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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 difference between total revenue and total explicit and implicit costs






2. Ei > 1






3. 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






4. 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






5. Models where firms agree to mutually improve their situation






6. 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






7. 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






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






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






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






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






12. 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






13. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






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






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






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






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






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






20. 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






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






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






23. TR = P * Qd






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






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






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






27. A good for which higher income decreases demand






28. 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






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






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






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






32. 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






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






34. The difference between total revenue and total explicit costs






35. Entry of new firms shifts the cost curves for all firms downward






36. 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






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






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






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






40. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






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






42. 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






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






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






45. AVC = TVC/Q






46. 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






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






48. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






49. Ed = 1






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