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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. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Resources
Income Elasticity
Price discrimination
Producer surplus
2. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Derived Demand
Constrained Utility Maximization
Explicit costs
3. Exists if a producer can produce more of a good than all other producers
Constant Returns to Scale
Absolute Advantage
Economics
Surplus
4. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Surplus
Cartel
Determinants of Demand
Least-Cost Rule
5. AFC = TFC/Q
Price Elasticity of Supply
Determinants of Supply
Average Fixed Cost (AFC)
Perfectly elastic
6. 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
Constrained Utility Maximization
Inferior Goods
Economic Profit
Determinants of Supply
7. 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
Marginal tax rate
Shortage
Free-Rider Problem
Short run
8. Models where firms agree to mutually improve their situation
Scarcity
Price elasticity
Constant cost industry
Collusive oligopoly
9. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Least-Cost Rule
Public goods
Monopolistic competition
10. 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
Surplus
Total Welfare
Cross-Price Elasticity of Demand
Perfect competition
11. Costs that change with the level of output. If output is zero - so are TVCs.
Total variable costs (TVC)
Monopolistic competition
Determinants of Labor Demand
Law of Demand
12. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Monopolistic competition
Total Revenue Test
Non-collusive oligopoly
Total variable costs (TVC)
13. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Income Effect
Dead Weight Loss
Surplus
Perfectly elastic
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
Least-Cost Rule
Specialization
Four-firm concentration ratio
Monopolistic competition long-run equilibrium
15. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Surplus
Determinants of Supply
Positive externality
Determinants of Labor Demand
16. 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
Diseconomies of Scale
Spillover benefits
Spillover costs
Law of Demand
17. Ei > 1
Public goods
Perfectly competitive long-run equilibrium
Determinants of elasticity
Luxury
18. 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
Private goods
Monopolistic competition
Public goods
Average Variable Cost (AVC)
19. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Positive externality
Spillover costs
Total Fixed Costs (TFC)
Price floor
20. Entry of new firms shifts the cost curves for all firms downward
Total Product of Labor (TPL)
Decreasing Cost industry
Least-Cost Rule
Marginal Resource Cost (MRC)
21. 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
Marginal tax rate
Inferior Goods
Resources
Monopoly
22. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Producer surplus
Price Ceiling
Resources
Normal Profit
23. The imbalance between limited productive resources and unlimited human wants
Scarcity
Market Economy (Capitalism)
Law of Demand
Marginal Revenue Product (MRP)
24. The sum of consumer surplus and producer surplus
Income Effect
Spillover benefits
Total Welfare
Implicit costs
25. The additional cost incurred from the consumption of the next unit of a good or a service
Scarcity
Price inelastic demand
Marginal Cost (MC)
Economies of Scale
26. 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
Normal Goods
Perfectly elastic
Average Fixed Cost (AFC)
Spillover costs
27. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Marginal Revenue Product (MRP)
Economies of Scale
Profit Maximizing Resource Employment
Producer surplus
28. The most desirable alternative given up as the result of a decision
Positive externality
Natural Monopoly
Opportunity Cost
Average Total Cost (ATC)
29. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Demand for Labor
Diseconomies of Scale
Private goods
30. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Absolute Advantage
Allocative Efficiency
Utility Maximizing Rule
Shortage
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
Relative Prices
Constrained Utility Maximization
Least-Cost Rule
Total Fixed Costs (TFC)
32. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Natural Monopoly
Subsidy
Collusive oligopoly
Total Product of Labor (TPL)
33. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Long Run
Allocative Efficiency
Least-Cost Rule
Market Economy (Capitalism)
34. 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
Surplus
Perfectly elastic
Monopolistic competition
Incidence of Tax
35. The practice of selling essentially the same good to different groups of consumers at different prices
Marginal Benefit (MB)
Price elasticity
Scarcity
Price discrimination
36. A good for which higher income increases demand
Luxury
Marginal tax rate
Marginal Benefit (MB)
Normal Goods
37. Ed < 1
Substitution Effect
Shortage
Least-Cost Rule
Price inelastic demand
38. A firm that has market power in the factor market (a wage-setter)
Law of Supply
Determinants of Supply
Monopsonist
Market Equilibrium
39. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Substitution Effect
Price Ceiling
Economic Growth
Spillover costs
40. The marginal utility from consumption of more and more of that item falls over time
Price Ceiling
Law of Diminishing Marginal Utility
Profit Maximizing Resource Employment
Price elastic demand
41. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Total Fixed Costs (TFC)
Marginal Product of Labor (MPL)
Price discrimination
Productive Efficiency
42. Es = (%dQs) / (%dPrice)
Surplus
Cartel
Price inelastic demand
Price Elasticity of Supply
43. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Monopolistic competition
Marginal Product of Labor (MPL)
Productive Efficiency
Least-Cost Rule
44. 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
Determinants of Demand
Perfect competition
Private goods
Excess Capacity
45. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Market Equilibrium
Substitution Effect
Marginal Product of Labor (MPL)
Shortage
46. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Public goods
Law of Supply
Monopolistic competition long-run equilibrium
Surplus
47. Ed = 0 - no response to price change
Perfectly inelastic
Surplus
Normal Profit
Four-firm concentration ratio
48. 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
Least-Cost Rule
Economies of Scale
Determinants of elasticity
Short run
49. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Economics
Non-collusive oligopoly
Shortage
Perfectly elastic
50. 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
Production function
Marginal Benefit (MB)
Price elastic demand
Price floor