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






2. 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






3. 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






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






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






6. 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






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






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






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






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






11. 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






12. TR = P * Qd






13. 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.






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






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






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






17. 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






18. Ed = 0 - no response to price change






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






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






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






22. 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






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






24. 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






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






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






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






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






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






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






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






32. 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






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






34. Models where firms agree to mutually improve their situation






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






36. 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






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






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






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






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






42. The sum of consumer surplus and producer surplus






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






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






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






46. Ed > 1 - meaning consumers are price sensitive






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






48. 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






49. AFC = TFC/Q






50. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter







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