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






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






3. The difference between total revenue and total explicit costs






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






5. 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






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






7. 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






8. Ed > 1 - meaning consumers are price sensitive






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






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






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






12. The output where ATC is minimized and economic profit is zero






13. 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






14. 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






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






16. 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






17. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






18. 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






19. Exists if a producer can produce a good at lower opportunity cost than all other producers






20. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






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






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






23. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






24. 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






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






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






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






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






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






30. 0 < Ei < 1






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






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






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






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






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






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






37. 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






38. Models where firms agree to mutually improve their situation






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






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






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






42. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






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






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






45. The additional benefit received from the consumption of the next unit of a good or service






46. The sum of consumer surplus and producer surplus






47. TR = P * Qd






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






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






50. 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







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