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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. Product demand - productivity - prices of other resources - and complementary resources
Perfectly inelastic
Monopoly long-run equilibrium
Determinants of Labor Demand
Complementary Goods
2. 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
Short run
Average Variable Cost (AVC)
Collusive oligopoly
Substitute Goods
3. Ei > 1
Long Run
Law of Demand
Luxury
Monopoly long-run equilibrium
4. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Economics
Consumer surplus
Dead Weight Loss
Constant cost industry
5. AVC = TVC/Q
Perfectly elastic
Total Revenue Test
Average Variable Cost (AVC)
Normal Profit
6. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Natural Monopoly
Luxury
Absolute prices
Monopoly
7. The ability to set the price above the perfectly competitive level
Diseconomies of Scale
Market power
Price elasticity
Marginal Benefit (MB)
8. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Absolute prices
Utility Maximizing Rule
Economic Growth
9. 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
Monopoly long-run equilibrium
Allocative Efficiency
Marginal Resource Cost (MRC)
Price discrimination
10. Entry of new firms shifts the cost curves for all firms upward
Opportunity Cost
Price floor
Increasing Cost Industry
Market power
11. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Marginal Resource Cost (MRC)
Excess Capacity
Economic Growth
12. The price of a good measured in units of currency
Constant cost industry
Comparative Advantage
Absolute prices
Fixed inputs
13. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Four-firm concentration ratio
Total Welfare
Marginal Product of Labor (MPL)
Normal Goods
14. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Dead Weight Loss
Productive Efficiency
Market power
Price floor
15. 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
Perfectly inelastic
Long Run
Spillover benefits
Relative Prices
16. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Price elasticity
Surplus
Constrained Utility Maximization
Total Welfare
17. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Total Welfare
Fixed inputs
Producer surplus
Price Ceiling
18. 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
Profit Maximizing Resource Employment
Fixed inputs
Marginal tax rate
Increasing Cost Industry
19. The most desirable alternative given up as the result of a decision
Opportunity Cost
Total Product of Labor (TPL)
Determinants of Labor Demand
Comparative Advantage
20. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Collusive oligopoly
Incidence of Tax
Determinants of Demand
Private goods
21. The practice of selling essentially the same good to different groups of consumers at different prices
Subsidy
Price discrimination
Total Product of Labor (TPL)
Long Run
22. 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
Shutdown Point
Spillover costs
Total variable costs (TVC)
23. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Positive externality
Market power
Increasing Cost Industry
24. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Specialization
Scarcity
Monopsonist
25. AFC = TFC/Q
Relative Prices
Determinants of Supply
Collusive oligopoly
Average Fixed Cost (AFC)
26. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Relative Prices
Subsidy
Collusive oligopoly
Monopoly
27. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Marginal Revenue Product (MRP)
Economic Growth
Excess Capacity
Decreasing Cost industry
28. A firm that has market power in the factor market (a wage-setter)
Normal Profit
Spillover costs
Monopsonist
Law of Supply
29. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Consumer surplus
Shortage
Cross-Price Elasticity of Demand
Least-Cost Rule
30. A good for which higher income increases demand
Absolute Advantage
Normal Goods
Total Fixed Costs (TFC)
Substitute Goods
31. Occurs when LRAC is constant over a variety of plant sizes
Economics
Derived Demand
Constant Returns to Scale
Law of Diminishing Marginal Utility
32. 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
Cartel
Producer surplus
Economies of Scale
Private goods
33. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Shortage
Average Fixed Cost (AFC)
Non-collusive oligopoly
Complementary Goods
34. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Four-firm concentration ratio
Fixed inputs
Perfectly inelastic
Producer surplus
35. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Normal Goods
Perfect competition
Consumer surplus
Relative Prices
36. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Cartel
Demand for Labor
Perfectly elastic
Monopsonist
37. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Oligopoly
Utility Maximizing Rule
Derived Demand
Profit Maximizing Resource Employment
38. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Price elastic demand
Monopoly long-run equilibrium
Utility Maximizing Rule
Market Equilibrium
39. The difference between total revenue and total explicit costs
Accounting Profit
Price inelastic demand
Collusive oligopoly
Surplus
40. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Constant Returns to Scale
Private goods
Substitution Effect
Price inelastic demand
41. Models where firms agree to mutually improve their situation
Incidence of Tax
Monopsonist
Inferior Goods
Collusive oligopoly
42. Exists if a producer can produce more of a good than all other producers
Average Variable Cost (AVC)
Perfectly inelastic
Marginal Cost (MC)
Absolute Advantage
43. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Determinants of Supply
Specialization
Profit Maximizing Resource Employment
44. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Price Elasticity of Supply
Marginal tax rate
Average Product of Labor (APL)
Derived Demand
45. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Price Ceiling
Short run
Law of Increasing Costs
Allocative Efficiency
46. TR = P * Qd
Economic Profit
Total Revenue
Marginal Analysis
Unit elastic demand
47. 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
Price Elasticity of Supply
Shutdown Point
Positive externality
Excess Capacity
48. 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
Price floor
Economies of Scale
Normal Profit
Constant Returns to Scale
49. The additional cost incurred from the consumption of the next unit of a good or a service
Law of Supply
Average Product of Labor (APL)
Marginal Cost (MC)
Perfectly competitive long-run equilibrium
50. 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
Constrained Utility Maximization
Short run
Perfectly inelastic
Total Product of Labor (TPL)