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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
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. 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
Public goods
Income Elasticity
Determinants of elasticity
Price Ceiling
2. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Determinants of Labor Demand
Long Run
Economies of Scale
Implicit costs
3. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Market Economy (Capitalism)
Price elastic demand
Total Revenue
Law of Demand
4. 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
Free-Rider Problem
Spillover costs
Marginal Resource Cost (MRC)
Producer surplus
5. 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
Marginal Product of Labor (MPL)
Private goods
Necessity
Determinants of Supply
6. Ed = 1
Unit elastic demand
Determinants of elasticity
Law of Diminishing Marginal Utility
Perfectly competitive long-run equilibrium
7. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Shortage
Scarcity
Total Revenue
Constrained Utility Maximization
8. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Comparative Advantage
Variable inputs
Spillover benefits
Allocative Efficiency
9. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Luxury
Specialization
Cartel
Law of Increasing Costs
10. Ed = (%dQd)/(%dP). Ignore negative sign
Price inelastic demand
Explicit costs
Price elasticity
Long Run
11. The difference between total revenue and total explicit costs
Accounting Profit
Specialization
Marginal Benefit (MB)
Resources
12. All firms maximize profit by producing where MR = MC
Income Effect
Profit Maximizing Rule
Market power
Increasing Cost Industry
13. 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
Price Ceiling
Collusive oligopoly
Substitute Goods
Dead Weight Loss
14. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Decreasing Cost industry
Spillover benefits
Constant Returns to Scale
Derived Demand
15. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Determinants of Supply
Relative Prices
Spillover benefits
16. The price of a good measured in units of currency
Absolute prices
Price elastic demand
Constrained Utility Maximization
Absolute Advantage
17. 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
Price elasticity
Producer surplus
Monopoly
Spillover costs
18. 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.
Economies of Scale
Marginal Analysis
Natural Monopoly
Private goods
19. Entry of new firms shifts the cost curves for all firms upward
Price elasticity
Constant cost industry
Marginal Productivity Theory
Increasing Cost Industry
20. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Determinants of Labor Demand
Explicit costs
Comparative Advantage
Profit Maximizing Resource Employment
21. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Implicit costs
Cartel
Private goods
Marginal Productivity Theory
22. AVC = TVC/Q
Total Fixed Costs (TFC)
Average Variable Cost (AVC)
Productive Efficiency
Diseconomies of Scale
23. 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
Marginal Resource Cost (MRC)
Marginal Productivity Theory
Spillover benefits
Cross-Price Elasticity of Demand
24. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Marginal tax rate
Derived Demand
Production function
25. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Shortage
Determinants of Supply
Implicit costs
26. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Marginal Product of Labor (MPL)
Negative externality
Production function
27. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Price elasticity
Marginal Resource Cost (MRC)
Perfectly inelastic
28. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Surplus
Market Economy (Capitalism)
Shortage
Total Welfare
29. TR = P * Qd
Total Revenue
Determinants of Labor Demand
Variable inputs
Shortage
30. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Complementary Goods
Public goods
Long Run
Subsidy
31. Entry of new firms shifts the cost curves for all firms downward
Determinants of Labor Demand
Decreasing Cost industry
Complementary Goods
Determinants of elasticity
32. AFC = TFC/Q
Unit elastic demand
Substitution Effect
Average Fixed Cost (AFC)
Price elasticity
33. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Average Variable Cost (AVC)
Utility Maximizing Rule
Opportunity Cost
Law of Supply
34. 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
Four-firm concentration ratio
Collusive oligopoly
Economics
Law of Diminishing Marginal Utility
35. 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
Variable inputs
Monopolistic competition
Price floor
Law of Diminishing Marginal Utility
36. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Marginal Revenue Product (MRP)
Profit Maximizing Resource Employment
Inferior Goods
37. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Scarcity
Production function
Implicit costs
Marginal Product of Labor (MPL)
38. 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.
Profit Maximizing Resource Employment
Monopolistic competition long-run equilibrium
Natural Monopoly
Diseconomies of Scale
39. 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
Monopolistic competition
Constrained Utility Maximization
Economic Profit
Consumer surplus
40. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Average Total Cost (ATC)
Total Welfare
Resources
Determinants of elasticity
41. Exists if a producer can produce more of a good than all other producers
Law of Supply
Perfectly inelastic
Absolute Advantage
Price Elasticity of Supply
42. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Decreasing Cost industry
Surplus
Constant Returns to Scale
43. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Excise Tax
Decreasing Cost industry
Oligopoly
Economic Growth
44. 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
Short run
Least-Cost Rule
Spillover benefits
Marginal Resource Cost (MRC)
45. Ei > 1
Price Ceiling
Opportunity Cost
Market Equilibrium
Luxury
46. The output where ATC is minimized and economic profit is zero
Monopolistic competition long-run equilibrium
Market power
Break-even Point
Substitution Effect
47. ATC = TC/Q = AFC + AVC
Implicit costs
Excess Capacity
Average Total Cost (ATC)
Variable inputs
48. The practice of selling essentially the same good to different groups of consumers at different prices
Price discrimination
Determinants of Demand
Total Revenue Test
Price elastic demand
49. 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
Average Fixed Cost (AFC)
Income Effect
Determinants of Labor Demand
Marginal Resource Cost (MRC)
50. The imbalance between limited productive resources and unlimited human wants
Non-collusive oligopoly
Monopolistic competition
Scarcity
Derived Demand