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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. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Positive externality
Free-Rider Problem
Resources
Productive Efficiency
2. 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)
Constant cost industry
Profit Maximizing Rule
Market Equilibrium
3. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Average Fixed Cost (AFC)
Implicit costs
Normal Profit
Least-Cost Rule
4. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Cartel
Economic Profit
Shutdown Point
Law of Increasing Costs
5. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Absolute prices
Law of Demand
Economics
Law of Supply
6. 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
Public goods
Shortage
Normal Profit
Specialization
7. Ed = 1
Unit elastic demand
Market Economy (Capitalism)
Consumer surplus
Determinants of Supply
8. The practice of selling essentially the same good to different groups of consumers at different prices
Law of Supply
Market Economy (Capitalism)
Price discrimination
Explicit costs
9. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Perfectly inelastic
Total Fixed Costs (TFC)
Shutdown Point
10. 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
Oligopoly
Perfectly competitive long-run equilibrium
Determinants of Demand
Cross-Price Elasticity of Demand
11. Entry of new firms shifts the cost curves for all firms upward
Price Elasticity of Supply
Diseconomies of Scale
Normal Profit
Increasing Cost Industry
12. 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
Diseconomies of Scale
Perfectly elastic
Marginal tax rate
Total Fixed Costs (TFC)
13. Ei = (%dQd good X)/(%d Income)
Marginal Cost (MC)
Profit Maximizing Resource Employment
Utility Maximizing Rule
Income Elasticity
14. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Monopsonist
Determinants of elasticity
Unit elastic demand
15. Ed = (%dQd)/(%dP). Ignore negative sign
Marginal Benefit (MB)
Unit elastic demand
Price elasticity
Comparative Advantage
16. 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
Spillover benefits
Monopolistic competition
Average Total Cost (ATC)
Cross-Price Elasticity of Demand
17. 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
Market power
Resources
Income Elasticity
Spillover benefits
18. Exists if a producer can produce more of a good than all other producers
Market Economy (Capitalism)
Price Ceiling
Monopolistic competition long-run equilibrium
Absolute Advantage
19. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Consumer surplus
Comparative Advantage
Shortage
20. The mechanism for combining production resources - with existing technology - into finished goods and services
Excise Tax
Perfect competition
Resources
Production function
21. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Opportunity Cost
Absolute prices
Utility Maximizing Rule
Perfectly inelastic
22. Ed = 0 - no response to price change
Market Economy (Capitalism)
Average Product of Labor (APL)
Perfectly inelastic
Marginal tax rate
23. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Total Revenue Test
Specialization
Complementary Goods
Positive externality
24. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Non-collusive oligopoly
Specialization
Negative externality
Perfectly elastic
25. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Monopoly long-run equilibrium
Diseconomies of Scale
Marginal Cost (MC)
Constant cost industry
26. Ei > 1
Luxury
Cross-Price Elasticity of Demand
Marginal Analysis
Decreasing Cost industry
27. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Accounting Profit
Constrained Utility Maximization
Economies of Scale
Economic Growth
28. 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
Explicit costs
Normal Goods
Variable inputs
Total Revenue
29. The difference between total revenue and total explicit costs
Private goods
Perfect competition
Accounting Profit
Cartel
30. Costs that change with the level of output. If output is zero - so are TVCs.
Economies of Scale
Dead Weight Loss
Law of Diminishing Marginal Utility
Total variable costs (TVC)
31. Models where firms agree to mutually improve their situation
Collusive oligopoly
Comparative Advantage
Opportunity Cost
Price Elasticity of Supply
32. 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
Diseconomies of Scale
Complementary Goods
Marginal Resource Cost (MRC)
Private goods
33. All firms maximize profit by producing where MR = MC
Public goods
Profit Maximizing Rule
Economics
Marginal Revenue Product (MRP)
34. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Spillover benefits
Average Variable Cost (AVC)
Comparative Advantage
Long Run
35. The total quantity - or total output of a good produced at each quantity of labor employed
Marginal Productivity Theory
Total Product of Labor (TPL)
Substitution Effect
Total Welfare
36. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Perfectly inelastic
Marginal Cost (MC)
Total Welfare
Determinants of Demand
37. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Least-Cost Rule
Market Equilibrium
Marginal Productivity Theory
Natural Monopoly
38. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Perfectly inelastic
Marginal Productivity Theory
Marginal Product of Labor (MPL)
Dead Weight Loss
39. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Inferior Goods
Derived Demand
Market Equilibrium
Average Total Cost (ATC)
40. Product demand - productivity - prices of other resources - and complementary resources
Law of Supply
Average Fixed Cost (AFC)
Determinants of Labor Demand
Average Total Cost (ATC)
41. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Least-Cost Rule
Total variable costs (TVC)
Monopolistic competition
Luxury
42. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Decreasing Cost industry
Dead Weight Loss
Absolute Advantage
Demand for Labor
43. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Price discrimination
Monopoly
Natural Monopoly
Producer surplus
44. TR = P * Qd
Constrained Utility Maximization
Price inelastic demand
Relative Prices
Total Revenue
45. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Break-even Point
Economic Profit
Oligopoly
Economics
46. 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.
Determinants of Labor Demand
Cross-Price Elasticity of Demand
Economies of Scale
Monopoly long-run equilibrium
47. Es = (%dQs) / (%dPrice)
Marginal Product of Labor (MPL)
Price Elasticity of Supply
Cross-Price Elasticity of Demand
Long Run
48. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Price floor
Subsidy
Inferior Goods
49. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Law of Demand
Constrained Utility Maximization
Market Economy (Capitalism)
Law of Supply
50. Ed > 1 - meaning consumers are price sensitive
Utility Maximizing Rule
Subsidy
Law of Supply
Price elastic demand