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Test your basic knowledge |
AP Microeconomics
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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 study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Collusive oligopoly
Public goods
Allocative Efficiency
Economics
2. The marginal utility from consumption of more and more of that item falls over time
Perfect competition
Cross-Price Elasticity of Demand
Average Variable Cost (AVC)
Law of Diminishing Marginal Utility
3. 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
Unit elastic demand
Marginal Benefit (MB)
Increasing Cost Industry
4. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Price Elasticity of Supply
Market power
Marginal Product of Labor (MPL)
Inferior Goods
5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Relative Prices
Short run
Total Welfare
Monopoly long-run equilibrium
6. A good for which higher income decreases demand
Inferior Goods
Normal Goods
Shutdown Point
Price elasticity
7. The mechanism for combining production resources - with existing technology - into finished goods and services
Economic Profit
Production function
Productive Efficiency
Determinants of elasticity
8. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Average Variable Cost (AVC)
Productive Efficiency
Law of Increasing Costs
Consumer surplus
9. 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
Excess Capacity
Public goods
Excise Tax
Market Equilibrium
10. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Constant Returns to Scale
Total Fixed Costs (TFC)
Spillover benefits
11. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of Demand
Marginal Product of Labor (MPL)
Law of Demand
Determinants of elasticity
12. 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
Dead Weight Loss
Total Revenue Test
Spillover costs
Shutdown Point
13. Occurs when LRAC is constant over a variety of plant sizes
Oligopoly
Constant Returns to Scale
Public goods
Natural Monopoly
14. 0 < Ei < 1
Marginal Cost (MC)
Marginal Analysis
Necessity
Long Run
15. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Absolute prices
Marginal Productivity Theory
Productive Efficiency
Constant cost industry
16. The imbalance between limited productive resources and unlimited human wants
Accounting Profit
Scarcity
Economies of Scale
Price elasticity
17. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Luxury
Complementary Goods
Natural Monopoly
18. 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
Short run
Total Welfare
Total Revenue Test
Determinants of Demand
19. 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
Specialization
Substitute Goods
Opportunity Cost
Private goods
20. 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
Marginal Resource Cost (MRC)
Perfectly inelastic
Accounting Profit
Free-Rider Problem
21. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Law of Diminishing Marginal Utility
Market Economy (Capitalism)
Substitute Goods
Average Variable Cost (AVC)
22. The output where ATC is minimized and economic profit is zero
Demand for Labor
Break-even Point
Income Elasticity
Unit elastic demand
23. AVC = TVC/Q
Income Elasticity
Average Variable Cost (AVC)
Economic Profit
Total Product of Labor (TPL)
24. 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
Average Variable Cost (AVC)
Four-firm concentration ratio
Absolute Advantage
Oligopoly
25. Ei > 1
Luxury
Necessity
Producer surplus
Market power
26. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Resources
Marginal Revenue Product (MRP)
Marginal tax rate
27. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Subsidy
Break-even Point
Substitute Goods
Natural Monopoly
28. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Demand for Labor
Law of Demand
Law of Increasing Costs
Normal Goods
29. Product demand - productivity - prices of other resources - and complementary resources
Constrained Utility Maximization
Determinants of Labor Demand
Economies of Scale
Increasing Cost Industry
30. 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.
Necessity
Diseconomies of Scale
Explicit costs
Perfectly elastic
31. Ed = 1
Spillover benefits
Total variable costs (TVC)
Unit elastic demand
Collusive oligopoly
32. Ed = 8 - infinite change in demand to price change
Economic Profit
Perfectly elastic
Opportunity Cost
Determinants of Supply
33. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Profit Maximizing Resource Employment
Four-firm concentration ratio
Monopolistic competition
Price floor
34. Ed < 1
Positive externality
Marginal Resource Cost (MRC)
Necessity
Price inelastic demand
35. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Price floor
Diseconomies of Scale
Utility Maximizing Rule
36. The ability to set the price above the perfectly competitive level
Monopolistic competition
Market power
Price discrimination
Income Effect
37. 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
Price elastic demand
Incidence of Tax
Substitution Effect
Economics
38. Exists at the point where the quantity supplied equals the quantity demanded
Perfect competition
Market Equilibrium
Price Ceiling
Price elastic demand
39. Entry of new firms shifts the cost curves for all firms upward
Incidence of Tax
Consumer surplus
Price floor
Increasing Cost Industry
40. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Excise Tax
Absolute Advantage
Monopoly
Economic Growth
41. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Economic Profit
Utility Maximizing Rule
Natural Monopoly
Excise Tax
42. Ed > 1 - meaning consumers are price sensitive
Necessity
Accounting Profit
Price elastic demand
Total Fixed Costs (TFC)
43. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Price elastic demand
Average Total Cost (ATC)
Derived Demand
Productive Efficiency
44. Ed = 0 - no response to price change
Specialization
Perfectly inelastic
Subsidy
Spillover benefits
45. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Perfect competition
Constant Returns to Scale
Short run
Utility Maximizing Rule
46. 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
Total Fixed Costs (TFC)
Shutdown Point
Positive externality
47. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Economies of Scale
Price elastic demand
Marginal Product of Labor (MPL)
48. 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
Average Product of Labor (APL)
Resources
Price floor
Increasing Cost Industry
49. The difference between total revenue and total explicit and implicit costs
Economic Profit
Marginal Product of Labor (MPL)
Price Elasticity of Supply
Marginal Cost (MC)
50. 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
Specialization
Total variable costs (TVC)
Oligopoly
Resources