Test your basic knowledge |

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. Ed = 8 - infinite change in demand to price change






2. 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






3. Ed > 1 - meaning consumers are price sensitive






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






5. 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






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






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






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






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






10. 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






11. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






12. The ability to set the price above the perfectly competitive level






13. A good for which higher income increases demand






14. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






15. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






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






17. 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






18. 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






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






20. The imbalance between limited productive resources and unlimited human wants






21. The sum of consumer surplus and producer surplus






22. 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






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






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. The price of a good measured in units of currency






26. 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






27. The marginal utility from consumption of more and more of that item falls over time






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






29. Two goods are consumer substitutes if they provide essentially the same utility to consumers






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






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






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






33. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






34. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






35. A good for which higher income decreases demand






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






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






38. 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






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






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






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






42. 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.






43. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






44. Total product divided by labor employed. APL = TPL/L






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






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






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






48. 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






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






50. The additional benefit received from the consumption of the next unit of a good or service