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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. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Dead Weight Loss
Complementary Goods
Natural Monopoly
Comparative Advantage
2. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Incidence of Tax
Total Welfare
Marginal Productivity Theory
Constrained Utility Maximization
3. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Unit elastic demand
Constant cost industry
Production function
Total Fixed Costs (TFC)
4. 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
Least-Cost Rule
Dead Weight Loss
Decreasing Cost industry
Economic Growth
5. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Positive externality
Producer surplus
Law of Increasing Costs
6. The difference between total revenue and total explicit and implicit costs
Economic Profit
Diseconomies of Scale
Luxury
Complementary Goods
7. 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
Law of Demand
Constrained Utility Maximization
Cross-Price Elasticity of Demand
8. The total quantity - or total output of a good produced at each quantity of labor employed
Break-even Point
Price inelastic demand
Total Product of Labor (TPL)
Decreasing Cost industry
9. Entry of new firms shifts the cost curves for all firms upward
Variable inputs
Necessity
Spillover costs
Increasing Cost Industry
10. The practice of selling essentially the same good to different groups of consumers at different prices
Income Effect
Economics
Price discrimination
Allocative Efficiency
11. 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
Spillover benefits
Private goods
Monopolistic competition
Oligopoly
12. Costs that change with the level of output. If output is zero - so are TVCs.
Spillover benefits
Substitute Goods
Marginal Product of Labor (MPL)
Total variable costs (TVC)
13. Ei > 1
Luxury
Law of Increasing Costs
Negative externality
Absolute prices
14. 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.
Economic Growth
Average Total Cost (ATC)
Marginal Revenue Product (MRP)
Necessity
15. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Marginal Benefit (MB)
Monopoly
Utility Maximizing Rule
Substitute Goods
16. Exists if a producer can produce a good at lower opportunity cost than all other producers
Least-Cost Rule
Comparative Advantage
Law of Demand
Spillover costs
17. 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
Monopoly long-run equilibrium
Law of Demand
Positive externality
Public goods
18. 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
Law of Demand
Public goods
Increasing Cost Industry
Monopoly long-run equilibrium
19. 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
Luxury
Law of Increasing Costs
Determinants of Demand
Determinants of Supply
20. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Total Product of Labor (TPL)
Monopoly long-run equilibrium
Economic Growth
21. 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
Profit Maximizing Resource Employment
Price floor
Excess Capacity
Economies of Scale
22. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Inferior Goods
Non-collusive oligopoly
Economic Profit
Total variable costs (TVC)
23. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Total Revenue Test
Average Variable Cost (AVC)
Excise Tax
Substitution Effect
24. 0 < Ei < 1
Price floor
Marginal Revenue Product (MRP)
Necessity
Four-firm concentration ratio
25. 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
Perfect competition
Substitution Effect
Total Revenue Test
26. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Marginal Cost (MC)
Determinants of elasticity
Incidence of Tax
Excess Capacity
27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Determinants of Demand
Marginal Revenue Product (MRP)
Shortage
Short run
28. 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.
Production function
Relative Prices
Total Product of Labor (TPL)
Diseconomies of Scale
29. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Total Revenue Test
Law of Demand
Determinants of Labor Demand
30. 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
Oligopoly
Marginal Revenue Product (MRP)
Substitute Goods
Price inelastic demand
31. Entry of new firms shifts the cost curves for all firms downward
Average Fixed Cost (AFC)
Total Fixed Costs (TFC)
Production function
Decreasing Cost industry
32. Exists if a producer can produce more of a good than all other producers
Monopsonist
Absolute Advantage
Cross-Price Elasticity of Demand
Decreasing Cost industry
33. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Cross-Price Elasticity of Demand
Normal Profit
Law of Increasing Costs
34. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Constrained Utility Maximization
Cartel
Marginal Revenue Product (MRP)
Monopoly
35. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Luxury
Determinants of elasticity
Necessity
Marginal Productivity Theory
36. AVC = TVC/Q
Average Variable Cost (AVC)
Marginal Analysis
Marginal Benefit (MB)
Normal Goods
37. 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
Market Equilibrium
Inferior Goods
Incidence of Tax
Monopoly long-run equilibrium
38. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Negative externality
Constant cost industry
Monopolistic competition long-run equilibrium
Utility Maximizing Rule
39. 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
Normal Profit
Least-Cost Rule
Short run
Law of Diminishing Marginal Utility
40. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Productive Efficiency
Economic Growth
Production function
Monopsonist
41. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Shutdown Point
Derived Demand
Marginal Productivity Theory
Subsidy
42. The rational decision maker chooses an action if MB = MC
Allocative Efficiency
Marginal Analysis
Cartel
Surplus
43. Ed = 8 - infinite change in demand to price change
Short run
Perfect competition
Perfectly elastic
Luxury
44. 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
Shortage
Opportunity Cost
Shutdown Point
Free-Rider Problem
45. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Excise Tax
Profit Maximizing Resource Employment
Long Run
Spillover costs
46. The marginal utility from consumption of more and more of that item falls over time
Total Fixed Costs (TFC)
Perfectly elastic
Economic Growth
Law of Diminishing Marginal Utility
47. Ed = (%dQd)/(%dP). Ignore negative sign
Perfectly competitive long-run equilibrium
Income Effect
Price elasticity
Least-Cost Rule
48. Ed = 1
Production function
Monopolistic competition long-run equilibrium
Unit elastic demand
Dead Weight Loss
49. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Income Effect
Total Fixed Costs (TFC)
Decreasing Cost industry
50. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Law of Supply
Cartel
Determinants of Supply