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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. 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






2. The difference between total revenue and total explicit costs






3. 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






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






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






6. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






7. 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






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






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






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






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






12. 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






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






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






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






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






17. 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






18. 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






19. TR = P * Qd






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






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






22. 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






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






24. 0 < Ei < 1






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






26. MUx / Px = MUy/Py or MUx/MUy = Px/Py






27. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






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






29. 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






30. Ed = 0 - no response to price change






31. Costs that change with the level of output. If output is zero - so are TVCs.






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






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






34. AVC = TVC/Q






35. Ed > 1 - meaning consumers are price sensitive






36. 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.






37. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






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






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






40. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






41. The price of a good measured in units of currency






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






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






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






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






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






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






48. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






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






50. Models where firms agree to mutually improve their situation