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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. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Determinants of Demand
Specialization
Marginal Product of Labor (MPL)
Marginal Cost (MC)
2. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Break-even Point
Fixed inputs
Oligopoly
Luxury
3. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Marginal Product of Labor (MPL)
Decreasing Cost industry
Market Economy (Capitalism)
Substitution Effect
4. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Profit Maximizing Rule
Normal Profit
Total variable costs (TVC)
Specialization
5. The ability to set the price above the perfectly competitive level
Law of Diminishing Marginal Utility
Market power
Spillover costs
Luxury
6. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Collusive oligopoly
Positive externality
Law of Increasing Costs
Economics
7. TR = P * Qd
Income Effect
Monopsonist
Constant cost industry
Total Revenue
8. A firm that has market power in the factor market (a wage-setter)
Negative externality
Monopsonist
Price inelastic demand
Unit elastic demand
9. A good for which higher income increases demand
Normal Goods
Spillover benefits
Cross-Price Elasticity of Demand
Market power
10. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Comparative Advantage
Economies of Scale
Total Revenue
Total Revenue Test
11. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Total Welfare
Four-firm concentration ratio
Positive externality
Total Revenue Test
12. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Economies of Scale
Constant Returns to Scale
Marginal tax rate
Utility Maximizing Rule
13. The difference between total revenue and total explicit costs
Negative externality
Relative Prices
Accounting Profit
Price floor
14. Ed = 8 - infinite change in demand to price change
Market Equilibrium
Economics
Perfectly elastic
Consumer surplus
15. 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
Public goods
Total variable costs (TVC)
Marginal Productivity Theory
Spillover costs
16. The mechanism for combining production resources - with existing technology - into finished goods and services
Production function
Constant Returns to Scale
Utility Maximizing Rule
Spillover costs
17. Exists if a producer can produce a good at lower opportunity cost than all other producers
Perfect competition
Comparative Advantage
Unit elastic demand
Marginal Benefit (MB)
18. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Opportunity Cost
Profit Maximizing Rule
Law of Increasing Costs
Monopoly
19. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Perfectly inelastic
Productive Efficiency
Marginal Revenue Product (MRP)
20. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Derived Demand
Monopolistic competition long-run equilibrium
Total Welfare
Spillover benefits
21. 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
Total variable costs (TVC)
Demand for Labor
Price Ceiling
Public goods
22. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Law of Diminishing Marginal Utility
Variable inputs
Income Effect
Private goods
23. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Economic Growth
Perfectly elastic
Price elasticity
24. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Average Total Cost (ATC)
Accounting Profit
Specialization
25. A good for which higher income decreases demand
Price elastic demand
Spillover benefits
Increasing Cost Industry
Inferior Goods
26. Ed < 1
Monopoly long-run equilibrium
Price inelastic demand
Marginal Analysis
Marginal Resource Cost (MRC)
27. 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
Law of Demand
Shutdown Point
Surplus
Producer surplus
28. 0 < Ei < 1
Producer surplus
Market power
Increasing Cost Industry
Necessity
29. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Income Elasticity
Monopoly long-run equilibrium
Fixed inputs
Shortage
30. Entry of new firms shifts the cost curves for all firms downward
Luxury
Total Revenue
Marginal Revenue Product (MRP)
Decreasing Cost industry
31. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Public goods
Profit Maximizing Resource Employment
Marginal tax rate
Spillover costs
32. 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
Constrained Utility Maximization
Luxury
Cartel
Normal Profit
33. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Price inelastic demand
Marginal Product of Labor (MPL)
Monopoly
34. Exists if a producer can produce more of a good than all other producers
Variable inputs
Absolute Advantage
Average Variable Cost (AVC)
Monopoly
35. The imbalance between limited productive resources and unlimited human wants
Scarcity
Diseconomies of Scale
Total Fixed Costs (TFC)
Perfect competition
36. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Profit Maximizing Rule
Economics
Luxury
Price elasticity
37. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Spillover costs
Law of Supply
Total Revenue Test
Four-firm concentration ratio
38. The rational decision maker chooses an action if MB = MC
Absolute Advantage
Law of Supply
Specialization
Marginal Analysis
39. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Determinants of Demand
Income Effect
Total variable costs (TVC)
40. AFC = TFC/Q
Average Fixed Cost (AFC)
Production function
Average Total Cost (ATC)
Opportunity Cost
41. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Cartel
Four-firm concentration ratio
Complementary Goods
Determinants of elasticity
42. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Surplus
Average Product of Labor (APL)
Marginal Revenue Product (MRP)
Monopolistic competition long-run equilibrium
43. Ei > 1
Explicit costs
Comparative Advantage
Luxury
Average Product of Labor (APL)
44. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Resources
Negative externality
Total Fixed Costs (TFC)
Price Elasticity of Supply
45. The difference between total revenue and total explicit and implicit costs
Economic Profit
Resources
Total Fixed Costs (TFC)
Spillover benefits
46. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Normal Goods
Spillover costs
Law of Demand
Economics
47. The total quantity - or total output of a good produced at each quantity of labor employed
Public goods
Opportunity Cost
Non-collusive oligopoly
Total Product of Labor (TPL)
48. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Spillover benefits
Producer surplus
Dead Weight Loss
Excise Tax
49. 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
Total Welfare
Economic Growth
Average Variable Cost (AVC)
Constrained Utility Maximization
50. 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
Determinants of elasticity
Determinants of Supply
Income Elasticity
Shutdown Point