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AP Microeconomics

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. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






2. Ed = 1






3. 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






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






5. 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






6. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






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






8. 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






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






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






11. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






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






13. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






14. A good for which higher income decreases demand






15. 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






16. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






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






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






19. 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






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






21. Ed = (%dQd)/(%dP). Ignore negative sign






22. 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






23. 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.






24. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






25. The difference between total revenue and total explicit costs






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






27. Ei = (%dQd good X)/(%d Income)






28. The ability to set the price above the perfectly competitive level






29. 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






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






31. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






32. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






33. Ed = 0 - no response to price change






34. Es = (%dQs) / (%dPrice)






35. 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






36. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






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






38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






39. Models where firms are competitive rivals seeking to gain at the expense of their rivals






40. 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






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






42. The price of a good measured in units of currency






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






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






45. A good for which higher income increases demand






46. The sum of consumer surplus and producer surplus






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






48. Entry of new firms shifts the cost curves for all firms upward






49. 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






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






Can you answer 50 questions in 15 minutes?



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