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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. The difference between total revenue and total explicit costs






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






3. 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






4. Occurs when LRAC is constant over a variety of plant sizes






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






6. The rational decision maker chooses an action if MB = MC






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






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






9. 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






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






11. 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






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






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






14. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






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






16. Demand for a resource like labor is derived from the demand for the goods produced by the resource






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






18. ATC = TC/Q = AFC + AVC






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






20. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






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






22. 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






23. 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






24. The marginal utility from consumption of more and more of that item falls over time






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






26. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






27. 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






28. AFC = TFC/Q






29. 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






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






31. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






32. Costs that change with the level of output. If output is zero - so are TVCs.






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






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






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






36. Ed > 1 - meaning consumers are price sensitive






37. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






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






39. Ed = 1






40. When firms focus their resources on production of goods for which they have comparative advantage






41. Ei > 1






42. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






43. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






44. AVC = TVC/Q






45. The difference between total revenue and total explicit and implicit costs






46. 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






47. 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






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






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






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