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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. A firm that has market power in the factor market (a wage-setter)
Marginal Benefit (MB)
Monopsonist
Law of Demand
Perfectly inelastic
2. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Total Welfare
Normal Goods
Substitution Effect
3. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Marginal Analysis
Excess Capacity
Accounting Profit
Fixed inputs
4. 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
Determinants of Supply
Oligopoly
Opportunity Cost
Complementary Goods
5. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Spillover benefits
Allocative Efficiency
Demand for Labor
6. 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
Four-firm concentration ratio
Cross-Price Elasticity of Demand
Economies of Scale
Marginal Productivity Theory
7. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Positive externality
Average Variable Cost (AVC)
Monopoly
Free-Rider Problem
8. 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
Total variable costs (TVC)
Price floor
Substitute Goods
Cross-Price Elasticity of Demand
9. 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
Accounting Profit
Inferior Goods
Non-collusive oligopoly
Short run
10. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Income Elasticity
Specialization
Average Fixed Cost (AFC)
11. 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
Price inelastic demand
Negative externality
Resources
Marginal Resource Cost (MRC)
12. 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
Shutdown Point
Constrained Utility Maximization
Total Product of Labor (TPL)
Marginal Cost (MC)
13. The difference between total revenue and total explicit and implicit costs
Derived Demand
Economic Profit
Marginal Resource Cost (MRC)
Surplus
14. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Shortage
Excise Tax
Specialization
15. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Monopolistic competition
Negative externality
Economic Profit
Non-collusive oligopoly
16. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Cross-Price Elasticity of Demand
Economic Profit
Excise Tax
17. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Public goods
Natural Monopoly
Inferior Goods
Variable inputs
18. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Implicit costs
Short run
Perfectly competitive long-run equilibrium
Inferior Goods
19. Exists at the point where the quantity supplied equals the quantity demanded
Cartel
Monopoly long-run equilibrium
Market Equilibrium
Substitute Goods
20. 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
Dead Weight Loss
Determinants of Demand
Unit elastic demand
Spillover costs
21. 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
Determinants of Supply
Average Variable Cost (AVC)
Monopoly long-run equilibrium
Perfectly elastic
22. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Average Total Cost (ATC)
Income Elasticity
Subsidy
Demand for Labor
23. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Law of Demand
Average Variable Cost (AVC)
Complementary Goods
Excise Tax
24. Ei = (%dQd good X)/(%d Income)
Marginal Cost (MC)
Total Product of Labor (TPL)
Income Elasticity
Specialization
25. Ed = 0 - no response to price change
Law of Diminishing Marginal Utility
Free-Rider Problem
Perfectly inelastic
Shutdown Point
26. The mechanism for combining production resources - with existing technology - into finished goods and services
Opportunity Cost
Short run
Production function
Relative Prices
27. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Long Run
Determinants of elasticity
Total Revenue Test
Marginal tax rate
28. 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
Constrained Utility Maximization
Spillover benefits
Average Total Cost (ATC)
Monopoly long-run equilibrium
29. Ei > 1
Luxury
Free-Rider Problem
Absolute Advantage
Resources
30. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Law of Supply
Substitution Effect
Necessity
Perfectly elastic
31. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Productive Efficiency
Increasing Cost Industry
Long Run
Total Fixed Costs (TFC)
32. The rational decision maker chooses an action if MB = MC
Implicit costs
Marginal Analysis
Four-firm concentration ratio
Law of Diminishing Marginal Utility
33. Ed < 1
Production function
Spillover benefits
Oligopoly
Price inelastic demand
34. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Price floor
Resources
Determinants of Labor Demand
35. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Subsidy
Constrained Utility Maximization
Long Run
Allocative Efficiency
36. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Determinants of Labor Demand
Average Total Cost (ATC)
Monopolistic competition
Determinants of Demand
37. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Income Elasticity
Price elasticity
Economic Growth
Determinants of Demand
38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Average Product of Labor (APL)
Profit Maximizing Resource Employment
Incidence of Tax
Resources
39. Ed > 1 - meaning consumers are price sensitive
Complementary Goods
Marginal Revenue Product (MRP)
Economic Growth
Price elastic demand
40. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Marginal Cost (MC)
Law of Increasing Costs
Complementary Goods
Excess Capacity
41. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Variable inputs
Complementary Goods
Production function
42. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Price Elasticity of Supply
Production function
Allocative Efficiency
Perfectly competitive long-run equilibrium
43. Models where firms agree to mutually improve their situation
Production function
Decreasing Cost industry
Collusive oligopoly
Income Elasticity
44. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Economics
Subsidy
Shortage
Income Effect
45. The practice of selling essentially the same good to different groups of consumers at different prices
Resources
Price discrimination
Normal Profit
Subsidy
46. 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
Law of Diminishing Marginal Utility
Marginal Analysis
Price inelastic demand
Cartel
47. 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 Productivity Theory
Total Fixed Costs (TFC)
Market Economy (Capitalism)
48. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Absolute prices
Monopolistic competition long-run equilibrium
Profit Maximizing Rule
Total Revenue Test
49. The most desirable alternative given up as the result of a decision
Positive externality
Shortage
Opportunity Cost
Fixed inputs
50. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Absolute Advantage
Price elastic demand
Constant cost industry
Marginal Benefit (MB)