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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






2. Models where firms agree to mutually improve their situation






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






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






5. Occurs when LRAC is constant over a variety of plant sizes






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






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






8. 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






9. AVC = TVC/Q






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






11. Ei > 1






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






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






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






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






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






17. The sum of consumer surplus and producer surplus






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






19. 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






20. Ed = 1






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






22. Exists if a producer can produce a good at lower opportunity cost than all other producers






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






24. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






25. The difference between total revenue and total explicit and implicit costs






26. 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






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






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






29. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






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






31. 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






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






33. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






34. The output where ATC is minimized and economic profit is zero






35. 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






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






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






38. 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






39. 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






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






41. 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






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






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






44. ATC = TC/Q = AFC + AVC






45. The difference between total revenue and total explicit costs






46. 0 < Ei < 1






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






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






49. 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






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