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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. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






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






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






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






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






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






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






8. 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






9. 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






10. Models where firms agree to mutually improve their situation






11. 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






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






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






14. Ed = 8 - infinite change in demand to price change






15. TR = P * Qd






16. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






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






18. Occurs when LRAC is constant over a variety of plant sizes






19. Ei > 1






20. 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






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






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






23. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






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






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






26. Entry (or exit) of firms does not shift the cost curves of firms in the industry






27. Exists at the point where the quantity supplied equals the quantity demanded






28. 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.






29. 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






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






31. 0 < Ei < 1






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






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






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






35. AVC = TVC/Q






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






37. 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






38. AFC = TFC/Q






39. 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






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






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






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






43. Ed < 1






44. The sum of consumer surplus and producer surplus






45. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






46. Demand for a resource like labor is derived from the demand for the goods produced by the resource






47. MUx / Px = MUy/Py or MUx/MUy = Px/Py






48. The difference between total revenue and total explicit and implicit costs






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






50. A good for which higher income increases demand






Can you answer 50 questions in 15 minutes?



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