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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. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






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






3. Ed > 1 - meaning consumers are price sensitive






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






5. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






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






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






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






9. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






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






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






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






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






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






15. 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






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






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






18. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






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






20. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






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






22. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






23. 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






24. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






25. The difference between total revenue and total explicit costs






26. TR = P * Qd






27. 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






28. Ed = 0 - no response to price change






29. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






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






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






32. A good for which higher income decreases demand






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






34. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






35. 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






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






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






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






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






40. The price of a good measured in units of currency






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






42. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






43. AVC = TVC/Q






44. A good for which higher income increases demand






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






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






47. 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






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






49. 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






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