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






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






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






4. ATC = TC/Q = AFC + AVC






5. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






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






7. Total product divided by labor employed. APL = TPL/L






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






9. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






10. The additional benefit received from the consumption of the next unit of a good or service






11. 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






12. 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






13. A good for which higher income increases demand






14. Ei > 1






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






16. AFC = TFC/Q






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






18. The practice of selling essentially the same good to different groups of consumers at different prices






19. 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






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






21. The lost net benefit to society caused by a movement away from the competitive market equilibrium






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






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






25. 0 < Ei < 1






26. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






27. 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






28. The difference between total revenue and total explicit costs






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






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






31. 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






32. 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






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






34. Product demand - productivity - prices of other resources - and complementary resources






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






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






37. Models where firms agree to mutually improve their situation






38. A firm that has market power in the factor market (a wage-setter)






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






40. The most desirable alternative given up as the result of a decision






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






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






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






44. TR = P * Qd






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






46. 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






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






48. Ed = 0 - no response to price change






49. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






50. 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







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