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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. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Perfect competition
Total variable costs (TVC)
Comparative Advantage
Complementary Goods
2. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Marginal Analysis
Decreasing Cost industry
Perfectly competitive long-run equilibrium
Average Variable Cost (AVC)
3. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Marginal Product of Labor (MPL)
Average Product of Labor (APL)
Income Effect
Productive Efficiency
4. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Market Equilibrium
Constrained Utility Maximization
Derived Demand
Spillover costs
5. The imbalance between limited productive resources and unlimited human wants
Private goods
Comparative Advantage
Scarcity
Non-collusive oligopoly
6. 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
Short run
Monopoly long-run equilibrium
Shortage
Income Effect
7. AFC = TFC/Q
Average Fixed Cost (AFC)
Surplus
Unit elastic demand
Total Fixed Costs (TFC)
8. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Comparative Advantage
Market Equilibrium
Free-Rider Problem
9. 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
Private goods
Inferior Goods
Productive Efficiency
Normal Goods
10. 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
Cross-Price Elasticity of Demand
Productive Efficiency
Price floor
Substitution Effect
11. 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.
Law of Diminishing Marginal Utility
Average Total Cost (ATC)
Opportunity Cost
Diseconomies of Scale
12. 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
Free-Rider Problem
Positive externality
Total Product of Labor (TPL)
Fixed inputs
13. The ability to set the price above the perfectly competitive level
Market power
Price inelastic demand
Necessity
Determinants of Labor Demand
14. 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
Law of Diminishing Marginal Utility
Producer surplus
Constrained Utility Maximization
Price inelastic demand
15. Ei = (%dQd good X)/(%d Income)
Price Elasticity of Supply
Oligopoly
Excess Capacity
Income Elasticity
16. 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
Average Variable Cost (AVC)
Marginal Analysis
Fixed inputs
Cartel
17. A good for which higher income increases demand
Law of Demand
Natural Monopoly
Normal Goods
Determinants of Labor Demand
18. 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.
Economies of Scale
Allocative Efficiency
Price Ceiling
Marginal Revenue Product (MRP)
19. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Four-firm concentration ratio
Determinants of Labor Demand
Marginal tax rate
Total Fixed Costs (TFC)
20. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Production function
Marginal Benefit (MB)
Break-even Point
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
Marginal tax rate
Excess Capacity
Spillover costs
Profit Maximizing Rule
22. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Complementary Goods
Dead Weight Loss
Determinants of Supply
23. 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
Price elastic demand
Four-firm concentration ratio
Variable inputs
Comparative Advantage
24. The price of a good measured in units of currency
Short run
Absolute prices
Price inelastic demand
Perfectly competitive long-run equilibrium
25. Es = (%dQs) / (%dPrice)
Accounting Profit
Price Elasticity of Supply
Total Fixed Costs (TFC)
Producer surplus
26. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Subsidy
Diseconomies of Scale
Law of Supply
27. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Perfect competition
Law of Diminishing Marginal Utility
Excise Tax
Dead Weight Loss
28. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Public goods
Constant cost industry
Dead Weight Loss
Price elasticity
29. 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
Marginal tax rate
Free-Rider Problem
Total Product of Labor (TPL)
30. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Marginal tax rate
Least-Cost Rule
Total variable costs (TVC)
Law of Demand
31. The marginal utility from consumption of more and more of that item falls over time
Least-Cost Rule
Profit Maximizing Rule
Substitution Effect
Law of Diminishing Marginal Utility
32. Entry of new firms shifts the cost curves for all firms downward
Price elastic demand
Decreasing Cost industry
Surplus
Law of Supply
33. 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
Price Ceiling
Cross-Price Elasticity of Demand
Law of Supply
Marginal Benefit (MB)
34. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Perfectly competitive long-run equilibrium
Law of Increasing Costs
Substitution Effect
35. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Perfectly elastic
Resources
Shutdown Point
36. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Producer surplus
Explicit costs
Scarcity
Incidence of Tax
37. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Shortage
Average Total Cost (ATC)
Subsidy
Incidence of Tax
38. Ed < 1
Diseconomies of Scale
Price inelastic demand
Least-Cost Rule
Demand for Labor
39. All firms maximize profit by producing where MR = MC
Perfectly elastic
Determinants of Demand
Profit Maximizing Rule
Law of Increasing Costs
40. Ed = 8 - infinite change in demand to price change
Marginal Revenue Product (MRP)
Perfectly elastic
Substitute Goods
Four-firm concentration ratio
41. 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
Determinants of Supply
Positive externality
Four-firm concentration ratio
Decreasing Cost industry
42. Ed = 0 - no response to price change
Derived Demand
Perfectly inelastic
Break-even Point
Diseconomies of Scale
43. When firms focus their resources on production of goods for which they have comparative advantage
Price elastic demand
Public goods
Specialization
Economics
44. The sum of consumer surplus and producer surplus
Producer surplus
Relative Prices
Total Welfare
Constant cost industry
45. 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
Economics
Total Revenue
Marginal Resource Cost (MRC)
Monopoly long-run equilibrium
46. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Explicit costs
Short run
Collusive oligopoly
47. 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
Total Product of Labor (TPL)
Spillover benefits
Market Economy (Capitalism)
Luxury
48. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Four-firm concentration ratio
Allocative Efficiency
Marginal Analysis
Natural Monopoly
49. 0 < Ei < 1
Total Revenue Test
Necessity
Average Total Cost (ATC)
Scarcity
50. Occurs when LRAC is constant over a variety of plant sizes
Price Ceiling
Constant Returns to Scale
Fixed inputs
Price floor