Getting ready for the AP Microeconomics exam? These 20 free practice questions cover the big ideas from every unit of the course, each with a clear explanation. Try each question on your own first, then tap Show answer to check your thinking.
The questions are written in the style of the multiple-choice section of the exam. They’re a quick way to find out which units you’ve mastered and which ones need more review.
What the AP Microeconomics exam covers
- Basic economic concepts: scarcity, opportunity cost, production possibilities and comparative advantage
- Supply and demand: market equilibrium, shifts, elasticity and government price controls
- Production, cost and perfect competition: cost curves, profit maximization and shutdown decisions
- Imperfect competition: monopoly, oligopoly, monopolistic competition and game theory
- Factor markets: how firms decide how many workers and other resources to hire
- Market failure and the role of government: externalities, public goods and income inequality
How to use these questions
Work through the questions without notes, the way you would on test day. Keep track of the ones you miss, and note which unit each one comes from. Two or three misses in the same unit is a sign to review that unit before moving on.
Don’t just check whether you got the right letter. Read every explanation, even for questions you answered correctly. AP questions often test whether you understand why, not just what.
Practice questions
Question 1
Maya can spend Saturday afternoon working a 3-hour shift that pays $15 per hour, or she can study for her economics test. If she chooses to study, what is her opportunity cost?
A. $0, because studying is free
B. $15
C. $45
D. The grade she earns on the test
Show answer
Answer: C. Opportunity cost is the value of the next best alternative given up. By studying, Maya gives up 3 hours of work at $15 per hour, so her opportunity cost is $45.
Question 2
A point inside a country’s production possibilities curve represents which of the following?
A. An output level that cannot be reached with current resources
B. Efficient use of all resources
C. Unemployed or underused resources
D. Economic growth
Show answer
Answer: C. Points on the curve are efficient, and points outside it are unattainable with current resources. A point inside the curve means the economy could produce more of both goods, so some resources are unemployed or not being used efficiently.
Question 3
In one day, a worker in Country A can produce either 10 cars or 20 tons of wheat. A worker in Country B can produce either 5 cars or 15 tons of wheat. Which statement is correct?
A. Country A has a comparative advantage in both goods
B. Country A should specialize in cars, and Country B should specialize in wheat
C. Country B should specialize in cars, and Country A should specialize in wheat
D. Neither country benefits from trade
Show answer
Answer: B. In Country A, one car costs 2 tons of wheat (20 divided by 10). In Country B, one car costs 3 tons of wheat (15 divided by 5). Country A gives up less wheat per car, so it has the comparative advantage in cars. Country B gives up fewer cars per ton of wheat (one-third of a car versus one-half), so it has the comparative advantage in wheat. Both countries can gain by specializing and trading.
Question 4
Peanut butter and jelly are complements. If the price of peanut butter rises, what happens in the market for jelly?
A. Demand for jelly increases, and the price of jelly rises
B. Demand for jelly decreases, and the price and quantity of jelly both fall
C. Supply of jelly decreases, and the price of jelly rises
D. Nothing changes in the jelly market
Show answer
Answer: B. When the price of a complement rises, people buy less of it, so they also want less of the good used with it. Demand for jelly shifts left, which lowers both the equilibrium price and quantity of jelly.
Question 5
When the price of a product rises by 10 percent, the quantity demanded falls by 25 percent. Which statement is true?
A. Demand is inelastic, and total revenue rises
B. Demand is elastic, and total revenue falls
C. Demand is unit elastic, and total revenue stays the same
D. Demand is perfectly inelastic
Show answer
Answer: B. Price elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price: 25 divided by 10 equals 2.5. Because this is greater than 1, demand is elastic. With elastic demand, a price increase causes total revenue to fall.
Question 6
The government sets a maximum price for apartment rent that is below the market equilibrium price. What is the most likely result?
A. A surplus of apartments
B. A shortage of apartments
C. No change in the market
D. An increase in the supply of apartments
Show answer
Answer: B. A binding price ceiling set below equilibrium makes the quantity demanded greater than the quantity supplied. The result is a shortage.
Question 7
A perfectly competitive firm faces a market price of $8. The minimum point of its average variable cost curve is $10. What should the firm do in the short run?
A. Increase output until price equals average total cost
B. Keep producing to cover its fixed costs
C. Shut down
D. Raise its price to $10
Show answer
Answer: C. In the short run, a firm should shut down if price falls below the minimum of average variable cost. At $8, the firm can’t even cover its variable costs, so producing would increase its losses. A perfectly competitive firm is a price taker, so it can’t raise its price.
Question 8
Compared with a perfectly competitive market, a profit-maximizing monopoly typically:
A. Produces more output and charges a lower price
B. Produces less output, charges a higher price and creates deadweight loss
C. Produces where price equals marginal cost
D. Earns zero economic profit in the long run
Show answer
Answer: B. A monopoly produces where marginal revenue equals marginal cost and then charges the price consumers are willing to pay on the demand curve. That price is above marginal cost, output is lower than in a competitive market, and the lost trades create deadweight loss.
Question 9
A factory’s production creates pollution that harms nearby residents, and the factory does not pay for that harm. Without government action, the market will:
A. Produce the socially optimal quantity
B. Produce less than the socially optimal quantity
C. Produce more than the socially optimal quantity
D. Charge a price that is too high
Show answer
Answer: C. Pollution is a negative externality. Because the factory doesn’t pay the full cost of its production, the market price is too low and output is higher than the socially optimal level. A per-unit tax equal to the external cost can move output to the efficient level.
Question 10
A firm sells its product in a perfectly competitive market for $4 per unit. Hiring one more worker would add 5 units of output. The wage is $18. Should the firm hire the worker?
A. Yes, because the marginal revenue product ($20) is greater than the wage
B. No, because the wage is greater than the product price
C. No, because the marginal product is too small
D. It depends on the firm’s fixed costs
Show answer
Answer: A. Marginal revenue product equals marginal product times price: 5 units times $4 equals $20. A firm should hire workers as long as marginal revenue product is at least as large as the wage. Since $20 is greater than $18, hiring the worker adds to profit.
More practice from the AP+ workbook
These next 10 questions come straight from our AP+ Review Workbook, with the same explanations you’ll find in its answer key.
Question 11
Country X can produce 60 widgets or 30 gadgets per day. Country Y can produce 50 widgets or 50 gadgets per day. Which correctly identifies comparative advantage?
A. Country X has absolute advantage in both; no comparative advantage for either
B. Country Y: comparative advantage in both because production is equal
C. Country X: comparative advantage in gadgets; Country Y: in widgets
D. Country X: comparative advantage in widgets; Country Y: in gadgets
Show answer
Answer: D. For Country X, one widget costs 30/60 = 0.5 gadget. For Country Y, one widget costs 50/50 = 1 gadget. Country X gives up less to make widgets, so it has the comparative advantage in widgets, and Country Y has it in gadgets. Common mistake: looking at who makes more (absolute advantage) instead of who gives up less.
Question 12
A bowed-out production possibilities curve reflects
A. decreasing opportunity costs through specialization
B. equal opportunity costs for both goods at all points on the curve
C. constant opportunity costs throughout production
D. increasing opportunity costs as production of one good expands
Show answer
Answer: D. A bowed-out curve shows increasing opportunity costs, because resources are not equally suited to producing every good. A straight-line PPC would mean constant opportunity cost.
Question 13
A consumer has $8 to spend. The next unit of Good A costs $4 and provides 20 utils of marginal utility. The next unit of Good B costs $2 and provides 14 utils. Which purchase gives the greater marginal utility per dollar?
A. Good A, because 20 > 14
B. Good B, because MU/P = 7
C. The consumer is indifferent because both goods provide positive utility
D. Good A, because MU/P = 5
Show answer
Answer: B. Compare marginal utility per dollar, not total utility. Good A: 20/4 = 5 utils per dollar. Good B: 14/2 = 7 utils per dollar. Good B is the better buy at the margin.
Question 14
A per-unit tax of $4 is imposed on sellers of coffee. After the tax, the price consumers pay rises from $5 to $7, and the price sellers receive falls to $3. The tax burden on consumers per unit is
A. $1
B. $2
C. $3
D. $4
Show answer
Answer: B. The full tax is $4 ($7 minus $3). Buyers’ burden is how much their price rose: $7 minus $5 = $2. Sellers bear the other $2, since what they receive fell from $5 to $3.
Question 15
If consumer income rises and demand for a good falls, the good is best classified as
A. a normal good with highly elastic demand
B. a complementary good
C. a substitute good for a more expensive product
D. an inferior good
Show answer
Answer: D. An inferior good has negative income elasticity: when income rises, people buy less of it. Normal goods have positive income elasticity.
Question 16
A perfectly competitive firm sells output at $20. ATC = $28 and AVC = $15 at the current output. The firm should
A. continue producing because P ($20) > AVC ($15): losses are less than fixed costs
B. produce more output until ATC falls below $20
C. raise its price above $20 to cover average total cost
D. shut down immediately to avoid all losses
Show answer
Answer: A. Price covers average variable cost and part of fixed cost, so producing loses less money than shutting down. The shutdown rule is P below AVC, not P below ATC.
Question 17
A firm has fixed costs of $100, variable costs of $150 at Q = 10, and a price of $22 per unit. The firm’s economic profit or loss is
A. a $30 profit
B. a $30 loss
C. a $20 loss
D. a $20 profit
Show answer
Answer: B. Total revenue = $22 × 10 = $220. Total cost = $100 + $150 = $250. Profit = $220 − $250 = −$30, a loss of $30.
Question 18
In a prisoners’ dilemma game, the dominant strategy for both players leads to
A. an outcome better than if both had cooperated
B. the socially optimal allocation of resources
C. an outcome worse for both than if both had cooperated
D. both players maximizing their individual profits simultaneously
Show answer
Answer: C. Each player’s dominant strategy is to defect, and the result (both defect) is worse for both than if they had cooperated. That gap is what makes it a dilemma.
Question 19
Compared to a perfectly competitive labor market, a monopsony employer pays
A. a lower wage and employs fewer workers
B. a lower wage but employs more workers
C. a higher wage and employs more workers
D. the same wage but employs fewer workers
Show answer
Answer: A. A monopsonist’s marginal factor cost is above the wage, so it hires where MRP = MFC. That means fewer workers than a competitive market, paid a lower wage taken from the supply curve.
Question 20
A public good differs from a private good because it is
A. provided by the government rather than the private sector
B. rival in consumption but freely available to everyone at zero price
C. nonrival and nonexcludable: one person’s use does not reduce availability, and non-payers cannot be excluded
D. excludable but consumed jointly by all members of society
Show answer
Answer: C. A public good is defined by being nonrival and nonexcludable. Being provided by the government does not make something a public good.
How did you do?
If you got 17 or more right, you have a strong foundation. Focus your review on the explanations for any you missed. If you got 12 to 16 right, you’re on track, but a few units need more practice. If you got 11 or fewer right, start with the unit reviews before doing more practice questions.
Our AP+ Microeconomics Review Workbook covers every unit with clear summaries, worked examples, graph practice and full exam-style practice with answers and explanations. It’s available as an instant PDF download or a paperback.
See the AP+ Microeconomics Review Workbook →
Studying for more than one AP exam? Browse the full AP+ Exam Prep series.
Frequently asked questions
Are these questions like the real AP Microeconomics exam?
They’re written in the style of the multiple-choice section and cover the same units and skills. Official practice materials from the College Board are also worth using alongside them.
What’s the best way to study for AP Microeconomics?
Review one unit at a time, practice drawing and reading graphs, and do mixed practice questions regularly. Reading the explanation for every question, including ones you get right, builds the understanding the exam rewards.
When is the AP Microeconomics exam?
AP exams are given each May. Check the College Board’s AP website for the current exam schedule.
AP is a registered trademark of the College Board, which was not involved in the production of, and does not endorse, this page or our workbooks.