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AP Microeconomics

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






2. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






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






4. Ei > 1






5. 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






6. The most desirable alternative given up as the result of a decision






7. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






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






9. The rational decision maker chooses an action if MB = MC






10. 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.






11. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






12. Models where firms agree to mutually improve their situation






13. TR = P * Qd






14. Es = (%dQs) / (%dPrice)






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






16. 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






17. The difference between total revenue and total explicit costs






18. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






19. AFC = TFC/Q






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






21. MUx / Px = MUy/Py or MUx/MUy = Px/Py






22. All firms maximize profit by producing where MR = MC






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






24. The change in quantity demanded resulting from a change in the price of one good relative to other goods






25. AVC = TVC/Q






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






27. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






28. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






29. Entry (or exit) of firms does not shift the cost curves of firms in the industry






30. The sum of consumer surplus and producer surplus






31. 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






32. 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






33. A good for which higher income decreases demand






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






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






36. Ed = 0 - no response to price change






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






38. 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






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






40. 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






41. Occurs when LRAC is constant over a variety of plant sizes






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






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






44. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






45. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






46. Demand for a resource like labor is derived from the demand for the goods produced by the resource






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






49. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






50. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.