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Test your basic knowledge |
AP Microeconomics
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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. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Marginal Cost (MC)
Marginal Resource Cost (MRC)
Inferior Goods
Surplus
2. AVC = TVC/Q
Unit elastic demand
Monopsonist
Increasing Cost Industry
Average Variable Cost (AVC)
3. 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
Producer surplus
Scarcity
Total Revenue
Profit Maximizing Rule
4. 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
Long Run
Monopoly long-run equilibrium
Allocative Efficiency
Dead Weight Loss
5. The sum of consumer surplus and producer surplus
Allocative Efficiency
Cartel
Market power
Total Welfare
6. The additional cost incurred from the consumption of the next unit of a good or a service
Average Total Cost (ATC)
Monopoly
Price discrimination
Marginal Cost (MC)
7. 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.
Public goods
Allocative Efficiency
Price Ceiling
Marginal Revenue Product (MRP)
8. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Normal Goods
Marginal tax rate
Negative externality
Constrained Utility Maximization
9. The output where ATC is minimized and economic profit is zero
Determinants of Demand
Break-even Point
Increasing Cost Industry
Constrained Utility Maximization
10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Economics
Total Revenue Test
Marginal Productivity Theory
Marginal Product of Labor (MPL)
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
Resources
Price elastic demand
Total Welfare
Least-Cost Rule
12. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Diseconomies of Scale
Economics
Cartel
13. 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
Public goods
Cross-Price Elasticity of Demand
Total variable costs (TVC)
Spillover benefits
14. 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
Break-even Point
Determinants of Supply
Marginal Revenue Product (MRP)
15. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Demand for Labor
Subsidy
Relative Prices
Comparative Advantage
16. The difference between total revenue and total explicit and implicit costs
Incidence of Tax
Marginal Productivity Theory
Economic Profit
Total Revenue Test
17. A good for which higher income decreases demand
Normal Profit
Allocative Efficiency
Producer surplus
Inferior Goods
18. 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
Short run
Marginal Product of Labor (MPL)
Determinants of Supply
Subsidy
19. The additional benefit received from the consumption of the next unit of a good or service
Complementary Goods
Market Economy (Capitalism)
Marginal Analysis
Marginal Benefit (MB)
20. The marginal utility from consumption of more and more of that item falls over time
Perfectly inelastic
Law of Diminishing Marginal Utility
Marginal Revenue Product (MRP)
Absolute prices
21. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Complementary Goods
Spillover benefits
Implicit costs
22. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Implicit costs
Normal Profit
Incidence of Tax
Long Run
23. Ed = 1
Excise Tax
Decreasing Cost industry
Economic Growth
Unit elastic demand
24. The practice of selling essentially the same good to different groups of consumers at different prices
Relative Prices
Price discrimination
Marginal Productivity Theory
Accounting Profit
25. 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
Economies of Scale
Marginal Productivity Theory
Private goods
Normal Goods
26. The total quantity - or total output of a good produced at each quantity of labor employed
Marginal Productivity Theory
Explicit costs
Utility Maximizing Rule
Total Product of Labor (TPL)
27. Exists at the point where the quantity supplied equals the quantity demanded
Scarcity
Normal Goods
Market Equilibrium
Market power
28. 0 < Ei < 1
Necessity
Marginal tax rate
Total Revenue Test
Monopoly long-run equilibrium
29. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Market power
Law of Increasing Costs
Shortage
Producer surplus
30. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Substitute Goods
Market Equilibrium
Total Fixed Costs (TFC)
Dead Weight Loss
31. 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
Spillover costs
Marginal Cost (MC)
Determinants of Supply
Derived Demand
32. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Spillover benefits
Perfectly inelastic
Market power
33. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Marginal Productivity Theory
Consumer surplus
Marginal Revenue Product (MRP)
Decreasing Cost industry
34. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Excise Tax
Marginal Analysis
Law of Demand
35. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Spillover benefits
Law of Supply
Determinants of Demand
Non-collusive oligopoly
36. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Consumer surplus
Law of Diminishing Marginal Utility
Total variable costs (TVC)
37. Es = (%dQs) / (%dPrice)
Monopolistic competition long-run equilibrium
Price Elasticity of Supply
Marginal Product of Labor (MPL)
Free-Rider Problem
38. 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
Producer surplus
Normal Profit
Utility Maximizing Rule
Variable inputs
39. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Excise Tax
Subsidy
Dead Weight Loss
Price floor
40. Occurs when LRAC is constant over a variety of plant sizes
Determinants of Labor Demand
Absolute Advantage
Marginal Product of Labor (MPL)
Constant Returns to Scale
41. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Accounting Profit
Spillover benefits
Perfectly inelastic
Shortage
42. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Monopsonist
Determinants of elasticity
Marginal Benefit (MB)
Average Product of Labor (APL)
43. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Marginal Product of Labor (MPL)
Cartel
Shutdown Point
Total Revenue Test
44. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Economics
Negative externality
Constant cost industry
Derived Demand
45. 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
Price discrimination
Market Equilibrium
Specialization
46. The mechanism for combining production resources - with existing technology - into finished goods and services
Diseconomies of Scale
Price discrimination
Decreasing Cost industry
Production function
47. 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
Oligopoly
Derived Demand
Marginal Resource Cost (MRC)
Marginal tax rate
48. Ei = (%dQd good X)/(%d Income)
Determinants of elasticity
Surplus
Income Elasticity
Subsidy
49. Ed = 8 - infinite change in demand to price change
Perfectly elastic
Determinants of elasticity
Marginal Benefit (MB)
Monopoly
50. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Consumer surplus
Luxury
Law of Demand