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






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






3. The difference between total revenue and total explicit costs






4. The lost net benefit to society caused by a movement away from the competitive market equilibrium






5. Ei > 1






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






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






8. 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.






9. 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






10. 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






11. 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






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






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






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






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






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






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






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






20. 0 < Ei < 1






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






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. AVC = TVC/Q






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






25. 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






26. A good for which higher income decreases demand






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






28. 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






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






30. 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






31. 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






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






33. A good for which higher income increases demand






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






35. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






36. Ed = 0 - no response to price change






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






38. The sum of consumer surplus and producer surplus






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






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






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






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






43. 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






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






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






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






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






48. 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






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






50. 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







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