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






2. 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






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






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






5. A good for which higher income increases demand






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






7. 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






8. 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






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






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






11. 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






12. A good for which higher income decreases demand






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






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






15. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






16. The sum of consumer surplus and producer surplus






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






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






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






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






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






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






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






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






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






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






28. 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






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






30. 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






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






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






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






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






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






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






37. 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






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






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






40. 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






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






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






43. Models where firms agree to mutually improve their situation






44. 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






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






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






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






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






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






50. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage