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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 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.






2. 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






3. The output where ATC is minimized and economic profit is zero






4. AVC = TVC/Q






5. The rational decision maker chooses an action if MB = MC






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






7. Ed > 1 - meaning consumers are price sensitive






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






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






10. TR = P * Qd






11. Exists if a producer can produce a good at lower opportunity cost than all other producers






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






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






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






15. 0 < Ei < 1






16. A good for which higher income increases demand






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






18. AFC = TFC/Q






19. A good for which higher income decreases demand






20. 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






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






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






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






24. The most desirable alternative given up as the result of a decision






25. 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






26. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






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






28. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






29. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






30. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






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






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






33. 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






34. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






35. 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






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






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






38. 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






39. Ed = 0 - no response to price change






40. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






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






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






43. The sum of consumer surplus and producer surplus






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






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






46. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






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






48. 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






49. The price of a good measured in units of currency






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