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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 firm that has market power in the factor market (a wage-setter)






2. 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






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






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






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






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






7. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






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






9. A good for which higher income decreases demand






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






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






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






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






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






15. 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






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






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






18. Models where firms agree to mutually improve their situation






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






20. Two goods are consumer substitutes if they provide essentially the same utility to consumers






21. 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






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






23. 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






24. The imbalance between limited productive resources and unlimited human wants






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






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






27. The total quantity - or total output of a good produced at each quantity of labor employed






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






29. Ed < 1






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






31. 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






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






33. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






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






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






36. 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






37. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






38. 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






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






40. Ei > 1






41. The difference between total revenue and total explicit costs






42. Ed = (%dQd)/(%dP). Ignore negative sign






43. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






44. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






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






46. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






47. 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






48. 0 < Ei < 1






49. Product demand - productivity - prices of other resources - and complementary resources






50. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur