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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. The change in quantity demanded resulting from a change in the price of one good relative to other goods






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






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






4. Models where firms agree to mutually improve their situation






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






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






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






8. A good for which higher income increases demand






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






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






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






12. 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






13. 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






14. The difference between total revenue and total explicit costs






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






16. 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






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






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






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






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






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






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






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






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






25. 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






26. Demand for a resource like labor is derived from the demand for the goods produced by the resource






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






28. 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






29. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






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






31. 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






32. 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






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






34. Entry (or exit) of firms does not shift the cost curves of firms in the industry






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






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






37. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






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






39. The sum of consumer surplus and producer surplus






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






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






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






43. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






44. 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






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






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






47. 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.






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






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






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