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AP Microeconomics
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Subjects
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economics
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ap
Instructions:
Answer 50 questions in 15 minutes.
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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 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
Luxury
Accounting Profit
Total Revenue Test
Incidence of Tax
2. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Price Elasticity of Supply
Utility Maximizing Rule
Scarcity
Non-collusive oligopoly
3. Ei > 1
Four-firm concentration ratio
Resources
Constrained Utility Maximization
Luxury
4. 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
Least-Cost Rule
Price elasticity
Derived Demand
Non-collusive oligopoly
5. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Resources
Normal Profit
Break-even Point
Determinants of Supply
6. Ed < 1
Surplus
Fixed inputs
Break-even Point
Price inelastic demand
7. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Economic Profit
Natural Monopoly
Average Variable Cost (AVC)
Luxury
8. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Implicit costs
Income Effect
Constant Returns to Scale
9. AFC = TFC/Q
Subsidy
Marginal Benefit (MB)
Average Fixed Cost (AFC)
Average Total Cost (ATC)
10. 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
Diseconomies of Scale
Cross-Price Elasticity of Demand
Short run
Excess Capacity
11. The additional benefit received from the consumption of the next unit of a good or service
Price elastic demand
Marginal Benefit (MB)
Perfectly competitive long-run equilibrium
Monopolistic competition long-run equilibrium
12. When firms focus their resources on production of goods for which they have comparative advantage
Long Run
Monopolistic competition
Economic Profit
Specialization
13. Ed = (%dQd)/(%dP). Ignore negative sign
Cross-Price Elasticity of Demand
Surplus
Perfect competition
Price elasticity
14. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Average Total Cost (ATC)
Price elasticity
Explicit costs
15. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Necessity
Law of Demand
Non-collusive oligopoly
16. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Consumer surplus
Implicit costs
Determinants of Demand
Demand for Labor
17. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Profit Maximizing Rule
Shutdown Point
Increasing Cost Industry
Dead Weight Loss
18. Ei = (%dQd good X)/(%d Income)
Price Ceiling
Income Elasticity
Increasing Cost Industry
Marginal Revenue Product (MRP)
19. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Economic Profit
Market power
Scarcity
Resources
20. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Short run
Price elastic demand
Four-firm concentration ratio
21. The difference between total revenue and total explicit costs
Accounting Profit
Negative externality
Luxury
Cartel
22. 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
Variable inputs
Average Total Cost (ATC)
Allocative Efficiency
Consumer surplus
23. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Economic Growth
Price Elasticity of Supply
Shutdown Point
24. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Average Total Cost (ATC)
Oligopoly
Substitute Goods
Total Revenue Test
25. The most desirable alternative given up as the result of a decision
Derived Demand
Total Revenue Test
Income Elasticity
Opportunity Cost
26. 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
Absolute prices
Marginal Resource Cost (MRC)
Excise Tax
Total Product of Labor (TPL)
27. ATC = TC/Q = AFC + AVC
Free-Rider Problem
Productive Efficiency
Average Total Cost (ATC)
Monopoly long-run equilibrium
28. The practice of selling essentially the same good to different groups of consumers at different prices
Price discrimination
Average Fixed Cost (AFC)
Least-Cost Rule
Monopoly long-run equilibrium
29. Models where firms agree to mutually improve their situation
Excise Tax
Average Variable Cost (AVC)
Collusive oligopoly
Profit Maximizing Rule
30. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Dead Weight Loss
Producer surplus
Complementary Goods
Natural Monopoly
31. The total quantity - or total output of a good produced at each quantity of labor employed
Price inelastic demand
Market Equilibrium
Total Product of Labor (TPL)
Cross-Price Elasticity of Demand
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
Perfect competition
Economic Growth
Determinants of Supply
Marginal Revenue Product (MRP)
33. Ed = 1
Scarcity
Income Effect
Negative externality
Unit elastic demand
34. 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
Economies of Scale
Public goods
Scarcity
Consumer surplus
35. 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
Public goods
Natural Monopoly
Necessity
Free-Rider Problem
36. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Spillover benefits
Price Elasticity of Supply
Monopsonist
Monopolistic competition
37. 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.
Market Equilibrium
Marginal Revenue Product (MRP)
Diseconomies of Scale
Collusive oligopoly
38. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Spillover costs
Relative Prices
Subsidy
Necessity
39. 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
Unit elastic demand
Marginal Resource Cost (MRC)
Spillover costs
Four-firm concentration ratio
40. 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
Production function
Short run
Increasing Cost Industry
Marginal Resource Cost (MRC)
41. 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
Perfectly inelastic
Four-firm concentration ratio
Price floor
Determinants of Demand
42. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Total Revenue Test
Marginal tax rate
Law of Increasing Costs
Oligopoly
43. The mechanism for combining production resources - with existing technology - into finished goods and services
Price elasticity
Total variable costs (TVC)
Production function
Allocative Efficiency
44. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Production function
Break-even Point
Relative Prices
Perfect competition
45. Exists at the point where the quantity supplied equals the quantity demanded
Positive externality
Increasing Cost Industry
Market Equilibrium
Substitution Effect
46. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Subsidy
Marginal Analysis
Negative externality
47. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Marginal Productivity Theory
Marginal tax rate
Inferior Goods
Law of Demand
48. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Marginal Product of Labor (MPL)
Excess Capacity
Average Fixed Cost (AFC)
Relative Prices
49. 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
Oligopoly
Long Run
Average Fixed Cost (AFC)
Production function
50. The ability to set the price above the perfectly competitive level
Incidence of Tax
Marginal Product of Labor (MPL)
Excess Capacity
Market power
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