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AP Micro Midyear Review 3 Flashcards | StudBud
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AP Micro Midyear Review 3
AP Micro Midyear Review 3
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1
why does price increase when supply decreases?
products are more scarce and thus more competition to get them
products are produced better
government regulates it
it doesn't. price decreases
2
if cross price elasticity is negative, the products are...
inferior
substitutes
complements
dangerous
3
what is the difference between average fixed and average variable cost?
AVC remains constant
AVC is always more than AFC
AFC is paid to the government
AFC gets smaller as output increases, while AVC will eventually rise
4
scarcity results in...
producers making 0 economic profit
producer surplus
people having to make choices
trade
5
which region represents consumer surplus?
blue area + red area
red area
supply line
blue area
6
which of the following is NOT true of a price ceiling?
an upper limit
must be BELOW equilibrium price to be effective
causes quantity demanded to decrease
its the most a seller is allowed to sell for
7
which of the following ideas were created Adam Smith
capitalism
specialization to increase efficiency
all of the above
invisible hand
8
who has the comparative advantage for producing trains?
neither country
both countries
Canada
USA
9
how do subsidies affect producers?
enable suppliers to increase the price
force suppliers to sell more of their product
force suppliers to sell less of their product
enable suppliers to lower the price (supply shift down/right)
10
what is the difference between accountants are economists?
economists handle businesses only
accountants deal with only spending
economists deal with economy, accountants are personal
economists look at explicit + implicit costs, accountants look at explicit
11
which of the following is true in a perfectly competitive market?
no need to advertise
firms are price takers
products are perfect substitutes
all of the above
12
what is shut down point?
when price is below a firm's minimum AVC point
firm MUST permanently close
when price is below a firm's minimum ATC point
point where profit is no longer made
13
MC curve is U shaped because originally cost increases with more workers and at a certain point it starts decreasing
False
True
14
elasticity measures...
change in demand due to change in taste
the change in demand due to income
the consumer responsiveness to a change in price
15
If popcorn and soda are complements. If the demand for popcorn increases, what will happen to demand for soda?
it will stay the same
demand will decrease
demand will increase
16
Minimum wage is an example of...
excise tax
price ceiling
subsidy
price floor
17
which points on the curve are attainable and efficient?
A, B, C
X, A
B, D, C
D, C, X
18
if demand for a product increases as income decreases, what kind of product is it?
substitute
inferior good
complement
normal good
19
which area represents the dead weight loss ?
a
b + d + f
c + d
a + c + e
20
govts create price controls to protect consumers in times of crisis
False
True
21
in a perfectly competitive market, why can't firms increase their prices?
they are price makers
products are perfect substitutes so no one will buy if they increases price
the products are not good enough
the government has set prices
22
what is the profit maximizing point?
$10, 24 units
$8, 24 units
$11, 20 units
$7, 20 units
23
ceteris paribus means all other things are kept constant
False
True
24
utility is defined as...
the satisfaction gained from consuming a product
the amount of work put into a product
the cost of a product
the opportunity cost of consuming a product
25
a study states that pizza can decrease stress. how will this impact demand for mozzarella cheese?
demand will stay the same
demand will decrease
demand will increase, then decrease
demand will increase
26
a company gets advanced technology that allows them to produce goods at half the speed. how will this affect supply?
no impact on supply
they have to stop production
decrease supply
increase supply
27
what is an opportunity cost?
how much money is lost when a product is produced
the optimal amount of product that should be consumed
the cost to produce a certain good
what you have to sacrifice when you choose one option over the other
28
when consumers pay $10.45 per unit, how much money is received by the producers per unit?
$11.45
$9.45
$10
$11
29
if marginal revenue is GREATER than marginal cost, marginal profit is...
negative
positive
zero
increasing
30
the law of marginal utility states that for each additional unit of a good that you consume...
the satisfaction gained will decrease
the price of the product will increase
demand will increase
31
if a products elasticity of demand is equal to 1, what is the elasticity?
perfectly inelastic
unit elastic
perfectly elastic
cannot be determined
32
in the short run...
all costs are variable
all costs are fixed
one resource is variable
at least one resource is fixed
33
a represents....
total surplus
producer burden with tax
consumer burden of the tax
total revenue
34
the price of an item is expected to double after two months. how will this impact the demand?
demand at the moment will DECREASE
demand will stay the same
demand at the moment will INCREASE
there will be 0 demand for the product
35
marginal revenue is constant in a perfectly competitive market
True
False
36
surplus is defined as...
when quantity demanded > quantity supplied
when quantity supplied = quantity demanded
when quantity demanded < quantity supplied
when consumers buy a lot of a product
37
a drought results in the supply of corn decreasing greatly. price will...
increase
become zero
decrease
stay the same
38
when supply is perfectly inelastic, who will benefit from a subsidy?
the government
producers and consumers EVENLY
producers
consumers
39
whats the difference between a per unit and lump sum tax?
only lump sum is from the government
per unit taxes are less than lump sum
lump sum tax is a one time payment
lump sum is paid per unit produced
40
what is the break even point when firms make normal profit?
the point at which producers and consumers pay the same
point where producers gain the most money
point where total revenue and total cost are the same
point where consumers pay the most money
41
this graph shows the supply and demand after a unit tax is placed on a good. how much was the tax?
$10
$11
$1.45
$1
42
who has the absolute advantage in producing planes?
both countries
USA
Canada
neither country
43
what is the fundamental economic problem?
trade
security
making a profit
scarcity
44
if a good is inelastic and price increases, what will happen to total revenue?
revenue will decrease
there will be no revenue
revenue will stay the same
revenue will increase
45
which point on the curve is impossible to achieve?
A
B
D
X
