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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. Es = (%dQs) / (%dPrice)
Total variable costs (TVC)
Specialization
Price Elasticity of Supply
Income Effect
2. Ei = (%dQd good X)/(%d Income)
Total Product of Labor (TPL)
Income Elasticity
Average Product of Labor (APL)
Oligopoly
3. The output where ATC is minimized and economic profit is zero
Perfectly inelastic
Relative Prices
Break-even Point
Marginal Benefit (MB)
4. 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
Natural Monopoly
Marginal Analysis
Oligopoly
Economic Growth
5. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Shortage
Explicit costs
Total Welfare
Average Product of Labor (APL)
6. 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
Oligopoly
Excise Tax
Total variable costs (TVC)
Public goods
7. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Variable inputs
Opportunity Cost
Substitution Effect
8. Models where firms agree to mutually improve their situation
Non-collusive oligopoly
Specialization
Relative Prices
Collusive oligopoly
9. Ed < 1
Luxury
Total Revenue
Price inelastic demand
Marginal Resource Cost (MRC)
10. AVC = TVC/Q
Producer surplus
Average Variable Cost (AVC)
Average Total Cost (ATC)
Profit Maximizing Rule
11. Exists if a producer can produce more of a good than all other producers
Perfectly competitive long-run equilibrium
Absolute Advantage
Law of Diminishing Marginal Utility
Average Variable Cost (AVC)
12. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Utility Maximizing Rule
Accounting Profit
Specialization
Consumer surplus
13. A good for which higher income increases demand
Income Effect
Marginal Cost (MC)
Collusive oligopoly
Normal Goods
14. Ei > 1
Derived Demand
Constrained Utility Maximization
Total Welfare
Luxury
15. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Non-collusive oligopoly
Normal Profit
Determinants of Supply
16. 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
Allocative Efficiency
Long Run
Perfectly competitive long-run equilibrium
Cartel
17. 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
Average Total Cost (ATC)
Perfectly elastic
Decreasing Cost industry
Monopoly long-run equilibrium
18. The most desirable alternative given up as the result of a decision
Short run
Marginal Cost (MC)
Opportunity Cost
Productive Efficiency
19. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Marginal Resource Cost (MRC)
Opportunity Cost
Marginal tax rate
Free-Rider Problem
20. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Fixed Costs (TFC)
Price elasticity
Marginal Product of Labor (MPL)
Specialization
21. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Incidence of Tax
Average Fixed Cost (AFC)
Constant cost industry
Law of Demand
22. Costs that change with the level of output. If output is zero - so are TVCs.
Total variable costs (TVC)
Decreasing Cost industry
Normal Goods
Cross-Price Elasticity of Demand
23. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Collusive oligopoly
Complementary Goods
Producer surplus
Utility Maximizing Rule
24. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Price elastic demand
Implicit costs
Variable inputs
25. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Long Run
Negative externality
Excise Tax
Determinants of Demand
26. 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.
Diseconomies of Scale
Explicit costs
Shortage
Decreasing Cost industry
27. The marginal utility from consumption of more and more of that item falls over time
Explicit costs
Law of Diminishing Marginal Utility
Producer surplus
Market power
28. 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
Income Effect
Cartel
Law of Increasing Costs
29. The practice of selling essentially the same good to different groups of consumers at different prices
Law of Increasing Costs
Average Fixed Cost (AFC)
Price discrimination
Allocative Efficiency
30. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Average Total Cost (ATC)
Determinants of Demand
Marginal Resource Cost (MRC)
Substitution Effect
31. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Natural Monopoly
Market Economy (Capitalism)
Spillover benefits
32. 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
Market Equilibrium
Natural Monopoly
Marginal Resource Cost (MRC)
Price elasticity
33. 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
Explicit costs
Accounting Profit
Total Welfare
Price floor
34. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Unit elastic demand
Law of Increasing Costs
Demand for Labor
Public goods
35. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Normal Goods
Dead Weight Loss
Economic Growth
Determinants of elasticity
36. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Subsidy
Income Elasticity
Total Revenue
37. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Monopoly
Marginal Productivity Theory
Implicit costs
Luxury
38. AFC = TFC/Q
Total variable costs (TVC)
Price floor
Average Fixed Cost (AFC)
Marginal Benefit (MB)
39. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Marginal tax rate
Law of Diminishing Marginal Utility
Implicit costs
40. Ed = 0 - no response to price change
Perfectly inelastic
Surplus
Law of Supply
Substitute Goods
41. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Total Revenue
Cartel
Monopsonist
42. 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
Constrained Utility Maximization
Productive Efficiency
Income Elasticity
Constant Returns to Scale
43. The additional cost incurred from the consumption of the next unit of a good or a service
Substitution Effect
Perfectly inelastic
Marginal Cost (MC)
Price floor
44. 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
Price Ceiling
Average Product of Labor (APL)
Cross-Price Elasticity of Demand
Four-firm concentration ratio
45. The imbalance between limited productive resources and unlimited human wants
Perfectly inelastic
Marginal Benefit (MB)
Scarcity
Private goods
46. 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
Profit Maximizing Resource Employment
Shutdown Point
Perfectly elastic
Monopsonist
47. 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
Total Welfare
Determinants of Supply
Utility Maximizing Rule
48. 0 < Ei < 1
Demand for Labor
Perfectly competitive long-run equilibrium
Necessity
Total variable costs (TVC)
49. Occurs when LRAC is constant over a variety of plant sizes
Constrained Utility Maximization
Production function
Constant Returns to Scale
Least-Cost Rule
50. The mechanism for combining production resources - with existing technology - into finished goods and services
Price floor
Decreasing Cost industry
Total variable costs (TVC)
Production function