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






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






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






4. 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






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






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






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






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






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






10. Ed = 1






11. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






12. 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






13. 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






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






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






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






17. 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






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






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






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






21. Ed < 1






22. 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






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






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






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






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






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






28. 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.






29. Occurs when LRAC is constant over a variety of plant sizes






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






31. 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






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






33. 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






34. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






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






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






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






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






39. 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






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






41. The difference between total revenue and total explicit costs






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






43. The sum of consumer surplus and producer surplus






44. 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






45. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






46. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






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






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






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






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







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