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






2. 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.






3. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






4. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






5. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






6. 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






7. Ed = 1






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






9. When firms focus their resources on production of goods for which they have comparative advantage






10. 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






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






12. 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






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






14. ATC = TC/Q = AFC + AVC






15. Ed = (%dQd)/(%dP). Ignore negative sign






16. 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






17. 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






18. Exists if a producer can produce more of a good than all other producers






19. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






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






21. MUx / Px = MUy/Py or MUx/MUy = Px/Py






22. Ed = 0 - no response to price change






23. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






24. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






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






26. Ei > 1






27. 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






28. 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






29. The difference between total revenue and total explicit costs






30. Costs that change with the level of output. If output is zero - so are TVCs.






31. Models where firms agree to mutually improve their situation






32. 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






33. All firms maximize profit by producing where MR = MC






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






35. The total quantity - or total output of a good produced at each quantity of labor employed






36. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






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






38. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






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






40. Product demand - productivity - prices of other resources - and complementary resources






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






42. The lost net benefit to society caused by a movement away from the competitive market equilibrium






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






44. TR = P * Qd






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






46. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






47. Es = (%dQs) / (%dPrice)






48. The additional cost incurred from the consumption of the next unit of a good or a service






49. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






50. Ed > 1 - meaning consumers are price sensitive