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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 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
Surplus
Incidence of Tax
Total Product of Labor (TPL)
Diseconomies of Scale
2. Exists at the point where the quantity supplied equals the quantity demanded
Marginal Cost (MC)
Market Equilibrium
Price inelastic demand
Marginal Analysis
3. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Utility Maximizing Rule
Total Revenue Test
Accounting Profit
Average Total Cost (ATC)
4. Ed = (%dQd)/(%dP). Ignore negative sign
Price floor
Price elasticity
Marginal Productivity Theory
Utility Maximizing Rule
5. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Market Equilibrium
Price elasticity
Total Welfare
6. 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
Marginal Product of Labor (MPL)
Determinants of Supply
Shutdown Point
Specialization
7. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Least-Cost Rule
Fixed inputs
Monopsonist
Spillover costs
8. The sum of consumer surplus and producer surplus
Total Welfare
Price Elasticity of Supply
Total Revenue Test
Cartel
9. The imbalance between limited productive resources and unlimited human wants
Market power
Implicit costs
Monopsonist
Scarcity
10. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Economic Profit
Productive Efficiency
Four-firm concentration ratio
Specialization
11. AVC = TVC/Q
Average Variable Cost (AVC)
Income Effect
Incidence of Tax
Long Run
12. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Economic Growth
Monopoly
Allocative Efficiency
Positive externality
13. 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.
Determinants of elasticity
Cartel
Absolute Advantage
Marginal Revenue Product (MRP)
14. Product demand - productivity - prices of other resources - and complementary resources
Average Product of Labor (APL)
Determinants of Labor Demand
Monopolistic competition
Monopsonist
15. 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
Spillover benefits
Economies of Scale
Implicit costs
Excise Tax
16. Models where firms agree to mutually improve their situation
Collusive oligopoly
Determinants of Supply
Increasing Cost Industry
Spillover costs
17. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Producer surplus
Consumer surplus
Collusive oligopoly
18. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Implicit costs
Marginal Productivity Theory
Income Effect
Economics
19. A good for which higher income increases demand
Consumer surplus
Law of Supply
Normal Goods
Constrained Utility Maximization
20. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Free-Rider Problem
Dead Weight Loss
Law of Demand
Increasing Cost Industry
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
Natural Monopoly
Opportunity Cost
Marginal Productivity Theory
Price elastic demand
22. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Monopoly
Demand for Labor
Shortage
Monopsonist
23. TR = P * Qd
Cartel
Short run
Total Revenue
Economic Profit
24. 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)
Free-Rider Problem
Cross-Price Elasticity of Demand
Unit elastic demand
25. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Increasing Cost Industry
Marginal Analysis
Free-Rider Problem
Economics
26. The price of a good measured in units of currency
Constant Returns to Scale
Marginal Productivity Theory
Variable inputs
Absolute prices
27. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Average Product of Labor (APL)
Opportunity Cost
Cartel
Economic Growth
28. Ed = 0 - no response to price change
Perfectly inelastic
Explicit costs
Necessity
Economies of Scale
29. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Demand for Labor
Market Economy (Capitalism)
Non-collusive oligopoly
Income Effect
30. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Excess Capacity
Specialization
Profit Maximizing Rule
Constant cost industry
31. The mechanism for combining production resources - with existing technology - into finished goods and services
Marginal Revenue Product (MRP)
Production function
Absolute prices
Monopolistic competition
32. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Market Equilibrium
Excise Tax
Perfectly inelastic
Determinants of Labor Demand
33. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Determinants of Labor Demand
Four-firm concentration ratio
Allocative Efficiency
34. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Determinants of Labor Demand
Producer surplus
Market power
Explicit costs
35. 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
Average Product of Labor (APL)
Consumer surplus
Utility Maximizing Rule
Determinants of Supply
36. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Absolute Advantage
Economic Growth
Perfectly elastic
Determinants of elasticity
37. The rational decision maker chooses an action if MB = MC
Specialization
Marginal Analysis
Perfect competition
Monopolistic competition long-run equilibrium
38. 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 Increasing Costs
Total Welfare
Monopolistic competition
Four-firm concentration ratio
39. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Law of Diminishing Marginal Utility
Variable inputs
Perfectly competitive long-run equilibrium
Marginal Analysis
40. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Diseconomies of Scale
Monopoly long-run equilibrium
Demand for Labor
Variable inputs
41. 0 < Ei < 1
Profit Maximizing Resource Employment
Necessity
Average Total Cost (ATC)
Market Economy (Capitalism)
42. A good for which higher income decreases demand
Spillover benefits
Inferior Goods
Long Run
Spillover costs
43. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Price Ceiling
Complementary Goods
Determinants of elasticity
Law of Increasing Costs
44. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Spillover costs
Natural Monopoly
Excess Capacity
Comparative Advantage
45. 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
Marginal tax rate
Constant Returns to Scale
Total Product of Labor (TPL)
Spillover costs
46. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Utility Maximizing Rule
Dead Weight Loss
Long Run
47. 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
Monopsonist
Average Variable Cost (AVC)
Unit elastic demand
48. 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
Cross-Price Elasticity of Demand
Incidence of Tax
Substitute Goods
Complementary Goods
49. The difference between total revenue and total explicit and implicit costs
Spillover benefits
Average Variable Cost (AVC)
Determinants of Labor Demand
Economic Profit
50. 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
Short run
Constrained Utility Maximization
Law of Diminishing Marginal Utility
Monopoly long-run equilibrium