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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. A firm that has market power in the factor market (a wage-setter)






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






3. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






4. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






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






6. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






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






8. 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






9. 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






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






11. 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






12. 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






13. The difference between total revenue and total explicit and implicit costs






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






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






16. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






17. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






18. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






19. Exists at the point where the quantity supplied equals the quantity demanded






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






21. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






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






23. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






24. Ei = (%dQd good X)/(%d Income)






25. Ed = 0 - no response to price change






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






27. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






28. 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






29. Ei > 1






30. The change in quantity demanded resulting from a change in the price of one good relative to other goods






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






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






33. Ed < 1






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






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






36. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






37. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






39. Ed > 1 - meaning consumers are price sensitive






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






41. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






42. 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






43. Models where firms agree to mutually improve their situation






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






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






46. 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






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






48. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






49. The most desirable alternative given up as the result of a decision






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