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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 difference between total revenue and total explicit costs
Cartel
Constant Returns to Scale
Accounting Profit
Oligopoly
2. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Fixed inputs
Economic Profit
Monopolistic competition
Perfect competition
3. 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
Fixed inputs
Determinants of Labor Demand
Average Variable Cost (AVC)
Free-Rider Problem
4. Occurs when LRAC is constant over a variety of plant sizes
Surplus
Resources
Luxury
Constant Returns to Scale
5. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Marginal Productivity Theory
Non-collusive oligopoly
Market Economy (Capitalism)
Luxury
6. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Price discrimination
Inferior Goods
Surplus
7. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Average Product of Labor (APL)
Total Fixed Costs (TFC)
Necessity
Perfectly elastic
8. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Marginal Product of Labor (MPL)
Profit Maximizing Resource Employment
Resources
Marginal Cost (MC)
9. 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
Four-firm concentration ratio
Fixed inputs
Surplus
Free-Rider Problem
10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Economics
Determinants of Demand
Marginal Product of Labor (MPL)
Four-firm concentration ratio
11. 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
Monopolistic competition long-run equilibrium
Constrained Utility Maximization
Producer surplus
Oligopoly
12. The additional cost incurred from the consumption of the next unit of a good or a service
Private goods
Marginal Cost (MC)
Marginal Analysis
Oligopoly
13. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Price inelastic demand
Profit Maximizing Resource Employment
Accounting Profit
Surplus
14. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Substitution Effect
Price elasticity
Four-firm concentration ratio
15. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Market Economy (Capitalism)
Price floor
Income Effect
Four-firm concentration ratio
16. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Average Fixed Cost (AFC)
Derived Demand
Total Welfare
Perfect competition
17. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Variable inputs
Substitution Effect
Incidence of Tax
Excess Capacity
18. ATC = TC/Q = AFC + AVC
Income Elasticity
Law of Diminishing Marginal Utility
Average Total Cost (ATC)
Necessity
19. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Average Fixed Cost (AFC)
Collusive oligopoly
Determinants of Supply
Negative externality
20. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Normal Profit
Monopoly
Average Total Cost (ATC)
Normal Goods
21. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Natural Monopoly
Price discrimination
Income Elasticity
Price floor
22. 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
Income Effect
Marginal tax rate
Total Revenue Test
Marginal Benefit (MB)
23. 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
Decreasing Cost industry
Profit Maximizing Resource Employment
Productive Efficiency
Consumer surplus
24. The marginal utility from consumption of more and more of that item falls over time
Shutdown Point
Marginal Revenue Product (MRP)
Law of Diminishing Marginal Utility
Total variable costs (TVC)
25. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Economic Profit
Positive externality
Luxury
Total Revenue Test
26. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Subsidy
Implicit costs
Perfect competition
Determinants of elasticity
27. 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
Relative Prices
Increasing Cost Industry
Monopolistic competition long-run equilibrium
Incidence of Tax
28. AFC = TFC/Q
Scarcity
Utility Maximizing Rule
Average Fixed Cost (AFC)
Determinants of Demand
29. 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
Comparative Advantage
Economic Growth
Constrained Utility Maximization
Decreasing Cost industry
30. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Law of Demand
Absolute Advantage
Explicit costs
31. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Marginal tax rate
Perfect competition
Total Product of Labor (TPL)
Incidence of Tax
32. Costs that change with the level of output. If output is zero - so are TVCs.
Variable inputs
Determinants of Labor Demand
Total variable costs (TVC)
Free-Rider Problem
33. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Relative Prices
Least-Cost Rule
Natural Monopoly
Constant cost industry
34. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Income Elasticity
Accounting Profit
Law of Demand
35. All firms maximize profit by producing where MR = MC
Determinants of Demand
Opportunity Cost
Profit Maximizing Rule
Marginal Productivity Theory
36. Ed > 1 - meaning consumers are price sensitive
Monopoly
Price elastic demand
Oligopoly
Economic Profit
37. 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.
Economic Profit
Long Run
Accounting Profit
Marginal Revenue Product (MRP)
38. The ability to set the price above the perfectly competitive level
Market power
Average Fixed Cost (AFC)
Scarcity
Marginal Resource Cost (MRC)
39. Ed = 1
Unit elastic demand
Profit Maximizing Rule
Total variable costs (TVC)
Total Fixed Costs (TFC)
40. When firms focus their resources on production of goods for which they have comparative advantage
Total Product of Labor (TPL)
Subsidy
Specialization
Law of Increasing Costs
41. Ei > 1
Luxury
Excise Tax
Private goods
Determinants of Labor Demand
42. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Average Product of Labor (APL)
Excess Capacity
Marginal Cost (MC)
43. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Price Ceiling
Productive Efficiency
Increasing Cost Industry
Monopoly long-run equilibrium
44. AVC = TVC/Q
Economic Growth
Average Variable Cost (AVC)
Constrained Utility Maximization
Marginal tax rate
45. The difference between total revenue and total explicit and implicit costs
Total Revenue Test
Shortage
Surplus
Economic Profit
46. 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
Law of Diminishing Marginal Utility
Fixed inputs
Marginal Resource Cost (MRC)
Producer surplus
47. 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
Absolute prices
Economics
Price discrimination
Public goods
48. The practice of selling essentially the same good to different groups of consumers at different prices
Total Revenue Test
Price discrimination
Price Ceiling
Inferior Goods
49. The imbalance between limited productive resources and unlimited human wants
Productive Efficiency
Scarcity
Cross-Price Elasticity of Demand
Collusive oligopoly
50. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Surplus
Complementary Goods
Marginal Analysis
Economic Growth