SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
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. 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
Monopolistic competition
Constrained Utility Maximization
Price Ceiling
Perfectly elastic
2. 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
Determinants of elasticity
Incidence of Tax
Total Fixed Costs (TFC)
Shutdown Point
3. Ed = 1
Surplus
Unit elastic demand
Perfectly competitive long-run equilibrium
Positive externality
4. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Constant Returns to Scale
Spillover costs
Perfectly inelastic
Total Fixed Costs (TFC)
5. Total product divided by labor employed. APL = TPL/L
Perfectly inelastic
Unit elastic demand
Average Product of Labor (APL)
Market Economy (Capitalism)
6. Costs that change with the level of output. If output is zero - so are TVCs.
Absolute prices
Price Elasticity of Supply
Total variable costs (TVC)
Cartel
7. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Revenue Test
Natural Monopoly
Excess Capacity
Price discrimination
8. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Average Product of Labor (APL)
Excise Tax
Cross-Price Elasticity of Demand
Determinants of Labor Demand
9. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Allocative Efficiency
Profit Maximizing Rule
Marginal Revenue Product (MRP)
Subsidy
10. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopolistic competition
Average Variable Cost (AVC)
Shortage
Monopoly
11. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Consumer surplus
Law of Increasing Costs
Comparative Advantage
Inferior Goods
12. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Price inelastic demand
Total Product of Labor (TPL)
Profit Maximizing Rule
13. AFC = TFC/Q
Average Fixed Cost (AFC)
Accounting Profit
Monopoly
Price floor
14. Exists if a producer can produce a good at lower opportunity cost than all other producers
Total Welfare
Subsidy
Comparative Advantage
Market power
15. Ei > 1
Resources
Luxury
Income Effect
Market Equilibrium
16. The practice of selling essentially the same good to different groups of consumers at different prices
Law of Demand
Marginal Productivity Theory
Price discrimination
Spillover costs
17. The imbalance between limited productive resources and unlimited human wants
Scarcity
Decreasing Cost industry
Marginal Cost (MC)
Monopolistic competition long-run equilibrium
18. A good for which higher income decreases demand
Inferior Goods
Four-firm concentration ratio
Producer surplus
Marginal tax rate
19. The difference between total revenue and total explicit costs
Long Run
Accounting Profit
Constant Returns to Scale
Increasing Cost Industry
20. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Economics
Absolute Advantage
Economic Profit
Oligopoly
21. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Monopoly long-run equilibrium
Income Elasticity
Normal Goods
22. Exists at the point where the quantity supplied equals the quantity demanded
Law of Diminishing Marginal Utility
Determinants of Labor Demand
Shortage
Market Equilibrium
23. The total quantity - or total output of a good produced at each quantity of labor employed
Resources
Price discrimination
Market Equilibrium
Total Product of Labor (TPL)
24. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Economics
Excise Tax
Comparative Advantage
Negative externality
25. TR = P * Qd
Total variable costs (TVC)
Free-Rider Problem
Total Revenue
Producer surplus
26. The rational decision maker chooses an action if MB = MC
Scarcity
Marginal Analysis
Four-firm concentration ratio
Price elasticity
27. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Least-Cost Rule
Absolute Advantage
Marginal Revenue Product (MRP)
Marginal Resource Cost (MRC)
28. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Marginal Benefit (MB)
Subsidy
Shutdown Point
Implicit costs
29. 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
Producer surplus
Public goods
Decreasing Cost industry
Unit elastic demand
30. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Producer surplus
Scarcity
Law of Diminishing Marginal Utility
31. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Shutdown Point
Total Welfare
Absolute Advantage
32. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Marginal Resource Cost (MRC)
Luxury
Constant Returns to Scale
33. 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
Average Fixed Cost (AFC)
Spillover benefits
Shortage
Four-firm concentration ratio
34. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Marginal Product of Labor (MPL)
Complementary Goods
Shortage
Economic Growth
35. All firms maximize profit by producing where MR = MC
Average Fixed Cost (AFC)
Productive Efficiency
Profit Maximizing Rule
Dead Weight Loss
36. The mechanism for combining production resources - with existing technology - into finished goods and services
Market Economy (Capitalism)
Production function
Spillover costs
Collusive oligopoly
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.
Absolute Advantage
Absolute prices
Marginal Revenue Product (MRP)
Total Welfare
38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Resources
Scarcity
Comparative Advantage
Determinants of Supply
39. 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
Total Fixed Costs (TFC)
Private goods
Marginal tax rate
Increasing Cost Industry
40. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Market Equilibrium
Marginal Analysis
Short run
Absolute prices
41. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Average Variable Cost (AVC)
Monopolistic competition
Marginal Benefit (MB)
Perfect competition
42. Entry of new firms shifts the cost curves for all firms upward
Average Fixed Cost (AFC)
Law of Increasing Costs
Increasing Cost Industry
Substitution Effect
43. AVC = TVC/Q
Average Variable Cost (AVC)
Scarcity
Accounting Profit
Constrained Utility Maximization
44. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Relative Prices
Marginal Analysis
Demand for Labor
Specialization
45. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Economics
Monopolistic competition long-run equilibrium
Spillover costs
Average Product of Labor (APL)
46. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Incidence of Tax
Diseconomies of Scale
Monopsonist
Total variable costs (TVC)
47. 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
Variable inputs
Substitution Effect
Income Elasticity
Market Equilibrium
48. Ed < 1
Price inelastic demand
Monopsonist
Average Product of Labor (APL)
Economic Growth
49. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Economics
Law of Demand
Private goods
Break-even Point
50. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Production function
Price Elasticity of Supply
Profit Maximizing Resource Employment
Marginal Cost (MC)