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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. A firm that has market power in the factor market (a wage-setter)
Average Total Cost (ATC)
Perfectly competitive long-run equilibrium
Monopsonist
Market Economy (Capitalism)
2. 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
Marginal Product of Labor (MPL)
Explicit costs
Total Welfare
Price floor
3. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Positive externality
Average Fixed Cost (AFC)
Break-even Point
Fixed inputs
4. Entry of new firms shifts the cost curves for all firms upward
Law of Diminishing Marginal Utility
Normal Profit
Perfectly inelastic
Increasing Cost Industry
5. The difference between total revenue and total explicit and implicit costs
Incidence of Tax
Economic Profit
Price floor
Least-Cost Rule
6. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Market Economy (Capitalism)
Profit Maximizing Resource Employment
Spillover benefits
7. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Relative Prices
Surplus
Normal Profit
Demand for Labor
8. Entry of new firms shifts the cost curves for all firms downward
Determinants of Labor Demand
Substitute Goods
Decreasing Cost industry
Perfectly elastic
9. A good for which higher income decreases demand
Variable inputs
Law of Diminishing Marginal Utility
Market Equilibrium
Inferior Goods
10. The most desirable alternative given up as the result of a decision
Inferior Goods
Substitute Goods
Average Total Cost (ATC)
Opportunity Cost
11. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Constant Returns to Scale
Natural Monopoly
Price Elasticity of Supply
12. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Total variable costs (TVC)
Opportunity Cost
Oligopoly
13. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Economies of Scale
Diseconomies of Scale
Oligopoly
Income Effect
14. All firms maximize profit by producing where MR = MC
Increasing Cost Industry
Utility Maximizing Rule
Economic Growth
Profit Maximizing Rule
15. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Monopsonist
Free-Rider Problem
Determinants of Demand
Short run
16. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Total Product of Labor (TPL)
Surplus
Demand for Labor
Market Economy (Capitalism)
17. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Luxury
Subsidy
Law of Supply
Normal Goods
18. Models where firms agree to mutually improve their situation
Four-firm concentration ratio
Least-Cost Rule
Monopsonist
Collusive oligopoly
19. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Utility Maximizing Rule
Average Fixed Cost (AFC)
Total Revenue Test
Positive externality
20. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Price inelastic demand
Economies of Scale
Substitute Goods
Profit Maximizing Resource Employment
21. 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
Perfect competition
Perfectly competitive long-run equilibrium
Law of Diminishing Marginal Utility
Private goods
22. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Break-even Point
Monopoly
Relative Prices
23. 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
Non-collusive oligopoly
Private goods
Specialization
Incidence of Tax
24. The imbalance between limited productive resources and unlimited human wants
Price floor
Subsidy
Scarcity
Spillover benefits
25. The practice of selling essentially the same good to different groups of consumers at different prices
Income Effect
Determinants of Labor Demand
Price discrimination
Spillover costs
26. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Decreasing Cost industry
Shutdown Point
Negative externality
27. The total quantity - or total output of a good produced at each quantity of labor employed
Positive externality
Profit Maximizing Rule
Total Product of Labor (TPL)
Free-Rider Problem
28. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Constrained Utility Maximization
Total Revenue Test
Perfectly elastic
Shutdown Point
29. Ed < 1
Price inelastic demand
Average Total Cost (ATC)
Scarcity
Luxury
30. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Collusive oligopoly
Price elasticity
Shutdown Point
Shortage
31. 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
Income Effect
Price elastic demand
Producer surplus
Marginal Analysis
32. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Total Revenue
Economics
Perfect competition
Excess Capacity
33. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Economic Growth
Income Effect
Price Elasticity of Supply
34. The price of a good measured in units of currency
Excess Capacity
Average Fixed Cost (AFC)
Absolute prices
Perfect competition
35. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Consumer surplus
Substitution Effect
Profit Maximizing Resource Employment
Opportunity Cost
36. 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
Normal Profit
Average Variable Cost (AVC)
Market Economy (Capitalism)
Oligopoly
37. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Price inelastic demand
Constant cost industry
Income Elasticity
Surplus
38. 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
Relative Prices
Marginal tax rate
Break-even Point
Marginal Productivity Theory
39. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Perfectly competitive long-run equilibrium
Total Fixed Costs (TFC)
Constant cost industry
Price discrimination
40. Ei > 1
Economics
Substitute Goods
Luxury
Price floor
41. The difference between total revenue and total explicit costs
Determinants of Supply
Constrained Utility Maximization
Accounting Profit
Profit Maximizing Rule
42. Ed = (%dQd)/(%dP). Ignore negative sign
Shortage
Price elasticity
Production function
Determinants of elasticity
43. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Economic Profit
Marginal Analysis
Market power
Monopoly
44. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Comparative Advantage
Marginal Benefit (MB)
Variable inputs
Marginal Productivity Theory
45. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Spillover costs
Private goods
Market Economy (Capitalism)
Perfectly elastic
46. 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
Explicit costs
Profit Maximizing Resource Employment
Spillover costs
Productive Efficiency
47. 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
Law of Increasing Costs
Short run
Subsidy
Normal Profit
48. 0 < Ei < 1
Necessity
Determinants of Demand
Perfectly inelastic
Profit Maximizing Resource Employment
49. Product demand - productivity - prices of other resources - and complementary resources
Positive externality
Diseconomies of Scale
Specialization
Determinants of Labor Demand
50. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Monopoly long-run equilibrium
Explicit costs
Law of Diminishing Marginal Utility
Resources