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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
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. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Specialization
Opportunity Cost
Monopoly long-run equilibrium
Utility Maximizing Rule
2. The rational decision maker chooses an action if MB = MC
Marginal Cost (MC)
Marginal Analysis
Four-firm concentration ratio
Total Welfare
3. 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
Accounting Profit
Marginal tax rate
Cartel
Positive externality
4. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Resources
Producer surplus
Collusive oligopoly
5. The most desirable alternative given up as the result of a decision
Price floor
Opportunity Cost
Law of Demand
Break-even Point
6. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Consumer surplus
Non-collusive oligopoly
Total Product of Labor (TPL)
Total Revenue Test
7. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Perfectly competitive long-run equilibrium
Producer surplus
Perfectly elastic
Economic Growth
8. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Implicit costs
Consumer surplus
Long Run
Least-Cost Rule
9. Ei > 1
Luxury
Non-collusive oligopoly
Inferior Goods
Excess Capacity
10. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Shortage
Four-firm concentration ratio
Inferior Goods
Break-even Point
11. The marginal utility from consumption of more and more of that item falls over time
Price elasticity
Specialization
Economic Profit
Law of Diminishing Marginal Utility
12. 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
Average Variable Cost (AVC)
Cross-Price Elasticity of Demand
Resources
Non-collusive oligopoly
13. 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
Price elastic demand
Marginal Resource Cost (MRC)
Total Revenue Test
Monopolistic competition
14. When firms focus their resources on production of goods for which they have comparative advantage
Complementary Goods
Specialization
Price inelastic demand
Natural Monopoly
15. Ed < 1
Price discrimination
Normal Profit
Price inelastic demand
Marginal Resource Cost (MRC)
16. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Variable inputs
Explicit costs
Average Total Cost (ATC)
Incidence of Tax
17. The mechanism for combining production resources - with existing technology - into finished goods and services
Determinants of Demand
Production function
Least-Cost Rule
Marginal Product of Labor (MPL)
18. 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
Shutdown Point
Variable inputs
Unit elastic demand
Negative externality
19. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Four-firm concentration ratio
Law of Demand
Utility Maximizing Rule
20. The sum of consumer surplus and producer surplus
Dead Weight Loss
Producer surplus
Total Welfare
Consumer surplus
21. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Market power
Perfectly competitive long-run equilibrium
Private goods
Variable inputs
22. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Total Revenue
Spillover costs
Law of Supply
Luxury
23. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Increasing Cost Industry
Substitution Effect
Average Product of Labor (APL)
Shutdown Point
24. Ed = 8 - infinite change in demand to price change
Scarcity
Natural Monopoly
Break-even Point
Perfectly elastic
25. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Explicit costs
Positive externality
Determinants of Supply
Productive Efficiency
26. AVC = TVC/Q
Marginal Analysis
Average Variable Cost (AVC)
Law of Demand
Negative externality
27. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Price Elasticity of Supply
Determinants of elasticity
Surplus
Least-Cost Rule
28. 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
Income Elasticity
Accounting Profit
Perfectly inelastic
Spillover costs
29. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Law of Increasing Costs
Average Product of Labor (APL)
Cartel
Marginal Product of Labor (MPL)
30. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Luxury
Inferior Goods
Excess Capacity
Excise Tax
31. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Economics
Complementary Goods
Average Fixed Cost (AFC)
Absolute Advantage
32. Exists at the point where the quantity supplied equals the quantity demanded
Profit Maximizing Resource Employment
Shortage
Market Equilibrium
Absolute prices
33. 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
Price floor
Inferior Goods
Marginal Analysis
Perfectly elastic
34. A good for which higher income decreases demand
Perfectly competitive long-run equilibrium
Shutdown Point
Total Revenue
Inferior Goods
35. 0 < Ei < 1
Average Fixed Cost (AFC)
Total Product of Labor (TPL)
Average Total Cost (ATC)
Necessity
36. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Unit elastic demand
Price Ceiling
Constant Returns to Scale
37. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Marginal Cost (MC)
Long Run
Allocative Efficiency
38. The additional benefit received from the consumption of the next unit of a good or service
Natural Monopoly
Profit Maximizing Resource Employment
Marginal Benefit (MB)
Derived Demand
39. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Dead Weight Loss
Break-even Point
Negative externality
Private goods
40. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Price Elasticity of Supply
Marginal tax rate
Natural Monopoly
Unit elastic demand
41. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Implicit costs
Resources
Shortage
Total Revenue Test
42. 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
Variable inputs
Price Ceiling
Shortage
Positive externality
43. The additional cost incurred from the consumption of the next unit of a good or a service
Cross-Price Elasticity of Demand
Marginal Resource Cost (MRC)
Marginal Cost (MC)
Variable inputs
44. 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
Determinants of Supply
Economies of Scale
Monopoly long-run equilibrium
Determinants of elasticity
45. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Average Variable Cost (AVC)
Price inelastic demand
Economics
Dead Weight Loss
46. Product demand - productivity - prices of other resources - and complementary resources
Price elasticity
Excess Capacity
Determinants of Labor Demand
Non-collusive oligopoly
47. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Marginal Productivity Theory
Perfect competition
Public goods
Price elasticity
48. A good for which higher income increases demand
Profit Maximizing Resource Employment
Oligopoly
Normal Goods
Total variable costs (TVC)
49. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Comparative Advantage
Price elastic demand
Unit elastic demand
50. Exists if a producer can produce more of a good than all other producers
Total Product of Labor (TPL)
Absolute Advantage
Average Variable Cost (AVC)
Decreasing Cost industry