplied will decrease.
(C) The quantity of labor demanded will increase.
(D) The market demand will increase.
(E) The market demand will decrease.

6. (A) I only (B) II only (C) III only
5. The allocation of resources in a market economy is described by which of the following statements?
I. The government decides which goods will be produced and which consumers will have the
opportunity to buy them.
II. Buyers and sellers exchange goods and services through market interactions.
III. Prices help producers determine whether they are producing too little or too much of a good.
(A) I only (B) II only (C) III only
(D) I and III only (E) II and III only

7. 6. In order to raise the most revenue, the government should impose a tax on goods where
(A) the supply is perfectly elastic.
(B) the supply is unit elastic.
(C) the demand is perfectly elastic.
(D) the demand is perfectly inelastic.
(E) the demand is unit elastic.

8. 7. Suppose that the market price is currently below equilibrium
7. Suppose that the market price is currently below equilibrium. There is a situation of excess ______________. The market will correct itself by allowing the price to __________.
(A) demand; rise
(B) demand; fall
(C) supply; rise
(D) supply; fall
(E) supply; remain constant

9. 8

10. 9

11. 10

12. 11

13. 12

14. 13

15. 14

16. Answers
1. E
8. B
2. B
9. A
3. C
10. D
4. A
11. D
5. E
12. B
6. D
13. C
7. A
14. D