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






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






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






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






5. AFC = TFC/Q






6. 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






7. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






8. Models where firms agree to mutually improve their situation






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






10. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






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






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






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






14. 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






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






16. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






17. Ei > 1






18. 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






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






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






21. 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






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






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






24. The sum of consumer surplus and producer surplus






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






26. 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






27. 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.






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






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






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






31. 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






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






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






34. 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






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






36. A good for which higher income increases demand






37. Ed < 1






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






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






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






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






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






43. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






44. 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






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






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






47. Ed = 0 - no response to price change






48. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






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






50. 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