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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. Entry of new firms shifts the cost curves for all firms upward
Monopoly long-run equilibrium
Increasing Cost Industry
Marginal Analysis
Law of Demand
2. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Spillover benefits
Demand for Labor
Perfect competition
Luxury
3. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Marginal Analysis
Marginal tax rate
Average Fixed Cost (AFC)
4. Ei > 1
Private goods
Inferior Goods
Marginal Productivity Theory
Luxury
5. 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
Monopoly
Consumer surplus
Shutdown Point
Determinants of Supply
6. The most desirable alternative given up as the result of a decision
Opportunity Cost
Market power
Marginal Productivity Theory
Monopoly
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
Shortage
Excise Tax
Public goods
Long Run
8. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Marginal Revenue Product (MRP)
Increasing Cost Industry
Income Elasticity
Market Economy (Capitalism)
9. The rational decision maker chooses an action if MB = MC
Market power
Marginal Analysis
Increasing Cost Industry
Marginal Resource Cost (MRC)
10. 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.
Marginal Revenue Product (MRP)
Productive Efficiency
Absolute Advantage
Production function
11. 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
Total Fixed Costs (TFC)
Profit Maximizing Rule
Public goods
Least-Cost Rule
12. Models where firms agree to mutually improve their situation
Collusive oligopoly
Total Welfare
Normal Goods
Marginal Product of Labor (MPL)
13. TR = P * Qd
Perfectly competitive long-run equilibrium
Price Ceiling
Total Revenue
Scarcity
14. Es = (%dQs) / (%dPrice)
Price discrimination
Shortage
Price Elasticity of Supply
Long Run
15. Exists at the point where the quantity supplied equals the quantity demanded
Price elasticity
Average Fixed Cost (AFC)
Demand for Labor
Market Equilibrium
16. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Accounting Profit
Variable inputs
Marginal Benefit (MB)
Average Product of Labor (APL)
17. The difference between total revenue and total explicit costs
Marginal Product of Labor (MPL)
Profit Maximizing Resource Employment
Natural Monopoly
Accounting Profit
18. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Law of Diminishing Marginal Utility
Total Revenue Test
Derived Demand
19. AFC = TFC/Q
Marginal Resource Cost (MRC)
Absolute prices
Average Fixed Cost (AFC)
Determinants of elasticity
20. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Marginal Resource Cost (MRC)
Income Effect
Market power
Spillover benefits
21. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Increasing Cost Industry
Allocative Efficiency
Unit elastic demand
Utility Maximizing Rule
22. All firms maximize profit by producing where MR = MC
Incidence of Tax
Profit Maximizing Rule
Cartel
Price elasticity
23. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Excess Capacity
Determinants of Demand
Marginal Revenue Product (MRP)
24. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Subsidy
Economics
Substitution Effect
Short run
25. AVC = TVC/Q
Price discrimination
Shortage
Absolute prices
Average Variable Cost (AVC)
26. The difference between total revenue and total explicit and implicit costs
Production function
Price Elasticity of Supply
Perfectly inelastic
Economic Profit
27. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Accounting Profit
Four-firm concentration ratio
Consumer surplus
Monopolistic competition
28. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfect competition
Short run
Normal Profit
Dead Weight Loss
29. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Positive externality
Relative Prices
Law of Supply
30. The sum of consumer surplus and producer surplus
Constant Returns to Scale
Long Run
Non-collusive oligopoly
Total Welfare
31. 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
Price floor
Constant Returns to Scale
Constrained Utility Maximization
Price elasticity
32. 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
Price elastic demand
Explicit costs
Short run
Marginal Revenue Product (MRP)
33. A good for which higher income decreases demand
Inferior Goods
Substitute Goods
Comparative Advantage
Determinants of elasticity
34. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Total Fixed Costs (TFC)
Accounting Profit
Shutdown Point
35. The output where ATC is minimized and economic profit is zero
Law of Increasing Costs
Diseconomies of Scale
Monopsonist
Break-even Point
36. Ed = 0 - no response to price change
Perfect competition
Production function
Absolute prices
Perfectly inelastic
37. The practice of selling essentially the same good to different groups of consumers at different prices
Law of Diminishing Marginal Utility
Price discrimination
Price Elasticity of Supply
Opportunity Cost
38. 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
Absolute prices
Spillover costs
Allocative Efficiency
Incidence of Tax
39. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Dead Weight Loss
Spillover benefits
Profit Maximizing Resource Employment
Relative Prices
40. 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
Cross-Price Elasticity of Demand
Economic Growth
Specialization
Profit Maximizing Resource Employment
41. Occurs when LRAC is constant over a variety of plant sizes
Fixed inputs
Market power
Constant Returns to Scale
Specialization
42. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Income Elasticity
Excess Capacity
Surplus
Marginal Cost (MC)
43. Entry of new firms shifts the cost curves for all firms downward
Incidence of Tax
Cross-Price Elasticity of Demand
Implicit costs
Decreasing Cost industry
44. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Increasing Cost Industry
Resources
Derived Demand
45. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Normal Goods
Surplus
Perfectly elastic
46. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Monopoly
Accounting Profit
Economics
47. 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
Variable inputs
Scarcity
Free-Rider Problem
Price discrimination
48. The marginal utility from consumption of more and more of that item falls over time
Market Equilibrium
Total Product of Labor (TPL)
Law of Diminishing Marginal Utility
Long Run
49. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Collusive oligopoly
Monopolistic competition
Law of Supply
Absolute prices
50. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Price inelastic demand
Constant Returns to Scale
Economic Growth
Free-Rider Problem