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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. The sum of consumer surplus and producer surplus






2. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






3. The total quantity - or total output of a good produced at each quantity of labor employed






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






5. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






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






7. The practice of selling essentially the same good to different groups of consumers at different prices






8. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






9. Ed = 0 - no response to price change






10. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






11. A good for which higher income increases demand






12. 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






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






14. 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






15. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






16. 0 < Ei < 1






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






18. Ed = 1






19. The mechanism for combining production resources - with existing technology - into finished goods and services






20. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






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






22. 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






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






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






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






26. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






27. 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






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






29. Ed < 1






30. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






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






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






33. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






34. The lost net benefit to society caused by a movement away from the competitive market equilibrium






35. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






36. The difference between total revenue and total explicit costs






37. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






38. 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






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






40. A firm that has market power in the factor market (a wage-setter)






41. Exists at the point where the quantity supplied equals the quantity demanded






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






43. The difference between total revenue and total explicit and implicit costs






44. The ability to set the price above the perfectly competitive level






45. 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






46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






47. 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






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






49. Two goods are consumer substitutes if they provide essentially the same utility to consumers






50. TR = P * Qd