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






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






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






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






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






6. 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






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






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






9. TR = P * Qd






10. ATC = TC/Q = AFC + AVC






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






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






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






14. Ei > 1






15. 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






16. Models where firms agree to mutually improve their situation






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






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






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






20. Ed < 1






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






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






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






24. 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.






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






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






27. 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






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






29. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






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






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






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






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






34. 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






35. AVC = TVC/Q






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






37. Ed = 0 - no response to price change






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






39. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






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






41. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






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






43. 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






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






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






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. 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






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






49. The change in quantity demanded resulting from a change in the price of one good relative to other goods






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