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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. When firms focus their resources on production of goods for which they have comparative advantage






2. Exists if a producer can produce a good at lower opportunity cost than all other producers






3. 0 < Ei < 1






4. Models where firms are competitive rivals seeking to gain at the expense of their rivals






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






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






7. Ed = 1






8. Costs that change with the level of output. If output is zero - so are TVCs.






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






10. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






11. 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






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






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






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






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






16. 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






17. All firms maximize profit by producing where MR = MC






18. 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






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






20. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






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






22. 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.






23. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






24. Total product divided by labor employed. APL = TPL/L






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






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






27. Ed < 1






28. 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






29. 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






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






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






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






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






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






35. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






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






37. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






38. Models where firms agree to mutually improve their situation






39. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






40. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






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






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






43. TR = P * Qd






44. Ed > 1 - meaning consumers are price sensitive






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






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






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






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






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






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