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






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






3. Ed > 1 - meaning consumers are price sensitive






4. 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.






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






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






7. 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






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






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






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






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






12. A good for which higher income increases demand






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






14. 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






15. 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






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






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






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






19. 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






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






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






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






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






24. Models where firms agree to mutually improve their situation






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






26. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






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






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






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






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






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






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






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






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






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






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






37. 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






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






39. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






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






41. 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






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






43. Costs that change with the level of output. If output is zero - so are TVCs.






44. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






45. 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






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






47. 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






48. Ed < 1






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






50. 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