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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 output where ATC is minimized and economic profit is zero






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






3. The difference between total revenue and total explicit costs






4. 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






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






6. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






7. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






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






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






10. 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






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






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






13. 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






14. 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






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






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






17. The change in quantity demanded resulting from a change in the price of one good relative to other goods






18. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






19. The price of a good measured in units of currency






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






21. Ed < 1






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






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






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






25. 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






26. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






27. Ed > 1 - meaning consumers are price sensitive






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






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






30. 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






31. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






32. AVC = TVC/Q






33. ATC = TC/Q = AFC + AVC






34. 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






35. 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






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






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






38. Ed = 1






39. 0 < Ei < 1






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






41. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






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






43. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






44. 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






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






46. 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






47. Exists if a producer can produce a good at lower opportunity cost than all other producers






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






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






50. 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