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






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






3. The imbalance between limited productive resources and unlimited human wants






4. Ed = 0 - no response to price change






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






6. 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






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






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






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






10. Ed = 8 - infinite change in demand to price change






11. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






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






13. The mechanism for combining production resources - with existing technology - into finished goods and services






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






15. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






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






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






18. 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






19. 0 < Ei < 1






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






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






22. Entry of new firms shifts the cost curves for all firms upward






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






24. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






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






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






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






28. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






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






30. TR = P * Qd






31. 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






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






33. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






34. 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






35. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






36. 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






37. 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






38. 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






39. 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






40. Costs that change with the level of output. If output is zero - so are TVCs.






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






42. 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






43. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






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






45. 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






46. 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






47. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






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






49. 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






50. 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