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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 change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Marginal Analysis
Income Effect
Average Product of Labor (APL)
Four-firm concentration ratio
2. Ed = (%dQd)/(%dP). Ignore negative sign
Spillover costs
Normal Profit
Normal Goods
Price elasticity
3. 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
Excise Tax
Law of Increasing Costs
Total Fixed Costs (TFC)
4. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Negative externality
Incidence of Tax
Long Run
Increasing Cost Industry
5. Ed > 1 - meaning consumers are price sensitive
Law of Diminishing Marginal Utility
Price elastic demand
Luxury
Marginal tax rate
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
Economic Profit
Profit Maximizing Resource Employment
Four-firm concentration ratio
Total Revenue
7. 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
Opportunity Cost
Comparative Advantage
Price Ceiling
Cartel
8. 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
Monopsonist
Price elasticity
Fixed inputs
Oligopoly
9. The rational decision maker chooses an action if MB = MC
Determinants of Labor Demand
Market Equilibrium
Marginal Analysis
Collusive oligopoly
10. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Determinants of Demand
Dead Weight Loss
Total Welfare
Absolute prices
11. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Necessity
Implicit costs
Derived Demand
Long Run
12. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Unit elastic demand
Incidence of Tax
Marginal tax rate
13. Es = (%dQs) / (%dPrice)
Normal Goods
Determinants of Supply
Price Elasticity of Supply
Marginal Productivity Theory
14. Exists if a producer can produce more of a good than all other producers
Producer surplus
Absolute Advantage
Oligopoly
Absolute prices
15. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Utility Maximizing Rule
Accounting Profit
Spillover benefits
Price discrimination
16. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Free-Rider Problem
Absolute prices
Income Effect
Perfectly competitive long-run equilibrium
17. Ed < 1
Price inelastic demand
Determinants of Demand
Price floor
Derived Demand
18. The difference between total revenue and total explicit costs
Profit Maximizing Resource Employment
Monopoly
Accounting Profit
Total Revenue Test
19. 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
Allocative Efficiency
Free-Rider Problem
Price inelastic demand
Producer surplus
20. The price of a good measured in units of currency
Least-Cost Rule
Absolute prices
Variable inputs
Oligopoly
21. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Normal Goods
Derived Demand
Determinants of Demand
Market Economy (Capitalism)
22. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Least-Cost Rule
Excise Tax
Natural Monopoly
Marginal Cost (MC)
23. 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
Productive Efficiency
Luxury
Relative Prices
Monopoly long-run equilibrium
24. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Constrained Utility Maximization
Economic Growth
Price elasticity
Determinants of Supply
25. 0 < Ei < 1
Price floor
Cartel
Diseconomies of Scale
Necessity
26. Exists if a producer can produce a good at lower opportunity cost than all other producers
Resources
Four-firm concentration ratio
Comparative Advantage
Normal Goods
27. 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
Constrained Utility Maximization
Determinants of Labor Demand
Determinants of Supply
Normal Profit
28. The additional benefit received from the consumption of the next unit of a good or service
Necessity
Free-Rider Problem
Substitution Effect
Marginal Benefit (MB)
29. Ed = 8 - infinite change in demand to price change
Perfectly elastic
Income Effect
Perfectly competitive long-run equilibrium
Cartel
30. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Total Revenue Test
Monopolistic competition long-run equilibrium
Average Variable Cost (AVC)
Shortage
31. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Marginal Productivity Theory
Consumer surplus
Economies of Scale
Total Fixed Costs (TFC)
32. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Opportunity Cost
Price elastic demand
Total Revenue
33. The output where ATC is minimized and economic profit is zero
Marginal Revenue Product (MRP)
Break-even Point
Positive externality
Complementary Goods
34. 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
Four-firm concentration ratio
Marginal Resource Cost (MRC)
Variable inputs
Incidence of Tax
35. AFC = TFC/Q
Economic Growth
Average Fixed Cost (AFC)
Excess Capacity
Accounting Profit
36. 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
Dead Weight Loss
Price elasticity
Producer surplus
Fixed inputs
37. The ability to set the price above the perfectly competitive level
Market power
Law of Demand
Luxury
Law of Diminishing Marginal Utility
38. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Oligopoly
Total variable costs (TVC)
Shutdown Point
39. 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
Price Ceiling
Inferior Goods
Total variable costs (TVC)
40. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Economies of Scale
Shutdown Point
Law of Demand
Market Equilibrium
41. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Positive externality
Price inelastic demand
Utility Maximizing Rule
Economics
42. The difference between total revenue and total explicit and implicit costs
Law of Supply
Total variable costs (TVC)
Economic Profit
Average Variable Cost (AVC)
43. 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
Profit Maximizing Rule
Shutdown Point
Variable inputs
Four-firm concentration ratio
44. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Average Total Cost (ATC)
Perfectly elastic
Price elastic demand
45. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Normal Profit
Perfect competition
Income Effect
Substitution Effect
46. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Variable inputs
Law of Increasing Costs
Marginal Cost (MC)
Specialization
47. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Perfectly elastic
Cartel
Substitution Effect
Variable inputs
48. The mechanism for combining production resources - with existing technology - into finished goods and services
Producer surplus
Necessity
Production function
Utility Maximizing Rule
49. 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
Law of Increasing Costs
Unit elastic demand
Normal Profit
Price floor
50. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Producer surplus
Law of Supply
Excess Capacity
Monopsonist