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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






2. Demand for a resource like labor is derived from the demand for the goods produced by the resource






3. Entry of new firms shifts the cost curves for all firms upward






4. Entry of new firms shifts the cost curves for all firms downward






5. The sum of consumer surplus and producer surplus






6. Entry (or exit) of firms does not shift the cost curves of firms in the industry






7. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






8. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






9. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






10. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






11. AVC = TVC/Q






12. Occurs when LRAC is constant over a variety of plant sizes






13. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






14. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






15. The additional benefit received from the consumption of the next unit of a good or service






16. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






17. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






18. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






19. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






20. A good for which higher income decreases demand






21. Ed = (%dQd)/(%dP). Ignore negative sign






22. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






23. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






24. The practice of selling essentially the same good to different groups of consumers at different prices






25. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






26. The ability to set the price above the perfectly competitive level






27. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






28. Total product divided by labor employed. APL = TPL/L






29. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






30. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






31. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






32. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






33. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






34. ATC = TC/Q = AFC + AVC






35. The rational decision maker chooses an action if MB = MC






36. Ed = 1






37. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






38. Ed = 8 - infinite change in demand to price change






39. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






40. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






41. Exists if a producer can produce a good at lower opportunity cost than all other producers






42. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






43. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






44. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






45. Models where firms are competitive rivals seeking to gain at the expense of their rivals






46. The lost net benefit to society caused by a movement away from the competitive market equilibrium






47. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






48. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






49. The mechanism for combining production resources - with existing technology - into finished goods and services






50. The output where ATC is minimized and economic profit is zero






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