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






2. 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






3. Ei > 1






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






5. AVC = TVC/Q






6. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






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






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






9. 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






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






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






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






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






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






15. 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






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






17. 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






18. 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






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






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






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






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






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






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






25. AFC = TFC/Q






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






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






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






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






30. A good for which higher income increases demand






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






32. 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






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






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






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






36. 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






37. 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






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






39. The difference between total revenue and total explicit costs






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






41. Models where firms agree to mutually improve their situation






42. Exists if a producer can produce more of a good than all other producers






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






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






45. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






46. TR = P * Qd






47. 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






48. 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






49. The additional cost incurred from the consumption of the next unit of a good or a service






50. 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