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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. Ed < 1






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






3. 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






4. The difference between total revenue and total explicit costs






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






6. 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






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






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






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






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






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






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






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






14. Models where firms are competitive rivals seeking to gain at the expense of their rivals






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






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






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






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






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






20. Models where firms agree to mutually improve their situation






21. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






22. 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






23. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






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






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






26. 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






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






28. 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






29. 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






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






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






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






33. Exists if a producer can produce more of a good than all other producers






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






35. 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






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






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






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






39. 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






40. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






41. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






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






44. The sum of consumer surplus and producer surplus






45. A good for which higher income increases demand






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






47. Two goods are consumer substitutes if they provide essentially the same utility to consumers






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






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






50. Exists if a producer can produce a good at lower opportunity cost than all other producers







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