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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. Entry of new firms shifts the cost curves for all firms downward






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






3. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






4. 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






5. 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






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






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






8. A good for which higher income increases demand






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






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






11. 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






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






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






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






15. A good for which higher income decreases demand






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






17. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






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






19. Ed = 0 - no response to price change






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






21. Ed < 1






22. Ei > 1






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






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






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






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






27. The sum of consumer surplus and producer surplus






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






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






30. The difference between total revenue and total explicit costs






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






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






33. AFC = TFC/Q






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






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






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






37. 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






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






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






40. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






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






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






43. 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






44. 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






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






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






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






48. 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






49. 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






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