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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 total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






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






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






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






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






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






7. TR = P * Qd






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






9. A good for which higher income increases demand






10. 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.






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






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. The difference between total revenue and total explicit costs






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






15. 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






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






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






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






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






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






21. 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






22. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






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






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






25. A good for which higher income decreases demand






26. Ed < 1






27. 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






28. 0 < Ei < 1






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






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






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






32. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






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






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






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






36. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






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






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






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






40. AFC = TFC/Q






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






42. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






43. Ei > 1






44. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






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






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






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






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






49. 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






50. 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