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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. The total quantity - or total output of a good produced at each quantity of labor employed
Market Economy (Capitalism)
Average Fixed Cost (AFC)
Incidence of Tax
Total Product of Labor (TPL)
2. 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
Diseconomies of Scale
Accounting Profit
Production function
Private goods
3. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Positive externality
Total Revenue Test
Resources
Market Economy (Capitalism)
4. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Four-firm concentration ratio
Diseconomies of Scale
Law of Demand
5. A good for which higher income increases demand
Normal Goods
Economic Profit
Scarcity
Determinants of Demand
6. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Fixed inputs
Profit Maximizing Resource Employment
Determinants of Demand
Total Revenue
7. 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
Marginal Productivity Theory
Substitute Goods
Economic Profit
Constrained Utility Maximization
8. 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
Perfectly inelastic
Price elastic demand
Constrained Utility Maximization
Oligopoly
9. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Normal Goods
Allocative Efficiency
Income Effect
Profit Maximizing Rule
10. Entry of new firms shifts the cost curves for all firms upward
Market power
Increasing Cost Industry
Marginal Revenue Product (MRP)
Complementary Goods
11. 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
Law of Demand
Spillover benefits
Law of Increasing Costs
Luxury
12. A good for which higher income decreases demand
Relative Prices
Short run
Inferior Goods
Law of Supply
13. The practice of selling essentially the same good to different groups of consumers at different prices
Monopolistic competition long-run equilibrium
Productive Efficiency
Scarcity
Price discrimination
14. Ed = (%dQd)/(%dP). Ignore negative sign
Necessity
Resources
Price Elasticity of Supply
Price elasticity
15. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Absolute Advantage
Specialization
Normal Goods
Subsidy
16. The sum of consumer surplus and producer surplus
Unit elastic demand
Cross-Price Elasticity of Demand
Total Welfare
Market power
17. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Diseconomies of Scale
Substitution Effect
Incidence of Tax
Private goods
18. 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
Price discrimination
Consumer surplus
Specialization
Perfectly competitive long-run equilibrium
19. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Diseconomies of Scale
Total Revenue
Market Economy (Capitalism)
Non-collusive oligopoly
20. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Cartel
Short run
Marginal Benefit (MB)
21. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Four-firm concentration ratio
Absolute prices
Decreasing Cost industry
Explicit costs
22. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Absolute Advantage
Explicit costs
Spillover costs
Law of Supply
23. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Total Fixed Costs (TFC)
Non-collusive oligopoly
Monopoly
Substitute Goods
24. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Revenue Test
Determinants of Labor Demand
Perfectly elastic
Public goods
25. The most desirable alternative given up as the result of a decision
Law of Increasing Costs
Variable inputs
Opportunity Cost
Price inelastic demand
26. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Decreasing Cost industry
Excise Tax
Perfectly competitive long-run equilibrium
Economic Growth
27. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Substitute Goods
Excise Tax
Marginal Productivity Theory
28. 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
Free-Rider Problem
Monopoly
Public goods
Marginal Revenue Product (MRP)
29. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Perfectly competitive long-run equilibrium
Marginal Analysis
Total Fixed Costs (TFC)
Monopoly long-run equilibrium
30. 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
Specialization
Price discrimination
Monopoly long-run equilibrium
Marginal Analysis
31. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Perfect competition
Monopolistic competition
Price Ceiling
Excess Capacity
32. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Economics
Income Effect
Marginal Revenue Product (MRP)
Price floor
33. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Four-firm concentration ratio
Economics
Excise Tax
Relative Prices
34. Product demand - productivity - prices of other resources - and complementary resources
Necessity
Determinants of Labor Demand
Collusive oligopoly
Total variable costs (TVC)
35. Exists if a producer can produce a good at lower opportunity cost than all other producers
Shortage
Comparative Advantage
Relative Prices
Diseconomies of Scale
36. Exists if a producer can produce more of a good than all other producers
Decreasing Cost industry
Price discrimination
Natural Monopoly
Absolute Advantage
37. 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
Production function
Free-Rider Problem
Fixed inputs
Spillover costs
38. The additional cost incurred from the consumption of the next unit of a good or a service
Subsidy
Marginal Cost (MC)
Law of Demand
Oligopoly
39. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Market Equilibrium
Normal Profit
Demand for Labor
Law of Supply
40. 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
Law of Demand
Total Product of Labor (TPL)
Producer surplus
Determinants of Supply
41. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Total Revenue Test
Total variable costs (TVC)
Unit elastic demand
42. Occurs when LRAC is constant over a variety of plant sizes
Economies of Scale
Producer surplus
Constant Returns to Scale
Marginal tax rate
43. Models where firms agree to mutually improve their situation
Collusive oligopoly
Law of Demand
Law of Increasing Costs
Productive Efficiency
44. 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
Economies of Scale
Substitution Effect
Price floor
Relative Prices
45. The difference between total revenue and total explicit and implicit costs
Economic Profit
Substitution Effect
Substitute Goods
Price Elasticity of Supply
46. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Constrained Utility Maximization
Income Elasticity
Natural Monopoly
Marginal Productivity Theory
47. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Long Run
Excess Capacity
Opportunity Cost
48. The mechanism for combining production resources - with existing technology - into finished goods and services
Total Revenue Test
Variable inputs
Marginal tax rate
Production function
49. Ed = 8 - infinite change in demand to price change
Total variable costs (TVC)
Surplus
Perfectly elastic
Diseconomies of Scale
50. 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
Price Ceiling
Cartel
Negative externality
Comparative Advantage