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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. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Specialization
Law of Diminishing Marginal Utility
Perfectly competitive long-run equilibrium
2. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Short run
Income Effect
Monopolistic competition long-run equilibrium
Average Variable Cost (AVC)
3. 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
Price Ceiling
Marginal Benefit (MB)
Scarcity
Productive Efficiency
4. AVC = TVC/Q
Average Variable Cost (AVC)
Normal Goods
Price Elasticity of Supply
Scarcity
5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Average Product of Labor (APL)
Incidence of Tax
Long Run
Relative Prices
6. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Implicit costs
Price elastic demand
Collusive oligopoly
7. 0 < Ei < 1
Necessity
Perfectly inelastic
Marginal Cost (MC)
Substitution Effect
8. The difference between total revenue and total explicit and implicit costs
Economic Profit
Diseconomies of Scale
Law of Increasing Costs
Market Economy (Capitalism)
9. 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
Marginal Product of Labor (MPL)
Cartel
Marginal Revenue Product (MRP)
Total Welfare
10. 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
Marginal tax rate
Constant Returns to Scale
Spillover benefits
Market Economy (Capitalism)
11. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Total variable costs (TVC)
Perfectly competitive long-run equilibrium
Decreasing Cost industry
Relative Prices
12. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Monopolistic competition long-run equilibrium
Resources
Monopoly long-run equilibrium
Oligopoly
13. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Marginal Resource Cost (MRC)
Non-collusive oligopoly
Law of Supply
Total Revenue Test
14. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Perfectly competitive long-run equilibrium
Monopolistic competition
Shutdown Point
15. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Income Effect
Economic Profit
Normal Profit
Relative Prices
16. Entry of new firms shifts the cost curves for all firms downward
Monopoly
Monopolistic competition long-run equilibrium
Decreasing Cost industry
Law of Demand
17. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Resources
Collusive oligopoly
Marginal Productivity Theory
Break-even Point
18. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Short run
Productive Efficiency
Utility Maximizing Rule
Surplus
19. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Determinants of Labor Demand
Perfectly inelastic
Monopolistic competition
Fixed inputs
20. 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.
Economies of Scale
Derived Demand
Average Variable Cost (AVC)
Natural Monopoly
21. The sum of consumer surplus and producer surplus
Derived Demand
Absolute Advantage
Total Welfare
Non-collusive oligopoly
22. TR = P * Qd
Profit Maximizing Rule
Allocative Efficiency
Excess Capacity
Total Revenue
23. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Free-Rider Problem
Income Effect
Positive externality
24. 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
Cross-Price Elasticity of Demand
Absolute Advantage
Dead Weight Loss
Cartel
25. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Monopoly long-run equilibrium
Marginal Productivity Theory
Productive Efficiency
26. Ed = 0 - no response to price change
Monopsonist
Perfectly inelastic
Surplus
Total Product of Labor (TPL)
27. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Four-firm concentration ratio
Perfectly inelastic
Scarcity
28. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Marginal Resource Cost (MRC)
Determinants of Labor Demand
Natural Monopoly
Excess Capacity
29. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Absolute Advantage
Total Fixed Costs (TFC)
Total variable costs (TVC)
Total Revenue
30. Exists at the point where the quantity supplied equals the quantity demanded
Market Equilibrium
Comparative Advantage
Normal Profit
Marginal Analysis
31. 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
Private goods
Absolute Advantage
Constrained Utility Maximization
Absolute prices
32. All firms maximize profit by producing where MR = MC
Absolute Advantage
Profit Maximizing Rule
Production function
Private goods
33. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Total Fixed Costs (TFC)
Substitution Effect
Total Revenue
Total variable costs (TVC)
34. Product demand - productivity - prices of other resources - and complementary resources
Determinants of Labor Demand
Total Revenue Test
Monopolistic competition
Short run
35. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Implicit costs
Least-Cost Rule
Income Elasticity
Economics
36. Exists if a producer can produce more of a good than all other producers
Average Variable Cost (AVC)
Absolute Advantage
Absolute prices
Unit elastic demand
37. 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
Incidence of Tax
Total Revenue Test
Determinants of Labor Demand
Constrained Utility Maximization
38. A good for which higher income decreases demand
Economic Growth
Public goods
Short run
Inferior Goods
39. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Public goods
Diseconomies of Scale
Shortage
Resources
40. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Producer surplus
Diseconomies of Scale
Demand for Labor
Subsidy
41. Ei > 1
Luxury
Profit Maximizing Rule
Market power
Incidence of Tax
42. A good for which higher income increases demand
Free-Rider Problem
Normal Goods
Substitution Effect
Total Revenue
43. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Necessity
Income Elasticity
Excise Tax
Luxury
44. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Total Welfare
Normal Profit
Profit Maximizing Rule
Law of Demand
45. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Total Revenue Test
Subsidy
Constant cost industry
Decreasing Cost industry
46. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Law of Supply
Marginal Product of Labor (MPL)
Average Product of Labor (APL)
Marginal Analysis
47. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Shutdown Point
Long Run
Income Elasticity
Spillover benefits
48. 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
Constant Returns to Scale
Normal Goods
Consumer surplus
Natural Monopoly
49. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Marginal tax rate
Economics
Monopoly
Shortage
50. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Relative Prices
Price floor
Dead Weight Loss
Non-collusive oligopoly