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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. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Normal Profit
Substitution Effect
Monopolistic competition long-run equilibrium
Opportunity Cost
2. Occurs when LRAC is constant over a variety of plant sizes
Collusive oligopoly
Constant Returns to Scale
Subsidy
Price elastic demand
3. All firms maximize profit by producing where MR = MC
Marginal Benefit (MB)
Profit Maximizing Rule
Perfect competition
Subsidy
4. Models where firms agree to mutually improve their situation
Average Product of Labor (APL)
Total Revenue
Collusive oligopoly
Shortage
5. The marginal utility from consumption of more and more of that item falls over time
Allocative Efficiency
Law of Diminishing Marginal Utility
Determinants of elasticity
Law of Demand
6. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Average Variable Cost (AVC)
Consumer surplus
Perfectly inelastic
Total Fixed Costs (TFC)
7. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Complementary Goods
Implicit costs
Constrained Utility Maximization
8. A good for which higher income increases demand
Economics
Normal Goods
Price floor
Total variable costs (TVC)
9. Product demand - productivity - prices of other resources - and complementary resources
Economics
Oligopoly
Determinants of Labor Demand
Derived Demand
10. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Long Run
Public goods
Accounting Profit
11. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Cross-Price Elasticity of Demand
Perfectly competitive long-run equilibrium
Marginal Resource Cost (MRC)
Short run
12. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal tax rate
Producer surplus
Monopsonist
Demand for Labor
13. 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
Comparative Advantage
Total Revenue
Monopoly
14. The difference between total revenue and total explicit costs
Accounting Profit
Decreasing Cost industry
Unit elastic demand
Profit Maximizing Rule
15. The total quantity - or total output of a good produced at each quantity of labor employed
Inferior Goods
Marginal Cost (MC)
Price inelastic demand
Total Product of Labor (TPL)
16. 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
Incidence of Tax
Constrained Utility Maximization
Natural Monopoly
Four-firm concentration ratio
17. Ed = (%dQd)/(%dP). Ignore negative sign
Collusive oligopoly
Price Ceiling
Price elasticity
Least-Cost Rule
18. The difference between total revenue and total explicit and implicit costs
Economic Profit
Total variable costs (TVC)
Producer surplus
Marginal Productivity Theory
19. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Total Product of Labor (TPL)
Public goods
Constant cost industry
Non-collusive oligopoly
20. The output where ATC is minimized and economic profit is zero
Break-even Point
Specialization
Total variable costs (TVC)
Least-Cost Rule
21. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Substitute Goods
Price elasticity
Specialization
Shortage
22. The practice of selling essentially the same good to different groups of consumers at different prices
Normal Profit
Break-even Point
Long Run
Price discrimination
23. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Marginal Analysis
Implicit costs
Four-firm concentration ratio
24. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Producer surplus
Marginal Resource Cost (MRC)
Substitute Goods
Spillover costs
25. 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
Least-Cost Rule
Perfectly competitive long-run equilibrium
Constant Returns to Scale
Price Ceiling
26. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Marginal Analysis
Total Product of Labor (TPL)
Price inelastic demand
27. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Perfectly inelastic
Profit Maximizing Rule
Market Economy (Capitalism)
Utility Maximizing Rule
28. 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
Opportunity Cost
Producer surplus
Demand for Labor
Negative externality
29. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Excess Capacity
Determinants of Supply
Total Welfare
Economic Growth
30. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Normal Profit
Utility Maximizing Rule
Law of Increasing Costs
Demand for Labor
31. 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
Spillover costs
Perfectly competitive long-run equilibrium
Price elasticity
Subsidy
32. 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
Price Elasticity of Supply
Marginal Productivity Theory
Diseconomies of Scale
Four-firm concentration ratio
33. Ei = (%dQd good X)/(%d Income)
Constant Returns to Scale
Income Elasticity
Perfect competition
Break-even Point
34. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Law of Diminishing Marginal Utility
Perfectly competitive long-run equilibrium
Negative externality
35. The ability to set the price above the perfectly competitive level
Productive Efficiency
Market power
Income Effect
Incidence of Tax
36. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Profit Maximizing Rule
Inferior Goods
Cartel
37. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Total Revenue Test
Market Equilibrium
Cartel
Monopolistic competition
38. Exists at the point where the quantity supplied equals the quantity demanded
Public goods
Perfectly elastic
Average Fixed Cost (AFC)
Market Equilibrium
39. The sum of consumer surplus and producer surplus
Opportunity Cost
Total Welfare
Long Run
Spillover benefits
40. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Production function
Break-even Point
Marginal Benefit (MB)
41. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Spillover costs
Dead Weight Loss
Price Elasticity of Supply
Monopoly
42. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Price inelastic demand
Normal Profit
Profit Maximizing Rule
Total Welfare
43. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfectly elastic
Perfect competition
Production function
Price Elasticity of Supply
44. 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
Utility Maximizing Rule
Market Equilibrium
Oligopoly
Natural Monopoly
45. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Marginal tax rate
Perfectly inelastic
Marginal Revenue Product (MRP)
46. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Total Product of Labor (TPL)
Price Ceiling
Resources
Inferior Goods
47. 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.
Average Fixed Cost (AFC)
Economies of Scale
Demand for Labor
Positive externality
48. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Monopsonist
Average Product of Labor (APL)
Luxury
49. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Non-collusive oligopoly
Comparative Advantage
Normal Goods
Explicit costs
50. 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
Substitution Effect
Excess Capacity
Specialization