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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. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Four-firm concentration ratio
Long Run
Non-collusive oligopoly
Spillover costs
2. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Dead Weight Loss
Shortage
Explicit costs
Comparative Advantage
3. 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
Market power
Shutdown Point
Average Variable Cost (AVC)
Natural Monopoly
4. Es = (%dQs) / (%dPrice)
Average Fixed Cost (AFC)
Price Elasticity of Supply
Law of Demand
Private goods
5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Price elasticity
Marginal Benefit (MB)
Relative Prices
Oligopoly
6. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Economies of Scale
Monopolistic competition long-run equilibrium
Collusive oligopoly
Price Ceiling
7. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Monopoly
Long Run
Constrained Utility Maximization
Perfect competition
8. Ei = (%dQd good X)/(%d Income)
Free-Rider Problem
Monopoly long-run equilibrium
Marginal Analysis
Income Elasticity
9. 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
Average Total Cost (ATC)
Law of Diminishing Marginal Utility
Profit Maximizing Resource Employment
Oligopoly
10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Total Revenue
Marginal Product of Labor (MPL)
Perfect competition
Natural Monopoly
11. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Consumer surplus
Determinants of Demand
Scarcity
12. 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
Public goods
Monopoly
Income Elasticity
Monopsonist
13. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Spillover benefits
Explicit costs
Oligopoly
Perfect competition
14. When firms focus their resources on production of goods for which they have comparative advantage
Marginal Benefit (MB)
Fixed inputs
Explicit costs
Specialization
15. The difference between total revenue and total explicit and implicit costs
Price Elasticity of Supply
Marginal Resource Cost (MRC)
Economic Profit
Cross-Price Elasticity of Demand
16. A good for which higher income increases demand
Complementary Goods
Normal Goods
Opportunity Cost
Natural Monopoly
17. The sum of consumer surplus and producer surplus
Determinants of Supply
Market Equilibrium
Total Welfare
Productive Efficiency
18. AFC = TFC/Q
Constant Returns to Scale
Constrained Utility Maximization
Average Fixed Cost (AFC)
Absolute Advantage
19. The most desirable alternative given up as the result of a decision
Four-firm concentration ratio
Cartel
Public goods
Opportunity Cost
20. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Implicit costs
Total Revenue Test
Collusive oligopoly
21. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Marginal Resource Cost (MRC)
Implicit costs
Average Total Cost (ATC)
Price elasticity
22. The price of a good measured in units of currency
Monopoly long-run equilibrium
Price Ceiling
Marginal Cost (MC)
Absolute prices
23. 0 < Ei < 1
Specialization
Profit Maximizing Resource Employment
Constant cost industry
Necessity
24. 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
Dead Weight Loss
Total Welfare
Diseconomies of Scale
25. The total quantity - or total output of a good produced at each quantity of labor employed
Market Equilibrium
Variable inputs
Total Product of Labor (TPL)
Utility Maximizing Rule
26. Product demand - productivity - prices of other resources - and complementary resources
Total Fixed Costs (TFC)
Determinants of Labor Demand
Law of Supply
Price elastic demand
27. The rational decision maker chooses an action if MB = MC
Economic Profit
Marginal Analysis
Accounting Profit
Luxury
28. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Natural Monopoly
Spillover benefits
Shutdown Point
Surplus
29. The practice of selling essentially the same good to different groups of consumers at different prices
Determinants of Demand
Price discrimination
Short run
Spillover benefits
30. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Absolute prices
Law of Increasing Costs
Perfectly elastic
Accounting Profit
31. Ed > 1 - meaning consumers are price sensitive
Price discrimination
Price elastic demand
Increasing Cost Industry
Implicit costs
32. TR = P * Qd
Determinants of Demand
Total Revenue
Production function
Specialization
33. The output where ATC is minimized and economic profit is zero
Perfectly inelastic
Inferior Goods
Market power
Break-even Point
34. Ed < 1
Marginal Product of Labor (MPL)
Variable inputs
Implicit costs
Price inelastic demand
35. Ed = 0 - no response to price change
Average Variable Cost (AVC)
Perfectly inelastic
Economies of Scale
Allocative Efficiency
36. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Total Revenue Test
Economic Growth
Marginal Benefit (MB)
Normal Goods
37. 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
Allocative Efficiency
Total Welfare
Collusive oligopoly
Total Revenue Test
38. 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
Economics
Cartel
Private goods
Normal Profit
39. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Income Elasticity
Perfectly competitive long-run equilibrium
Law of Demand
Incidence of Tax
40. Ed = (%dQd)/(%dP). Ignore negative sign
Constant cost industry
Price elasticity
Opportunity Cost
Derived Demand
41. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Economies of Scale
Spillover benefits
Utility Maximizing Rule
Shortage
42. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Economics
Monopoly long-run equilibrium
Determinants of Demand
43. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Determinants of Labor Demand
Complementary Goods
Average Product of Labor (APL)
Least-Cost Rule
44. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Substitute Goods
Spillover benefits
Determinants of Demand
Total Revenue
45. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Average Product of Labor (APL)
Negative externality
Constant Returns to Scale
Specialization
46. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Total Revenue Test
Break-even Point
Profit Maximizing Rule
47. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Price elastic demand
Determinants of Labor Demand
Marginal Productivity Theory
Determinants of elasticity
48. 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
Increasing Cost Industry
Marginal tax rate
Economic Growth
Producer surplus
49. 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
Economic Profit
Determinants of Demand
Four-firm concentration ratio
Market Equilibrium
50. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Productive Efficiency
Utility Maximizing Rule
Price elasticity
Derived Demand