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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
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. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Total Fixed Costs (TFC)
Inferior Goods
Monopoly
Marginal Resource Cost (MRC)
2. ATC = TC/Q = AFC + AVC
Constrained Utility Maximization
Average Total Cost (ATC)
Determinants of Demand
Explicit costs
3. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Monopsonist
Explicit costs
Excise Tax
Variable inputs
4. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Substitute Goods
Total Revenue Test
Positive externality
5. The output where ATC is minimized and economic profit is zero
Incidence of Tax
Oligopoly
Break-even Point
Income Effect
6. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Marginal Revenue Product (MRP)
Total Revenue Test
Cross-Price Elasticity of Demand
7. The ability to set the price above the perfectly competitive level
Market power
Production function
Marginal Productivity Theory
Marginal tax rate
8. A good for which higher income increases demand
Normal Goods
Economic Growth
Incidence of Tax
Scarcity
9. TR = P * Qd
Diseconomies of Scale
Economics
Total Fixed Costs (TFC)
Total Revenue
10. The rational decision maker chooses an action if MB = MC
Total Product of Labor (TPL)
Marginal Analysis
Monopsonist
Production function
11. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Monopoly long-run equilibrium
Explicit costs
Marginal Productivity Theory
12. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Economic Profit
Law of Diminishing Marginal Utility
Negative externality
13. Occurs when LRAC is constant over a variety of plant sizes
Constant Returns to Scale
Monopoly long-run equilibrium
Profit Maximizing Rule
Decreasing Cost industry
14. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Consumer surplus
Market Economy (Capitalism)
Law of Supply
Negative externality
15. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Incidence of Tax
Monopoly long-run equilibrium
Allocative Efficiency
Law of Demand
16. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Substitute Goods
Monopoly long-run equilibrium
Surplus
Determinants of Supply
17. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Spillover benefits
Subsidy
Market Economy (Capitalism)
Four-firm concentration ratio
18. The price of a good measured in units of currency
Average Total Cost (ATC)
Absolute prices
Average Product of Labor (APL)
Absolute Advantage
19. The total quantity - or total output of a good produced at each quantity of labor employed
Variable inputs
Total Product of Labor (TPL)
Determinants of Demand
Comparative Advantage
20. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Incidence of Tax
Average Fixed Cost (AFC)
Spillover costs
Constant cost industry
21. 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
Economic Growth
Cartel
Long Run
Scarcity
22. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Total Revenue Test
Marginal Resource Cost (MRC)
Determinants of Demand
23. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Non-collusive oligopoly
Long Run
Implicit costs
Demand for Labor
24. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Least-Cost Rule
Average Fixed Cost (AFC)
Productive Efficiency
Price inelastic demand
25. Product demand - productivity - prices of other resources - and complementary resources
Total Welfare
Determinants of Labor Demand
Law of Diminishing Marginal Utility
Marginal Benefit (MB)
26. 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
Absolute Advantage
Total Revenue
Price discrimination
Constrained Utility Maximization
27. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Subsidy
Price Ceiling
Marginal Product of Labor (MPL)
Monopoly long-run equilibrium
28. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Substitute Goods
Shortage
Private goods
Complementary Goods
29. 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
Total Fixed Costs (TFC)
Private goods
Marginal Analysis
Public goods
30. 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
Price Ceiling
Price elasticity
Short run
Total Fixed Costs (TFC)
31. Ed = 8 - infinite change in demand to price change
Perfectly elastic
Marginal Analysis
Derived Demand
Spillover costs
32. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Explicit costs
Utility Maximizing Rule
Economies of Scale
Determinants of Supply
33. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Cross-Price Elasticity of Demand
Determinants of Supply
Perfectly competitive long-run equilibrium
Price elastic demand
34. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Economic Profit
Comparative Advantage
Monopolistic competition long-run equilibrium
Law of Demand
35. A good for which higher income decreases demand
Average Total Cost (ATC)
Monopoly long-run equilibrium
Unit elastic demand
Inferior Goods
36. Costs that change with the level of output. If output is zero - so are TVCs.
Monopsonist
Total variable costs (TVC)
Total Fixed Costs (TFC)
Price Elasticity of Supply
37. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Allocative Efficiency
Market Equilibrium
Luxury
Shutdown Point
38. The mechanism for combining production resources - with existing technology - into finished goods and services
Production function
Derived Demand
Marginal tax rate
Excess Capacity
39. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Price Ceiling
Increasing Cost Industry
Total Revenue
40. 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
Law of Increasing Costs
Perfect competition
Consumer surplus
Law of Supply
41. The marginal utility from consumption of more and more of that item falls over time
Economies of Scale
Law of Diminishing Marginal Utility
Price discrimination
Long Run
42. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Price discrimination
Cross-Price Elasticity of Demand
Constrained Utility Maximization
Law of Demand
43. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Least-Cost Rule
Relative Prices
Necessity
44. Ed > 1 - meaning consumers are price sensitive
Dead Weight Loss
Average Product of Labor (APL)
Determinants of Supply
Price elastic demand
45. Ed < 1
Increasing Cost Industry
Price inelastic demand
Monopoly long-run equilibrium
Positive externality
46. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Monopolistic competition
Profit Maximizing Resource Employment
Cross-Price Elasticity of Demand
47. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Oligopoly
Monopoly
Cartel
48. The practice of selling essentially the same good to different groups of consumers at different prices
Substitute Goods
Price discrimination
Total Revenue Test
Consumer surplus
49. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Price elastic demand
Shortage
Determinants of Demand
Normal Profit
50. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Spillover costs
Substitution Effect
Normal Goods
Income Effect