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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. 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






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






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






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






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






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






7. The mechanism for combining production resources - with existing technology - into finished goods and services






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






9. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






10. 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






11. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






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






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






14. The rational decision maker chooses an action if MB = MC






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






16. Ei > 1






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






18. A good for which higher income increases demand






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






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






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






22. 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






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






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






25. 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






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






27. ATC = TC/Q = AFC + AVC






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






29. 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






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






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






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






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






34. All firms maximize profit by producing where MR = MC






35. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






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






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






38. AFC = TFC/Q






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






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






41. Demand for a resource like labor is derived from the demand for the goods produced by the resource






42. 0 < Ei < 1






43. Total product divided by labor employed. APL = TPL/L






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. 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






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






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






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






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






50. 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