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AP Microeconomics
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Subjects
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economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
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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. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Derived Demand
Perfectly elastic
Implicit costs
Necessity
2. 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
Total Revenue Test
Price discrimination
Monopoly long-run equilibrium
Perfectly elastic
3. 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
Incidence of Tax
Price elastic demand
Determinants of Supply
Allocative Efficiency
4. When firms focus their resources on production of goods for which they have comparative advantage
Free-Rider Problem
Specialization
Comparative Advantage
Income Effect
5. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Marginal Cost (MC)
Constant cost industry
Marginal Benefit (MB)
Total variable costs (TVC)
6. 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
Scarcity
Dead Weight Loss
Price Ceiling
Marginal Product of Labor (MPL)
7. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Cross-Price Elasticity of Demand
Price elastic demand
Normal Profit
Average Fixed Cost (AFC)
8. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Economic Profit
Perfectly competitive long-run equilibrium
Decreasing Cost industry
Substitute Goods
9. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Unit elastic demand
Complementary Goods
Total Fixed Costs (TFC)
Price Ceiling
10. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Oligopoly
Producer surplus
Positive externality
Substitute Goods
11. 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
Productive Efficiency
Market Economy (Capitalism)
Income Elasticity
12. TR = P * Qd
Total Revenue
Private goods
Determinants of Labor Demand
Comparative Advantage
13. 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
Total Welfare
Determinants of Demand
Positive externality
14. Entry of new firms shifts the cost curves for all firms upward
Determinants of Supply
Marginal Cost (MC)
Increasing Cost Industry
Price Elasticity of Supply
15. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Excess Capacity
Relative Prices
Marginal Cost (MC)
16. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Price Ceiling
Explicit costs
Monopsonist
Complementary Goods
17. 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
Least-Cost Rule
Spillover costs
Complementary Goods
Specialization
18. Ed = 0 - no response to price change
Total Fixed Costs (TFC)
Monopolistic competition long-run equilibrium
Perfectly inelastic
Non-collusive oligopoly
19. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Absolute Advantage
Profit Maximizing Resource Employment
Constant Returns to Scale
20. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Total Welfare
Average Product of Labor (APL)
Four-firm concentration ratio
Law of Demand
21. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Public goods
Negative externality
Natural Monopoly
Monopolistic competition
22. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Specialization
Marginal Analysis
Constant cost industry
Incidence of Tax
23. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Incidence of Tax
Monopolistic competition
Normal Profit
Unit elastic demand
24. 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
Total Revenue
Marginal Resource Cost (MRC)
Excess Capacity
Average Product of Labor (APL)
25. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Long Run
Opportunity Cost
Perfectly inelastic
Utility Maximizing Rule
26. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Total Product of Labor (TPL)
Total Revenue Test
Monopolistic competition
27. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Comparative Advantage
Determinants of Demand
Profit Maximizing Rule
Market power
28. Ed = 8 - infinite change in demand to price change
Allocative Efficiency
Average Variable Cost (AVC)
Determinants of Labor Demand
Perfectly elastic
29. Exists at the point where the quantity supplied equals the quantity demanded
Market Equilibrium
Variable inputs
Total Welfare
Total Revenue
30. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Price Ceiling
Allocative Efficiency
Law of Supply
Resources
31. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Income Elasticity
Accounting Profit
Shortage
Market Economy (Capitalism)
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
Complementary Goods
Producer surplus
Break-even Point
Four-firm concentration ratio
33. The rational decision maker chooses an action if MB = MC
Comparative Advantage
Marginal Analysis
Spillover benefits
Perfect competition
34. Models where firms agree to mutually improve their situation
Average Fixed Cost (AFC)
Perfectly inelastic
Constant Returns to Scale
Collusive oligopoly
35. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Short run
Monopolistic competition long-run equilibrium
Total Fixed Costs (TFC)
Total Product of Labor (TPL)
36. 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
Price floor
Spillover costs
Non-collusive oligopoly
Surplus
37. A firm that has market power in the factor market (a wage-setter)
Perfectly competitive long-run equilibrium
Perfectly inelastic
Monopsonist
Opportunity Cost
38. The mechanism for combining production resources - with existing technology - into finished goods and services
Natural Monopoly
Marginal Cost (MC)
Production function
Monopolistic competition
39. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Economics
Absolute prices
Perfectly elastic
Long Run
40. The ability to set the price above the perfectly competitive level
Monopolistic competition
Average Variable Cost (AVC)
Market power
Scarcity
41. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Luxury
Total Revenue Test
Public goods
Cartel
42. The sum of consumer surplus and producer surplus
Utility Maximizing Rule
Total Welfare
Derived Demand
Implicit costs
43. Ei = (%dQd good X)/(%d Income)
Market Economy (Capitalism)
Income Elasticity
Inferior Goods
Derived Demand
44. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Increasing Cost Industry
Total Product of Labor (TPL)
Derived Demand
45. Product demand - productivity - prices of other resources - and complementary resources
Necessity
Determinants of Labor Demand
Economic Profit
Inferior Goods
46. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Economics
Inferior Goods
Unit elastic demand
47. The price of a good measured in units of currency
Luxury
Explicit costs
Absolute prices
Long Run
48. 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
Determinants of Labor Demand
Shutdown Point
Producer surplus
Spillover benefits
49. AFC = TFC/Q
Complementary Goods
Average Product of Labor (APL)
Average Fixed Cost (AFC)
Spillover costs
50. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Dead Weight Loss
Private goods
Marginal Resource Cost (MRC)
Relative Prices
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