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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.
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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. 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






2. Ed < 1






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






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






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






6. The sum of consumer surplus and producer surplus






7. 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.






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






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






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






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






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






13. ATC = TC/Q = AFC + AVC






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






15. 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






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






17. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






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






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






20. AVC = TVC/Q






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






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






23. 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






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






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






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






27. Ed > 1 - meaning consumers are price sensitive






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






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






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






31. All firms maximize profit by producing where MR = MC






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






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






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






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






36. The additional benefit received from the consumption of the next unit of a good or service






37. Models where firms agree to mutually improve their situation






38. A good for which higher income decreases demand






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






40. 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.






41. Ed = 1






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






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






44. 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






45. 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






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






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






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






49. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






50. 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