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






2. TR = P * Qd






3. ATC = TC/Q = AFC + AVC






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






5. 0 < Ei < 1






6. 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






7. 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






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






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






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






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






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






13. A good for which higher income decreases demand






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






15. 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.






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






17. 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






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






19. 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






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






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






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






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






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






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






26. A good for which higher income increases demand






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






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






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






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






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






32. 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






33. 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.






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






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






36. 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






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






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






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






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






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






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






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






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






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






46. 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






47. 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






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






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






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