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AP Microeconomics
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Subjects
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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
Non-collusive oligopoly
Consumer surplus
Diseconomies of Scale
Total Fixed Costs (TFC)
2. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Public goods
Positive externality
Dead Weight Loss
Subsidy
3. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Subsidy
Excise Tax
Marginal Product of Labor (MPL)
Total Fixed Costs (TFC)
4. ATC = TC/Q = AFC + AVC
Price Elasticity of Supply
Average Total Cost (ATC)
Cross-Price Elasticity of Demand
Determinants of Supply
5. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Productive Efficiency
Economic Profit
Subsidy
6. Exists at the point where the quantity supplied equals the quantity demanded
Accounting Profit
Market Equilibrium
Determinants of elasticity
Marginal Resource Cost (MRC)
7. Total product divided by labor employed. APL = TPL/L
Private goods
Market Economy (Capitalism)
Average Product of Labor (APL)
Substitute Goods
8. The ability to set the price above the perfectly competitive level
Producer surplus
Constant Returns to Scale
Market power
Demand for Labor
9. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Demand for Labor
Market Equilibrium
Shortage
Monopoly
10. The additional benefit received from the consumption of the next unit of a good or service
Perfectly inelastic
Marginal Benefit (MB)
Determinants of Demand
Short run
11. 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
Market Economy (Capitalism)
Constrained Utility Maximization
Average Product of Labor (APL)
Perfectly competitive long-run equilibrium
12. 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
Determinants of Supply
Relative Prices
Constant Returns to Scale
13. A good for which higher income increases demand
Constrained Utility Maximization
Long Run
Decreasing Cost industry
Normal Goods
14. Ei > 1
Determinants of Labor Demand
Marginal Resource Cost (MRC)
Luxury
Profit Maximizing Rule
15. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Substitution Effect
Producer surplus
Market power
Law of Increasing Costs
16. AFC = TFC/Q
Marginal tax rate
Average Fixed Cost (AFC)
Monopoly
Complementary Goods
17. Entry of new firms shifts the cost curves for all firms downward
Normal Goods
Productive Efficiency
Total variable costs (TVC)
Decreasing Cost industry
18. The practice of selling essentially the same good to different groups of consumers at different prices
Absolute prices
Price discrimination
Substitute Goods
Shortage
19. 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
Negative externality
Profit Maximizing Resource Employment
Normal Profit
20. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Law of Diminishing Marginal Utility
Surplus
Absolute prices
Price Ceiling
21. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Dead Weight Loss
Least-Cost Rule
Total Product of Labor (TPL)
Normal Profit
22. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Total Fixed Costs (TFC)
Excess Capacity
Law of Demand
Law of Diminishing Marginal Utility
23. 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.
Economies of Scale
Price Elasticity of Supply
Utility Maximizing Rule
Free-Rider Problem
24. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Determinants of Demand
Price elastic demand
Average Total Cost (ATC)
25. 0 < Ei < 1
Unit elastic demand
Necessity
Diseconomies of Scale
Implicit costs
26. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Average Product of Labor (APL)
Perfectly inelastic
Utility Maximizing Rule
Total Fixed Costs (TFC)
27. 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
Positive externality
Accounting Profit
Public goods
Constant Returns to Scale
28. The difference between total revenue and total explicit costs
Specialization
Spillover benefits
Accounting Profit
Total Fixed Costs (TFC)
29. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Total Welfare
Constant cost industry
Price elasticity
Monopolistic competition
30. Ed = (%dQd)/(%dP). Ignore negative sign
Marginal Benefit (MB)
Determinants of Supply
Price elasticity
Average Fixed Cost (AFC)
31. 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
Opportunity Cost
Economic Profit
Free-Rider Problem
Increasing Cost Industry
32. 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
Production function
Accounting Profit
Incidence of Tax
Perfectly inelastic
33. The mechanism for combining production resources - with existing technology - into finished goods and services
Law of Increasing Costs
Marginal Productivity Theory
Production function
Law of Diminishing Marginal Utility
34. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Average Variable Cost (AVC)
Monopoly
Constrained Utility Maximization
35. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Four-firm concentration ratio
Average Total Cost (ATC)
Explicit costs
36. 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
Law of Increasing Costs
Subsidy
Total Product of Labor (TPL)
37. Models where firms agree to mutually improve their situation
Decreasing Cost industry
Collusive oligopoly
Income Elasticity
Constrained Utility Maximization
38. A firm that has market power in the factor market (a wage-setter)
Non-collusive oligopoly
Monopsonist
Marginal tax rate
Price Elasticity of Supply
39. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Incidence of Tax
Derived Demand
Perfectly elastic
Resources
40. The most desirable alternative given up as the result of a decision
Opportunity Cost
Decreasing Cost industry
Law of Demand
Marginal Productivity Theory
41. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Perfect competition
Explicit costs
Positive externality
42. The additional cost incurred from the consumption of the next unit of a good or a service
Variable inputs
Marginal Cost (MC)
Non-collusive oligopoly
Perfectly competitive long-run equilibrium
43. Entry of new firms shifts the cost curves for all firms upward
Collusive oligopoly
Increasing Cost Industry
Spillover costs
Scarcity
44. TR = P * Qd
Total Revenue
Substitute Goods
Demand for Labor
Absolute Advantage
45. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Implicit costs
Price floor
Total Product of Labor (TPL)
46. 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
Non-collusive oligopoly
Profit Maximizing Rule
Monopoly long-run equilibrium
Determinants of Supply
47. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Economic Profit
Excise Tax
Profit Maximizing Rule
Determinants of elasticity
48. Ed = 0 - no response to price change
Perfectly inelastic
Constant cost industry
Marginal Revenue Product (MRP)
Public goods
49. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Total Revenue Test
Collusive oligopoly
Marginal tax rate
50. 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
Producer surplus
Price inelastic demand
Total Welfare
Normal Profit
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