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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. A good for which higher income increases demand






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






3. Total product divided by labor employed. APL = TPL/L






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






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






6. 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






7. AFC = TFC/Q






8. 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






9. 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






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






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






12. Exists if a producer can produce a good at lower opportunity cost than all other producers






13. Ed = 0 - no response to price change






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






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






16. 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






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






18. Costs that change with the level of output. If output is zero - so are TVCs.






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






20. 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






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






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






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






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






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






26. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






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






28. Ed > 1 - meaning consumers are price sensitive






29. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






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






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






32. 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.






33. 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






34. 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






35. 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






36. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






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






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






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






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






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






42. Ed = 8 - infinite change in demand to price change






43. 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






44. 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






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






46. 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






47. ATC = TC/Q = AFC + AVC






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






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






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