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Test your basic knowledge |
AP Microeconomics
Start Test
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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. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Normal Goods
Least-Cost Rule
Perfectly inelastic
Subsidy
2. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Cartel
Constant Returns to Scale
Four-firm concentration ratio
3. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Marginal Product of Labor (MPL)
Substitute Goods
Marginal Analysis
Dead Weight Loss
4. Entry of new firms shifts the cost curves for all firms upward
Price inelastic demand
Explicit costs
Increasing Cost Industry
Constant Returns to Scale
5. Models where firms agree to mutually improve their situation
Producer surplus
Price elasticity
Public goods
Collusive oligopoly
6. The total quantity - or total output of a good produced at each quantity of labor employed
Collusive oligopoly
Determinants of elasticity
Total Product of Labor (TPL)
Total Fixed Costs (TFC)
7. The rational decision maker chooses an action if MB = MC
Implicit costs
Diseconomies of Scale
Marginal Analysis
Marginal Product of Labor (MPL)
8. Exists at the point where the quantity supplied equals the quantity demanded
Determinants of Labor Demand
Shutdown Point
Determinants of Demand
Market Equilibrium
9. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Producer surplus
Total Revenue Test
Non-collusive oligopoly
Average Product of Labor (APL)
10. The difference between total revenue and total explicit and implicit costs
Accounting Profit
Opportunity Cost
Long Run
Economic Profit
11. A firm that has market power in the factor market (a wage-setter)
Complementary Goods
Collusive oligopoly
Substitution Effect
Monopsonist
12. A good for which higher income increases demand
Implicit costs
Normal Goods
Price inelastic demand
Private goods
13. 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
Collusive oligopoly
Incidence of Tax
Market Equilibrium
Total Product of Labor (TPL)
14. Ei = (%dQd good X)/(%d Income)
Economics
Determinants of Supply
Income Elasticity
Decreasing Cost industry
15. TR = P * Qd
Monopolistic competition
Total Revenue Test
Total Revenue
Complementary Goods
16. 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
Marginal Analysis
Absolute prices
Perfectly inelastic
Least-Cost Rule
17. 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
Short run
Private goods
Profit Maximizing Resource Employment
Necessity
18. 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
Profit Maximizing Rule
Total Welfare
Absolute prices
Consumer surplus
19. Ed < 1
Price inelastic demand
Demand for Labor
Constant Returns to Scale
Perfectly inelastic
20. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Shutdown Point
Total Revenue Test
Fixed inputs
Economic Profit
21. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Long Run
Absolute Advantage
Break-even Point
22. 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
Diseconomies of Scale
Determinants of Supply
Break-even Point
Accounting Profit
23. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Luxury
Profit Maximizing Resource Employment
Marginal Benefit (MB)
Variable inputs
24. 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
Positive externality
Average Product of Labor (APL)
Marginal tax rate
Diseconomies of Scale
25. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Determinants of elasticity
Diseconomies of Scale
Market Equilibrium
Determinants of Supply
26. The output where ATC is minimized and economic profit is zero
Marginal Productivity Theory
Break-even Point
Price Ceiling
Spillover benefits
27. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Incidence of Tax
Marginal Benefit (MB)
Total Product of Labor (TPL)
Utility Maximizing Rule
28. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Perfect competition
Marginal Resource Cost (MRC)
Normal Goods
Determinants of Labor Demand
29. Total product divided by labor employed. APL = TPL/L
Price Ceiling
Total Revenue
Economics
Average Product of Labor (APL)
30. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Normal Goods
Necessity
Positive externality
Comparative Advantage
31. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Substitution Effect
Constant Returns to Scale
Spillover benefits
Total Revenue Test
32. The practice of selling essentially the same good to different groups of consumers at different prices
Excess Capacity
Explicit costs
Price discrimination
Total Revenue
33. The most desirable alternative given up as the result of a decision
Allocative Efficiency
Short run
Production function
Opportunity Cost
34. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Non-collusive oligopoly
Profit Maximizing Resource Employment
Total Revenue Test
Total Fixed Costs (TFC)
35. The ability to set the price above the perfectly competitive level
Subsidy
Average Total Cost (ATC)
Market power
Break-even Point
36. The price of a good measured in units of currency
Consumer surplus
Absolute prices
Average Fixed Cost (AFC)
Oligopoly
37. 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
Collusive oligopoly
Economics
Substitute Goods
38. The marginal utility from consumption of more and more of that item falls over time
Scarcity
Law of Supply
Total Fixed Costs (TFC)
Law of Diminishing Marginal Utility
39. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Least-Cost Rule
Constant cost industry
Price floor
Necessity
40. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Marginal Productivity Theory
Monopolistic competition
Necessity
Price discrimination
41. 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
Perfectly competitive long-run equilibrium
Excess Capacity
Determinants of Demand
Shutdown Point
42. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Total Fixed Costs (TFC)
Variable inputs
Resources
Cartel
43. Ed > 1 - meaning consumers are price sensitive
Absolute prices
Average Variable Cost (AVC)
Price elastic demand
Increasing Cost Industry
44. 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
Collusive oligopoly
Average Product of Labor (APL)
Utility Maximizing Rule
Monopoly long-run equilibrium
45. 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
Price elasticity
Excess Capacity
Cross-Price Elasticity of Demand
Natural Monopoly
46. The difference between total revenue and total explicit costs
Subsidy
Relative Prices
Price Elasticity of Supply
Accounting Profit
47. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Excess Capacity
Scarcity
Short run
Explicit costs
48. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Monopolistic competition long-run equilibrium
Price floor
Law of Demand
Long Run
49. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Increasing Cost Industry
Demand for Labor
Total Revenue
Total Revenue Test
50. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Oligopoly
Derived Demand
Excise Tax
Average Fixed Cost (AFC)