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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. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Producer surplus
Law of Supply
Absolute Advantage
Inferior Goods
2. A good for which higher income increases demand
Price floor
Law of Supply
Necessity
Normal Goods
3. The sum of consumer surplus and producer surplus
Total Product of Labor (TPL)
Four-firm concentration ratio
Total Welfare
Unit elastic demand
4. 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
Collusive oligopoly
Four-firm concentration ratio
Average Total Cost (ATC)
Marginal tax rate
5. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Four-firm concentration ratio
Economics
Perfect competition
Profit Maximizing Resource Employment
6. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Revenue Test
Law of Diminishing Marginal Utility
Law of Increasing Costs
Average Fixed Cost (AFC)
7. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Profit Maximizing Rule
Explicit costs
Complementary Goods
Economic Growth
8. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Relative Prices
Constant cost industry
Price floor
9. 0 < Ei < 1
Price floor
Necessity
Total Product of Labor (TPL)
Demand for Labor
10. Ed = 1
Monopoly long-run equilibrium
Explicit costs
Market Equilibrium
Unit elastic demand
11. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Fixed inputs
Marginal Resource Cost (MRC)
Economies of Scale
12. TR = P * Qd
Spillover costs
Marginal Revenue Product (MRP)
Total Revenue
Allocative Efficiency
13. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Monopolistic competition
Profit Maximizing Resource Employment
Constant Returns to Scale
Total Fixed Costs (TFC)
14. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Scarcity
Law of Supply
Accounting Profit
15. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Oligopoly
Income Effect
Price inelastic demand
Marginal tax rate
16. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Relative Prices
Law of Supply
Monopolistic competition
17. 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
Shortage
Oligopoly
Free-Rider Problem
Variable inputs
18. The imbalance between limited productive resources and unlimited human wants
Economies of Scale
Collusive oligopoly
Scarcity
Marginal tax rate
19. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Marginal tax rate
Resources
Negative externality
Perfectly inelastic
20. Occurs when LRAC is constant over a variety of plant sizes
Fixed inputs
Average Product of Labor (APL)
Constant Returns to Scale
Law of Demand
21. Costs that change with the level of output. If output is zero - so are TVCs.
Substitute Goods
Shutdown Point
Total variable costs (TVC)
Relative Prices
22. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Market power
Inferior Goods
Oligopoly
23. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Market Equilibrium
Productive Efficiency
Four-firm concentration ratio
24. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Monopoly long-run equilibrium
Short run
Decreasing Cost industry
25. 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
Spillover costs
Normal Profit
Economies of Scale
Price floor
26. Entry of new firms shifts the cost curves for all firms upward
Surplus
Market Equilibrium
Increasing Cost Industry
Demand for Labor
27. Ed = (%dQd)/(%dP). Ignore negative sign
Luxury
Demand for Labor
Price Elasticity of Supply
Price elasticity
28. The difference between total revenue and total explicit and implicit costs
Law of Increasing Costs
Price Ceiling
Economic Profit
Profit Maximizing Rule
29. The most desirable alternative given up as the result of a decision
Determinants of Demand
Total Revenue Test
Income Effect
Opportunity Cost
30. The output where ATC is minimized and economic profit is zero
Determinants of Supply
Determinants of Demand
Break-even Point
Increasing Cost Industry
31. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Average Product of Labor (APL)
Average Variable Cost (AVC)
Economies of Scale
Long Run
32. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Marginal Product of Labor (MPL)
Dead Weight Loss
Accounting Profit
Collusive oligopoly
33. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Unit elastic demand
Total Welfare
Shutdown Point
34. Ed < 1
Determinants of Labor Demand
Price inelastic demand
Comparative Advantage
Natural Monopoly
35. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Accounting Profit
Negative externality
Shortage
Determinants of elasticity
36. The difference between total revenue and total explicit costs
Accounting Profit
Dead Weight Loss
Production function
Specialization
37. A good for which higher income decreases demand
Marginal tax rate
Oligopoly
Inferior Goods
Explicit costs
38. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Marginal Analysis
Dead Weight Loss
Explicit costs
Law of Increasing Costs
39. 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
Income Elasticity
Perfectly competitive long-run equilibrium
Price floor
40. Models where firms agree to mutually improve their situation
Collusive oligopoly
Determinants of elasticity
Total Fixed Costs (TFC)
Utility Maximizing Rule
41. Product demand - productivity - prices of other resources - and complementary resources
Total Welfare
Accounting Profit
Price elastic demand
Determinants of Labor Demand
42. 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
Diseconomies of Scale
Cross-Price Elasticity of Demand
Profit Maximizing Resource Employment
Absolute prices
43. Ei > 1
Unit elastic demand
Consumer surplus
Luxury
Market Equilibrium
44. AVC = TVC/Q
Average Variable Cost (AVC)
Specialization
Determinants of Labor Demand
Productive Efficiency
45. 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.
Producer surplus
Economic Profit
Diseconomies of Scale
Average Total Cost (ATC)
46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Productive Efficiency
Marginal Resource Cost (MRC)
Short run
Normal Profit
47. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Least-Cost Rule
Complementary Goods
Unit elastic demand
Cross-Price Elasticity of Demand
48. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Determinants of elasticity
Excise Tax
Perfect competition
Derived Demand
49. 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
Public goods
Monopolistic competition
Perfectly competitive long-run equilibrium
Profit Maximizing Rule
50. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Absolute prices
Shutdown Point
Perfect competition
Law of Supply