Scribd
Upload
87 views1 page

AP Microeconomics Unit 2 Practice Questions

The document presents a set of challenging questions related to AP Microeconomics, focusing on concepts such as money supply, price elasticity of demand, and producer surplus. It includes specific scenarios and multiple-choice answers for each question. The questions test the understanding of economic principles and calculations.

Uploaded by

zhoukenny0826
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
87 views1 page

AP Microeconomics Unit 2 Practice Questions

The document presents a set of challenging questions related to AP Microeconomics, focusing on concepts such as money supply, price elasticity of demand, and producer surplus. It includes specific scenarios and multiple-choice answers for each question. The questions test the understanding of economic principles and calculations.

Uploaded by

zhoukenny0826
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

AP Microeconomics Unit 2 - Tricky & Challenging Questions

1. Jamie deposits $10,000 into her checking account. The reserve requirement is 20%. Assuming no

excess reserves, what is the maximum potential increase in the money supply?

A) $50,000

B) $2,000

C) $8,000

D) $10,000

2. If the price of lattes increases from $4 to $6 and quantity demanded drops from 100 to 80, what is

the price elasticity of demand using the midpoint formula?

A) 0.5

B) 0.4

C) 1.5

D) 2

3. A farmer receives $5 per bushel of corn but would have accepted $3. What is the producer

surplus per unit?

A) $2

B) $3

C) $5

D) $8

Common questions

Powered by AI

The price elasticity of demand is calculated as ( (Q2-Q1) / ((Q2+Q1)/2) ) / ( (P2-P1) / ((P2+P1)/2) ). With Q1=100, Q2=80, P1=$4, and P2=$6, the calculation yields ( (80-100) / (80+100)/2 ) / ( (6-4) / (6+4)/2 ) = (-20/90) / (2/5) = -0.222 / 0.4 = -0.555. Rounding to the options provided, the elasticity is closest to 0.5 .

With a reserve requirement of 20%, the initial deposit of $10,000 can support a maximum increase in the money supply of $50,000 through the money multiplier effect. The money multiplier is calculated as 1 divided by the reserve requirement ratio, which is 1/0.20 = 5. Hence, the maximum potential increase is 5 times the deposit, resulting in $50,000 .

Producer surplus represents the difference between the amount a seller is paid for a good and the minimum amount the seller would be willing to accept. In this scenario, the producer surplus per unit is $2, since the farmer receives $5 but would have accepted $3, resulting in a surplus of $5 - $3 = $2 per bushel .

You might also like