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






2. Models where firms agree to mutually improve their situation






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






4. Ed = 1






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






6. 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.






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






8. 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






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






10. The additional cost incurred from the consumption of the next unit of a good or a service






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






12. A good for which higher income decreases demand






13. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






14. Entry (or exit) of firms does not shift the cost curves of firms in the industry






15. 0 < Ei < 1






16. The difference between total revenue and total explicit costs






17. The ability to set the price above the perfectly competitive level






18. 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






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






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






21. Ed > 1 - meaning consumers are price sensitive






22. Exists at the point where the quantity supplied equals the quantity demanded






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






24. The marginal utility from consumption of more and more of that item falls over time






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






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






27. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






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






29. 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






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






31. Ei > 1






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






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






34. ATC = TC/Q = AFC + AVC






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






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






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






38. 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






39. 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






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






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






42. 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






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






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






45. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






46. 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






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






48. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






49. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






50. 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