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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
Public goods
Determinants of elasticity
Price elastic demand
Constrained Utility Maximization
2. Ed < 1
Price discrimination
Variable inputs
Price inelastic demand
Demand for Labor
3. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Relative Prices
Break-even Point
Excise Tax
4. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Monopolistic competition
Price floor
Average Total Cost (ATC)
Marginal Revenue Product (MRP)
5. The additional cost incurred from the consumption of the next unit of a good or a service
Average Fixed Cost (AFC)
Constant cost industry
Least-Cost Rule
Marginal Cost (MC)
6. The sum of consumer surplus and producer surplus
Free-Rider Problem
Price elasticity
Comparative Advantage
Total Welfare
7. 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.
Price elastic demand
Economies of Scale
Variable inputs
Average Variable Cost (AVC)
8. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Monopolistic competition long-run equilibrium
Non-collusive oligopoly
Demand for Labor
Economies of Scale
9. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Diseconomies of Scale
Total Product of Labor (TPL)
Law of Demand
Determinants of Labor Demand
10. The practice of selling essentially the same good to different groups of consumers at different prices
Economics
Price discrimination
Public goods
Demand for Labor
11. The ability to set the price above the perfectly competitive level
Economic Profit
Market power
Market Economy (Capitalism)
Constant Returns to Scale
12. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Total variable costs (TVC)
Accounting Profit
Derived Demand
Private goods
13. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Income Effect
Total Revenue
Average Variable Cost (AVC)
14. Total product divided by labor employed. APL = TPL/L
Marginal tax rate
Average Product of Labor (APL)
Free-Rider Problem
Complementary Goods
15. 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
Law of Diminishing Marginal Utility
Private goods
Economics
Producer surplus
16. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Total Revenue Test
Private goods
Perfect competition
Constant cost industry
17. 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.
Long Run
Price Elasticity of Supply
Marginal Revenue Product (MRP)
Diseconomies of Scale
18. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Marginal Revenue Product (MRP)
Law of Increasing Costs
Oligopoly
Total Fixed Costs (TFC)
19. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Accounting Profit
Necessity
Price Ceiling
20. AVC = TVC/Q
Average Variable Cost (AVC)
Determinants of Supply
Dead Weight Loss
Diseconomies of Scale
21. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Profit Maximizing Rule
Average Product of Labor (APL)
Scarcity
22. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Law of Supply
Spillover benefits
Complementary Goods
Relative Prices
23. 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
Implicit costs
Private goods
Law of Increasing Costs
Income Effect
24. A firm that has market power in the factor market (a wage-setter)
Law of Diminishing Marginal Utility
Price elasticity
Monopsonist
Average Product of Labor (APL)
25. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Average Variable Cost (AVC)
Law of Demand
Negative externality
Determinants of Demand
26. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Break-even Point
Monopolistic competition long-run equilibrium
Marginal Cost (MC)
Substitute Goods
27. Ed > 1 - meaning consumers are price sensitive
Perfectly inelastic
Price elastic demand
Perfectly competitive long-run equilibrium
Average Fixed Cost (AFC)
28. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Constrained Utility Maximization
Determinants of Labor Demand
Spillover costs
29. The rational decision maker chooses an action if MB = MC
Unit elastic demand
Marginal Analysis
Allocative Efficiency
Market power
30. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Price Ceiling
Law of Supply
Total variable costs (TVC)
Monopolistic competition
31. All firms maximize profit by producing where MR = MC
Increasing Cost Industry
Law of Diminishing Marginal Utility
Profit Maximizing Rule
Law of Supply
32. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Private goods
Market Economy (Capitalism)
Price inelastic demand
Variable inputs
33. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Monopolistic competition long-run equilibrium
Income Elasticity
Price elasticity
Explicit costs
34. Es = (%dQs) / (%dPrice)
Monopolistic competition long-run equilibrium
Law of Diminishing Marginal Utility
Production function
Price Elasticity of Supply
35. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Private goods
Utility Maximizing Rule
Average Variable Cost (AVC)
Excise Tax
36. The additional benefit received from the consumption of the next unit of a good or service
Necessity
Profit Maximizing Resource Employment
Marginal Benefit (MB)
Income Elasticity
37. Models where firms agree to mutually improve their situation
Shortage
Productive Efficiency
Collusive oligopoly
Cross-Price Elasticity of Demand
38. A good for which higher income decreases demand
Law of Demand
Average Fixed Cost (AFC)
Consumer surplus
Inferior Goods
39. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Inferior Goods
Derived Demand
Fixed inputs
Positive externality
40. 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.
Average Total Cost (ATC)
Average Variable Cost (AVC)
Marginal Revenue Product (MRP)
Marginal tax rate
41. Ed = 1
Implicit costs
Unit elastic demand
Economic Profit
Explicit costs
42. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Law of Diminishing Marginal Utility
Economic Growth
Substitution Effect
Marginal Productivity Theory
43. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Price discrimination
Unit elastic demand
Normal Goods
Excise Tax
44. 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
Four-firm concentration ratio
Law of Supply
Marginal Resource Cost (MRC)
Accounting Profit
45. 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
Derived Demand
Perfect competition
Oligopoly
Consumer surplus
46. The price of a good measured in units of currency
Income Elasticity
Absolute prices
Inferior Goods
Four-firm concentration ratio
47. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Substitution Effect
Market Economy (Capitalism)
Short run
Negative externality
48. The imbalance between limited productive resources and unlimited human wants
Shortage
Demand for Labor
Scarcity
Complementary Goods
49. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Marginal Resource Cost (MRC)
Average Product of Labor (APL)
Excess Capacity
Unit elastic demand
50. 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
Public goods
Diseconomies of Scale
Total Product of Labor (TPL)
Marginal Revenue Product (MRP)