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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. The sum of consumer surplus and producer surplus
Explicit costs
Total Welfare
Marginal Benefit (MB)
Implicit costs
2. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Resources
Perfectly elastic
Break-even Point
Substitution Effect
3. The total quantity - or total output of a good produced at each quantity of labor employed
Long Run
Cross-Price Elasticity of Demand
Total Product of Labor (TPL)
Price elasticity
4. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Perfect competition
Surplus
Law of Demand
Derived Demand
5. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Absolute Advantage
Surplus
Profit Maximizing Rule
6. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Price floor
Shortage
Monopoly long-run equilibrium
Excise Tax
7. The practice of selling essentially the same good to different groups of consumers at different prices
Constant Returns to Scale
Necessity
Price discrimination
Increasing Cost Industry
8. 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
Constrained Utility Maximization
Short run
Marginal Product of Labor (MPL)
Average Product of Labor (APL)
9. Ed = 0 - no response to price change
Absolute prices
Marginal Productivity Theory
Constant Returns to Scale
Perfectly inelastic
10. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Shortage
Implicit costs
Positive externality
11. A good for which higher income increases demand
Constant cost industry
Long Run
Substitute Goods
Normal Goods
12. 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
Variable inputs
Law of Demand
Oligopoly
Utility Maximizing Rule
13. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Implicit costs
Profit Maximizing Resource Employment
Income Elasticity
Inferior Goods
14. 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
Price floor
Spillover costs
Profit Maximizing Rule
Diseconomies of Scale
15. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Utility Maximizing Rule
Shutdown Point
Relative Prices
Law of Diminishing Marginal Utility
16. 0 < Ei < 1
Excess Capacity
Monopolistic competition long-run equilibrium
Constant cost industry
Necessity
17. Entry of new firms shifts the cost curves for all firms upward
Incidence of Tax
Constant Returns to Scale
Excess Capacity
Increasing Cost Industry
18. Ed = 1
Total Welfare
Average Variable Cost (AVC)
Total Fixed Costs (TFC)
Unit elastic demand
19. The mechanism for combining production resources - with existing technology - into finished goods and services
Resources
Comparative Advantage
Production function
Perfectly inelastic
20. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Price discrimination
Productive Efficiency
Inferior Goods
Allocative Efficiency
21. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Constrained Utility Maximization
Perfectly competitive long-run equilibrium
Law of Increasing Costs
Law of Diminishing Marginal Utility
22. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Excess Capacity
Diseconomies of Scale
Total variable costs (TVC)
Shutdown Point
23. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Marginal tax rate
Determinants of elasticity
Absolute prices
Excess Capacity
24. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Law of Supply
Implicit costs
Dead Weight Loss
25. The price of a good measured in units of currency
Absolute prices
Increasing Cost Industry
Productive Efficiency
Total Revenue Test
26. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Excise Tax
Least-Cost Rule
Economies of Scale
Cross-Price Elasticity of Demand
27. 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
Cross-Price Elasticity of Demand
Market Equilibrium
Monopoly long-run equilibrium
Profit Maximizing Resource Employment
28. The marginal utility from consumption of more and more of that item falls over time
Oligopoly
Price Ceiling
Law of Diminishing Marginal Utility
Subsidy
29. Ed < 1
Price inelastic demand
Absolute prices
Demand for Labor
Market Economy (Capitalism)
30. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Shutdown Point
Marginal Productivity Theory
Determinants of Demand
Luxury
31. The output where ATC is minimized and economic profit is zero
Utility Maximizing Rule
Cross-Price Elasticity of Demand
Price discrimination
Break-even Point
32. Entry of new firms shifts the cost curves for all firms downward
Production function
Utility Maximizing Rule
Market power
Decreasing Cost industry
33. 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
Increasing Cost Industry
Cartel
Private goods
Law of Increasing Costs
34. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Dead Weight Loss
Consumer surplus
Production function
Income Effect
35. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Positive externality
Marginal Revenue Product (MRP)
Monopolistic competition long-run equilibrium
Specialization
36. The difference between total revenue and total explicit costs
Accounting Profit
Demand for Labor
Total Revenue
Long Run
37. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Production function
Marginal Productivity Theory
Average Fixed Cost (AFC)
Monopolistic competition
38. 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
Spillover benefits
Price elasticity
Marginal Cost (MC)
Cartel
39. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Fixed inputs
Spillover costs
Four-firm concentration ratio
Non-collusive oligopoly
40. A firm that has market power in the factor market (a wage-setter)
Profit Maximizing Rule
Monopsonist
Determinants of Labor Demand
Perfectly competitive long-run equilibrium
41. Exists at the point where the quantity supplied equals the quantity demanded
Economic Growth
Utility Maximizing Rule
Monopolistic competition long-run equilibrium
Market Equilibrium
42. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Opportunity Cost
Variable inputs
Marginal Analysis
Marginal Product of Labor (MPL)
43. The difference between total revenue and total explicit and implicit costs
Economic Profit
Economic Growth
Profit Maximizing Resource Employment
Price floor
44. The ability to set the price above the perfectly competitive level
Market power
Four-firm concentration ratio
Private goods
Absolute Advantage
45. 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
Private goods
Inferior Goods
Total Fixed Costs (TFC)
Explicit costs
46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Average Total Cost (ATC)
Negative externality
Normal Profit
Substitute Goods
47. 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
Marginal Revenue Product (MRP)
Income Elasticity
Accounting Profit
Free-Rider Problem
48. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Determinants of Demand
Unit elastic demand
Specialization
Income Effect
49. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Substitute Goods
Producer surplus
Consumer surplus
Free-Rider Problem
50. TR = P * Qd
Monopoly long-run equilibrium
Positive externality
Price Elasticity of Supply
Total Revenue