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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. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Dead Weight Loss
Natural Monopoly
Price discrimination
Four-firm concentration ratio
2. Costs that change with the level of output. If output is zero - so are TVCs.
Price floor
Substitute Goods
Total variable costs (TVC)
Non-collusive oligopoly
3. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Constant cost industry
Diseconomies of Scale
Total variable costs (TVC)
4. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Price discrimination
Complementary Goods
Marginal Resource Cost (MRC)
Surplus
5. 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
Marginal tax rate
Profit Maximizing Resource Employment
Non-collusive oligopoly
Perfectly inelastic
6. 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
Four-firm concentration ratio
Unit elastic demand
Non-collusive oligopoly
7. Ei = (%dQd good X)/(%d Income)
Price discrimination
Income Elasticity
Determinants of Labor Demand
Profit Maximizing Rule
8. 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
Price Ceiling
Diseconomies of Scale
Price inelastic demand
9. 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
Four-firm concentration ratio
Average Fixed Cost (AFC)
Total Welfare
Cross-Price Elasticity of Demand
10. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Profit Maximizing Resource Employment
Specialization
Variable inputs
Production function
11. The imbalance between limited productive resources and unlimited human wants
Scarcity
Inferior Goods
Perfectly competitive long-run equilibrium
Productive Efficiency
12. 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
Scarcity
Absolute prices
Price Elasticity of Supply
Producer surplus
13. The marginal utility from consumption of more and more of that item falls over time
Short run
Law of Diminishing Marginal Utility
Marginal Productivity Theory
Economics
14. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Total Revenue
Monopsonist
Marginal Cost (MC)
15. 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
Total Revenue Test
Shutdown Point
Law of Supply
Consumer surplus
16. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Dead Weight Loss
Excise Tax
Market Economy (Capitalism)
Law of Supply
17. 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
Collusive oligopoly
Surplus
Law of Increasing Costs
Consumer surplus
18. TR = P * Qd
Total Fixed Costs (TFC)
Law of Demand
Excess Capacity
Total Revenue
19. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Cross-Price Elasticity of Demand
Spillover costs
Economic Growth
Collusive oligopoly
20. Exists if a producer can produce more of a good than all other producers
Specialization
Marginal Analysis
Absolute Advantage
Inferior Goods
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
Cartel
Derived Demand
Four-firm concentration ratio
Utility Maximizing Rule
22. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Shutdown Point
Marginal Revenue Product (MRP)
Economics
Law of Demand
23. 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
Market Economy (Capitalism)
Resources
Non-collusive oligopoly
Spillover costs
24. The sum of consumer surplus and producer surplus
Total Welfare
Cartel
Free-Rider Problem
Derived Demand
25. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Accounting Profit
Public goods
Absolute prices
26. Ed < 1
Economics
Price inelastic demand
Marginal Revenue Product (MRP)
Unit elastic demand
27. 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
Total Revenue Test
Allocative Efficiency
Profit Maximizing Rule
Demand for Labor
28. AVC = TVC/Q
Complementary Goods
Incidence of Tax
Excess Capacity
Average Variable Cost (AVC)
29. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Perfectly inelastic
Constrained Utility Maximization
Producer surplus
30. 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
Producer surplus
Unit elastic demand
Market power
Oligopoly
31. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Market power
Shutdown Point
Average Product of Labor (APL)
Derived Demand
32. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Average Total Cost (ATC)
Excise Tax
Oligopoly
Determinants of Supply
33. The difference between total revenue and total explicit costs
Marginal tax rate
Marginal Analysis
Implicit costs
Accounting Profit
34. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Spillover costs
Consumer surplus
Incidence of Tax
Monopolistic competition
35. Product demand - productivity - prices of other resources - and complementary resources
Perfectly elastic
Variable inputs
Utility Maximizing Rule
Determinants of Labor Demand
36. A firm that has market power in the factor market (a wage-setter)
Market Economy (Capitalism)
Perfectly elastic
Monopsonist
Total Welfare
37. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Negative externality
Break-even Point
Determinants of elasticity
Surplus
38. Es = (%dQs) / (%dPrice)
Negative externality
Law of Demand
Accounting Profit
Price Elasticity of Supply
39. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Law of Supply
Fixed inputs
Demand for Labor
Average Variable Cost (AVC)
40. When firms focus their resources on production of goods for which they have comparative advantage
Price elastic demand
Utility Maximizing Rule
Specialization
Surplus
41. The mechanism for combining production resources - with existing technology - into finished goods and services
Law of Supply
Price elastic demand
Production function
Implicit costs
42. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Profit Maximizing Resource Employment
Total Revenue
Total Fixed Costs (TFC)
Normal Profit
43. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Normal Profit
Non-collusive oligopoly
Monopolistic competition long-run equilibrium
Free-Rider Problem
44. 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
Perfect competition
Determinants of elasticity
Subsidy
Incidence of Tax
45. 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
Determinants of Demand
Accounting Profit
Price floor
Cartel
46. The additional cost incurred from the consumption of the next unit of a good or a service
Increasing Cost Industry
Production function
Shutdown Point
Marginal Cost (MC)
47. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Implicit costs
Economic Growth
Income Effect
Specialization
48. 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
Marginal Resource Cost (MRC)
Average Fixed Cost (AFC)
Complementary Goods
Price Ceiling
49. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Total Revenue
Constant Returns to Scale
Break-even Point
Diseconomies of Scale
50. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Short run
Necessity
Productive Efficiency
Constant cost industry