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






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






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






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






5. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






6. 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






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






8. 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






9. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






10. 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






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






12. 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






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






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






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






16. The difference between total revenue and total explicit costs






17. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






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






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






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






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






22. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






23. Ed = 0 - no response to price change






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






25. 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






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






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






28. 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






29. 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.






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






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






32. Entry (or exit) of firms does not shift the cost curves of firms in the industry






33. Ed > 1 - meaning consumers are price sensitive






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






35. 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






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






37. When firms focus their resources on production of goods for which they have comparative advantage






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






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






40. Ei = (%dQd good X)/(%d Income)






41. Ed = 1






42. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






43. 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.






44. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






45. 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






46. The ability to set the price above the perfectly competitive level






47. Ei > 1






48. Exists at the point where the quantity supplied equals the quantity demanded






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






50. 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