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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. Product demand - productivity - prices of other resources - and complementary resources
Total Revenue Test
Price inelastic demand
Economies of Scale
Determinants of Labor Demand
2. 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
Derived Demand
Profit Maximizing Rule
Absolute prices
3. A good for which higher income increases demand
Price elasticity
Normal Goods
Monopoly long-run equilibrium
Short run
4. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Producer surplus
Marginal Resource Cost (MRC)
Surplus
Break-even Point
5. The ability to set the price above the perfectly competitive level
Long Run
Total Welfare
Market power
Least-Cost Rule
6. The practice of selling essentially the same good to different groups of consumers at different prices
Necessity
Price discrimination
Break-even Point
Surplus
7. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Absolute Advantage
Economic Growth
Dead Weight Loss
Productive Efficiency
8. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Average Variable Cost (AVC)
Unit elastic demand
Profit Maximizing Resource Employment
Normal Goods
9. AFC = TFC/Q
Break-even Point
Average Fixed Cost (AFC)
Natural Monopoly
Price Elasticity of Supply
10. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Subsidy
Total Revenue Test
Law of Diminishing Marginal Utility
Implicit costs
11. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Law of Diminishing Marginal Utility
Four-firm concentration ratio
Luxury
Variable inputs
12. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Marginal Cost (MC)
Resources
Break-even Point
Subsidy
13. A firm that has market power in the factor market (a wage-setter)
Market power
Monopsonist
Income Effect
Short run
14. Ed = 0 - no response to price change
Positive externality
Derived Demand
Perfectly inelastic
Private goods
15. Exists at the point where the quantity supplied equals the quantity demanded
Public goods
Allocative Efficiency
Demand for Labor
Market Equilibrium
16. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Total Fixed Costs (TFC)
Incidence of Tax
Diseconomies of Scale
17. The rational decision maker chooses an action if MB = MC
Price floor
Short run
Complementary Goods
Marginal Analysis
18. 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
Short run
Specialization
Marginal Resource Cost (MRC)
Law of Increasing Costs
19. The price of a good measured in units of currency
Excess Capacity
Absolute prices
Market Equilibrium
Public goods
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
Determinants of elasticity
Monopoly long-run equilibrium
Non-collusive oligopoly
Positive externality
21. 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
Marginal Analysis
Absolute Advantage
Marginal Resource Cost (MRC)
Price floor
22. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Monopoly long-run equilibrium
Perfectly inelastic
Perfectly competitive long-run equilibrium
Implicit costs
23. 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
Constant cost industry
Non-collusive oligopoly
Economic Profit
Spillover costs
24. The difference between total revenue and total explicit costs
Determinants of Demand
Accounting Profit
Average Total Cost (ATC)
Determinants of Supply
25. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Normal Profit
Monopolistic competition long-run equilibrium
Inferior Goods
Total variable costs (TVC)
26. 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 Resource Cost (MRC)
Determinants of Demand
Market power
Free-Rider Problem
27. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Private goods
Law of Demand
Determinants of elasticity
Variable inputs
28. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Incidence of Tax
Price elasticity
Implicit costs
29. 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
Break-even Point
Law of Demand
Complementary Goods
Price Ceiling
30. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Determinants of elasticity
Price Elasticity of Supply
Positive externality
Relative Prices
31. The difference between total revenue and total explicit and implicit costs
Economic Profit
Total Welfare
Relative Prices
Price Ceiling
32. 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
Shutdown Point
Accounting Profit
Absolute prices
Perfect competition
33. 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
Perfectly inelastic
Increasing Cost Industry
Consumer surplus
Determinants of Supply
34. The total quantity - or total output of a good produced at each quantity of labor employed
Collusive oligopoly
Spillover benefits
Relative Prices
Total Product of Labor (TPL)
35. Ei > 1
Monopolistic competition long-run equilibrium
Luxury
Perfectly inelastic
Producer surplus
36. Ed = 1
Derived Demand
Decreasing Cost industry
Spillover costs
Unit elastic demand
37. AVC = TVC/Q
Average Variable Cost (AVC)
Spillover costs
Marginal Product of Labor (MPL)
Average Product of Labor (APL)
38. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Excise Tax
Resources
Diseconomies of Scale
39. ATC = TC/Q = AFC + AVC
Implicit costs
Variable inputs
Average Product of Labor (APL)
Average Total Cost (ATC)
40. 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
Productive Efficiency
Excess Capacity
Average Product of Labor (APL)
Oligopoly
41. 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.
Marginal Revenue Product (MRP)
Income Effect
Implicit costs
Long Run
42. Models where firms agree to mutually improve their situation
Short run
Inferior Goods
Market power
Collusive oligopoly
43. Costs that change with the level of output. If output is zero - so are TVCs.
Market Equilibrium
Total variable costs (TVC)
Free-Rider Problem
Shortage
44. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Determinants of Supply
Law of Demand
Four-firm concentration ratio
Resources
45. Occurs when LRAC is constant over a variety of plant sizes
Marginal Cost (MC)
Constant Returns to Scale
Total Fixed Costs (TFC)
Relative Prices
46. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Negative externality
Dead Weight Loss
Private goods
Cross-Price Elasticity of Demand
47. The most desirable alternative given up as the result of a decision
Opportunity Cost
Income Elasticity
Price discrimination
Price elasticity
48. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Spillover benefits
Economics
Determinants of elasticity
Total Product of Labor (TPL)
49. Exists if a producer can produce a good at lower opportunity cost than all other producers
Economic Growth
Comparative Advantage
Average Product of Labor (APL)
Negative externality
50. A good for which higher income decreases demand
Inferior Goods
Economies of Scale
Total Fixed Costs (TFC)
Public goods