Test your basic knowledge |

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






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






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






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






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






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






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






8. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






9. Ed = 1






10. 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






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






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






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






14. Ed > 1 - meaning consumers are price sensitive






15. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






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






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






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






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






20. 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






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






22. 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






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






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






25. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






26. 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






27. 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






28. Ed < 1






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






30. 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






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






32. 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






33. 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






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






35. A good for which higher income decreases demand






36. 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






37. The total quantity - or total output of a good produced at each quantity of labor employed






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






39. A good for which higher income increases demand






40. 0 < Ei < 1






41. The difference between total revenue and total explicit costs






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






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






44. Ed = (%dQd)/(%dP). Ignore negative sign






45. The ability to set the price above the perfectly competitive level






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






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






48. 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






49. 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






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