Test your basic knowledge |

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. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






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






3. Two goods are consumer substitutes if they provide essentially the same utility to consumers






4. Entry of new firms shifts the cost curves for all firms upward






5. Models where firms agree to mutually improve their situation






6. The total quantity - or total output of a good produced at each quantity of labor employed






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






8. Exists at the point where the quantity supplied equals the quantity demanded






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






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






11. A firm that has market power in the factor market (a wage-setter)






12. A good for which higher income increases demand






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






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






15. TR = P * Qd






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






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






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






19. Ed < 1






20. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






21. Es = (%dQs) / (%dPrice)






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






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






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






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.






26. The output where ATC is minimized and economic profit is zero






27. MUx / Px = MUy/Py or MUx/MUy = Px/Py






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






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






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






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






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






33. The most desirable alternative given up as the result of a decision






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






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






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






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






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






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






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






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






42. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






43. Ed > 1 - meaning consumers are price sensitive






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






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






46. The difference between total revenue and total explicit costs






47. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






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






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






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