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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. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Marginal Productivity Theory
Increasing Cost Industry
Normal Profit
Negative externality
2. Product demand - productivity - prices of other resources - and complementary resources
Law of Supply
Determinants of Labor Demand
Least-Cost Rule
Constant cost industry
3. Ed = 0 - no response to price change
Necessity
Monopolistic competition
Cartel
Perfectly inelastic
4. 0 < Ei < 1
Necessity
Normal Profit
Economic Profit
Natural Monopoly
5. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Private goods
Price inelastic demand
Production function
6. The output where ATC is minimized and economic profit is zero
Break-even Point
Constant Returns to Scale
Short run
Determinants of Demand
7. The total quantity - or total output of a good produced at each quantity of labor employed
Non-collusive oligopoly
Monopolistic competition long-run equilibrium
Total Product of Labor (TPL)
Constant Returns to Scale
8. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Demand for Labor
Market Equilibrium
Average Fixed Cost (AFC)
Marginal tax rate
9. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Monopolistic competition
Law of Supply
Increasing Cost Industry
Incidence of Tax
10. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Cross-Price Elasticity of Demand
Marginal Revenue Product (MRP)
Implicit costs
11. ATC = TC/Q = AFC + AVC
Incidence of Tax
Absolute Advantage
Productive Efficiency
Average Total Cost (ATC)
12. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Economic Growth
Relative Prices
Price Elasticity of Supply
Perfect competition
13. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Perfectly competitive long-run equilibrium
Resources
Normal Goods
Price Ceiling
14. The sum of consumer surplus and producer surplus
Price elasticity
Monopsonist
Total Welfare
Fixed inputs
15. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Increasing Cost Industry
Inferior Goods
Decreasing Cost industry
16. Ed > 1 - meaning consumers are price sensitive
Implicit costs
Marginal tax rate
Price elastic demand
Least-Cost Rule
17. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Total Fixed Costs (TFC)
Perfect competition
Substitution Effect
Substitute Goods
18. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Monopolistic competition
Market Equilibrium
Demand for Labor
Subsidy
19. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Price discrimination
Constant Returns to Scale
Substitute Goods
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
Determinants of elasticity
Market power
Specialization
Spillover costs
21. 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
Public goods
Scarcity
Producer surplus
Monopolistic competition
22. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Consumer surplus
Dead Weight Loss
Oligopoly
Positive externality
23. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Shortage
Marginal Product of Labor (MPL)
Excise Tax
Marginal Resource Cost (MRC)
24. A good for which higher income decreases demand
Long Run
Variable inputs
Inferior Goods
Monopolistic competition
25. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Cross-Price Elasticity of Demand
Collusive oligopoly
Diseconomies of Scale
Inferior Goods
26. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Natural Monopoly
Total variable costs (TVC)
Absolute prices
Surplus
27. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Price Ceiling
Fixed inputs
Income Effect
Determinants of Supply
28. Exists if a producer can produce more of a good than all other producers
Monopoly
Absolute Advantage
Excise Tax
Specialization
29. 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
Average Variable Cost (AVC)
Collusive oligopoly
Spillover benefits
Necessity
30. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Resources
Diseconomies of Scale
Increasing Cost Industry
31. 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
Constrained Utility Maximization
Normal Goods
Diseconomies of Scale
Oligopoly
32. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Equilibrium
Market Economy (Capitalism)
Price elasticity
Perfectly competitive long-run equilibrium
33. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Marginal Benefit (MB)
Marginal Resource Cost (MRC)
Law of Demand
Marginal Productivity Theory
34. AFC = TFC/Q
Productive Efficiency
Average Fixed Cost (AFC)
Price elasticity
Price Ceiling
35. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Economics
Surplus
Public goods
36. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Comparative Advantage
Economic Profit
Perfectly competitive long-run equilibrium
Economics
37. Ei > 1
Luxury
Perfectly elastic
Perfectly inelastic
Derived Demand
38. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Derived Demand
Excise Tax
Profit Maximizing Rule
Private goods
39. The mechanism for combining production resources - with existing technology - into finished goods and services
Production function
Surplus
Monopoly long-run equilibrium
Scarcity
40. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Variable inputs
Monopolistic competition long-run equilibrium
Negative externality
Constant Returns to Scale
41. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Marginal Benefit (MB)
Monopoly
Relative Prices
Law of Increasing Costs
42. Entry of new firms shifts the cost curves for all firms downward
Spillover benefits
Derived Demand
Monopoly
Decreasing Cost industry
43. 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
Productive Efficiency
Normal Profit
Normal Goods
44. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Dead Weight Loss
Average Fixed Cost (AFC)
Excess Capacity
Marginal Benefit (MB)
45. 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
Free-Rider Problem
Positive externality
Unit elastic demand
Decreasing Cost industry
46. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Economies of Scale
Utility Maximizing Rule
Marginal Cost (MC)
Monopolistic competition long-run equilibrium
47. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Perfect competition
Income Effect
Economic Growth
Consumer surplus
48. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Subsidy
Total Revenue Test
Diseconomies of Scale
Shutdown Point
49. Ed = 1
Unit elastic demand
Monopolistic competition
Short run
Total Welfare
50. 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
Total Fixed Costs (TFC)
Specialization
Price floor
Natural Monopoly