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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. Models where firms are competitive rivals seeking to gain at the expense of their rivals






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






3. 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






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






5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






6. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






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






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






9. 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






10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






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






12. 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






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






14. When firms focus their resources on production of goods for which they have comparative advantage






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






16. A good for which higher income increases demand






17. The sum of consumer surplus and producer surplus






18. AFC = TFC/Q






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






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






21. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






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






23. 0 < Ei < 1






24. 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






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






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






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






28. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






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






30. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






31. Ed > 1 - meaning consumers are price sensitive






32. TR = P * Qd






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






34. Ed < 1






35. Ed = 0 - no response to price change






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






37. 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






38. 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






39. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






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






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






42. ATC = TC/Q = AFC + AVC






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






44. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






45. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






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






47. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






48. 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






49. 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






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