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






2. A good for which higher income increases demand






3. The sum of consumer surplus and producer surplus






4. 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






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






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






7. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






8. Exists if a producer can produce more of a good than all other producers






9. 0 < Ei < 1






10. Ed = 1






11. ATC = TC/Q = AFC + AVC






12. TR = P * Qd






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






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






15. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






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






17. 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






18. The imbalance between limited productive resources and unlimited human wants






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






20. Occurs when LRAC is constant over a variety of plant sizes






21. Costs that change with the level of output. If output is zero - so are TVCs.






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






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






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






25. 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






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






27. Ed = (%dQd)/(%dP). Ignore negative sign






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






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






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






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






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






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






34. Ed < 1






35. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






36. The difference between total revenue and total explicit costs






37. A good for which higher income decreases demand






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






39. 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






40. Models where firms agree to mutually improve their situation






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






42. 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






43. Ei > 1






44. AVC = TVC/Q






45. 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.






46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






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






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






49. 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






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