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AP Micro 1-4 Review Flashcards | StudBud
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AP Micro 1-4 Review
AP Micro 1-4 Review
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1
What is marginal revenue when price is $2?
$12
$-1
$32
$-4
2
Assume a perfectly competitive market and price of $35. How many should they produce?
4 boxes
2 boxes
3 boxes
1 box
3
How many will this firm choose to produce to maximize profit after a shift in supply?
8
5000
5
6000
4
Scarcity is defined as...
Unlimited wants, but limited resources
Wants and needs
The kitty is cute
Opportunity Cost
5
Which of the following will cause the
quantity demanded
of milk to decrease?
Increase in the price of a substitute
A decrease in the price of a complementary good
An increase in the price of milk
A decrease in income assuming that milk is a normal good
6
If both supply and demand shift what is the rule?
The equilibrium price and quantity will increase
Price doesn't shift the curve
The new equilibrium price and quantity will be indeterminate
The new equilibrium price or quantity will be indeterminate
7
to Figure B. The marginal cost of producing the 4th output is:
$6
$13.50
$1.50
$ 54
8
Why would someone not value the 5th or 6th purchase of the same item as much as the 1st?
# of consumers
substitution effect
income effect
the law of diminishing marginal utility
9
Which is not a characteristic of a firm in a monopoly market structure?
"Price Maker"
unique product (no close substitutes)
the firm is the market
low barriers to entry
10
Given this model of a price floor, producer surplus would be
Area B+C
Area D+E
Area A+B+C+D+E
Area A
11
The marginal product of the sixth worker is
15 units of output
30 units of output
180 units of output
negative
12
What is the marginal utility of the 3rd slice of bread?
20
price doesn't shift the curve
130
40
13
If left unregulated, this monopoly firm will set price at?
P2
Mr. DARP
P3
P1
14
If gov't regulates a natural monopoly with price ceiling where the MC = Demand, then
monopoly will produce the productively efficient quantity
monopoly will produce the socially optimal quantity
monopoly will break even and make no economic profit
consumer surplus will decrease
15
The Law of Demand- There is a(n) _______ relationship between price and quantity demanded.
indecent
direct
inverse
individual
16
To maximize profit how many should this firm produce?
$36
$42
7
6
17
Which of the following occurs when a profit maximizing monopoly is subject to a lump sum tax?
The consumer surplus would get smaller
Price will increase but quantity will stay the same
Price and quantity will stay the same
Price will increase and quantity will decrease
18
Which of the following will cause the
demand
for milk to decrease?
A decrease in the price of milk
A decrease in the price of a complementary good
A decrease in income assuming that milk is a normal good
Increase in the price of a substitute
19
Monopolies are able to make economic profit in the long run because
they have inelastic demand curves
they can price discriminate
the demand curve is greater than the MR
they have barriers to entry
20
The vertical distance between ATC and AVC reflects:
the law of diminishing returns
marginal cost at each level of output
total cost
the average fixed cost at each level of output
21
In order to maximize profit this firm should choose to produce how many?
0
5
8
$4
22
On this short run cost curve graph, where would you find the Avg Fixed Cost?
distance bw ATC and MC
sum of MC and AVC
vertical distance bw ATC and AVC
sum of MC and AVC
23
Refer to Figure A. With which worker does the Law of Diminishing Marginal Returns first set in?
2nd
4th
3rd
1st
24
What is the opportunity cost of increasing production of clothing from 1 to 2?
C
1 Clothing
5 Food
B
25
After which worker does diminishing marginal returns set in?
3rd worker
6th worker
5th worker
2nd worker
26
Which is NOT a characteristic of a firm in a perfectly competitive market structure?
identical products
low barriers of entry
the firm is the market
the firms are "Price Takers"
27
How do you calculate economic profit?
Total Revenue - Explicit Costs
Price x Quantity
Fixed Costs + Variable Costs
Total Revenue - (Explicit + Implicit Costs)
28
In this graph:
point Y
indicates
Unattainable point
Inefficient point
Efficient point
Scarcity of resources
29
Which of the following best characterizes monopolistic competition?
Low barriers to entry and differentiated products
Large number of firms with high barriers to entry
Small number of firms and efficiency
Large number of firms with identical products
30
On this short run cost curve graph, what does curve X represent?
Avg Variable Cost
Avg Total Cost
Marginal Cost
Avg Fixed Cost
31
Which describes the situation where competitors collude and agree to set prices?
Game theory
Collusive competition
Cartel model
Excess capacity
32
In microeconomics, the short run is defined as which of the following?
a period less than one year
a period where fixed costs are greater than variable costs
a period between 1-4 years
a period during which some inputs cannot be changed
33
If the monopoly shown is maximizing profit, which of the following is true?
Total revenue is $960
Profit is $200
Total cost is $600
Firms will enter in the long run
34
The total variable cost of producing 4 units is:
$54
$30
$6
$24
35
The engineering knowledge that goes into the production of prosthetics is an example of
Labor
Human Capital
Physical Captial
Land
36
Which of the following would cause the PPF to shift to the right?
A war happens and most of society is left without electricity
None of the above
Cheaper Artificial Intelligence allows for industries to be more productive
The government choses to produce more consumer goods
37
What is the
profit per unit
when this firm sets a production level to maximize profit?
$6
$1
$42
There is no profit. Operating at a loss of $6 per unit.
38
At which point on this graph would you see the firm becoming too big and difficult to manage?
Point B
Point A
39
When quantity demanded is greater than quantity supplied at a given price
dead weight loss
marginal
shortage
surplus
40
The Green Zone represents
Negative Marginal Returns
Decreasing Marginal Returns
Increasing Marginal Returns
Green means GO
41
With a price-discriminating monopolist, all of the following would occur EXCEPT:
The monopoly would charge all consumers higher prices
The demand would equal the MR
There would be no dead-weight loss
The consumer surplus would be zero
42
According to this model what can you say is true about the firm?
It's marginal revenue is 8.
It should not produce and shut down.
This is an example of a firm in the short run.
It is operating at a loss.
43
In order to maximize profit this firm should produce how many?
8
None
7
9
44
To maximize total revenue, a monopolist producing in elastic range of its demand curve should
decrease its output
produce where the MR is zero
produce at the minimum point of the ATC curve
produce where the MR is negative
45
Calculate the consumer surplus given the graph
24
6
3
11
46
If four large firms sell similar products and use non-price competition, which is true?
The market is monopolistically competitive
The firms are efficient
The market is perfectly competitive
The firms are interdependent
47
According to this model what is true about the firm?
Total Revenue is $23
To maximize profit the firm should produce 15.
Total Cost is $23
It is making zero economic profit.
48
The acronym that means price, demand & marginal revenue are the same in perfect competition:
Allocative efficiency
Productive efficiency
Mr. DARP
MR = MC
49
Which of the following is correct regarding the four market structures?
Game theory is used in all market structures to set price
Perfectly competitive firms & monopolies = price takers
All market structures produce where price = marginal cost
Monopolies & monop. competitive firms = price makers
50
Fixed costs are:
average cost multiplied by the firm's output
the costs of producing one more unit of capital
any cost which doesn't change when a firm changes its output
usually zero when a firm produce nothing
51
Calculate the producer surplus given the graph
8.5
24.1
1.5
11.5
52
To maximize consumer surplus government should set a price ceiling for this firm
at Q1.
at P3.
at P2.
at P1.
53
Economic profit
=TR-TC
=ATC-AVC
takes into account implicit and explicit costs.
Green means go
54
To maximize profit how many should this firm produce?
2
$10
4
$12
55
In the production of Pizza, new crust making tech is created. What will happen?
Demand increases
supply increases
quantity supplied increases
(in best pirate voice) PRICE DOESN'T SHIFT THE CURVE!
56
At which point on this graph would you see mass production techniques being used?
Point B
Point A
57
The Yellow Zone represents
Increasing Marginal Returns
They call me Mello Yello....
Decreasing Marginal Returns
Negative Marginal Returns
58
According to the graph, at what production level would be in the inelastic range of demand?
None. All elastic.
12
7
1
59
to Figure B. The marginal cost of producing the 1st output is:
$1.50
$ 54
$9
$6
60
Which of the following is true for monopolistically competitive firms in long run equilibrium?
Price equals ATC
Firms are maximizing total revenue
They are productively efficient
Price equals MC
61
Which is
NOT
a characteristic of a firm that is in a monopolisticly competitive market?
some control over price
relatively large number of sellers
a lot of non-price competition (advertising)
identical products
62
Identify consumer surplus on this monopoly graph
ABE
ADG
BCJ
ACF
63
To maximize profit this firm's
cost per unit
will be?
$50 per unit
$5 per unit
$4 per unit
produce 5
64
What is the marginal product of the 3rd worker?
-6
4
-4
6
65
The Red Zone represents
Negative Marginal Returns
Decreasing Marginal Returns
Green means GO
Increasing Marginal Returns
66
This firm...
is operating at a profit.
is in long run equilibrium.
is operating at a loss.
should shut down.
67
You recently get a raise and your income increases. What will happen?
Your demand for ramen (an inferior good) will increase
Your supply of steak (a normal good) will increase
Your demand for steak (a normal good) will increase
Price doesn't shift the curve.
68
What is total revenue when price is $3?
$0
$6
MR=MC
$9
69
What's an opportunity cost?
Paying someone
When you have to buy one thing
When you have a choice to do or buy one thing or another
PAY DAY!
70
Law of Suppy- There is a(n) __________ relationship between price and quantity demanded
indirect
decent
inverse
direct
71
According to this graph this firm is
operating at a loss of $10 per unit.
operating at a profit of $1 per unit.
operating at a profit of $10 per unit.
should shut down production.
72
See below:
3 hours
2 hours
4 hours
1 hour
73
For a non-price discriminating monopoly, the marginal revenue is
less than the price
negative when the firm is maximizing profit
increasing at a constant rate
equal to the price
74
North Korea choses to devote many of its resources to the development of its military and nuclear weapons.
This is an example of ceteris peribis
This is an example of a negative statement
This is an example of a guns vs butter issue
None of the above
75
According to this graph, if this firm sells 1 more item what is the marginal revenue?
10/Q
MR=MC
Indeterminent
$10
76
On this short run cost curve graph, what does curve Y represent?
Avg Fixed Cost
Marginal Cost
Avg Variable Cost
Avg Total Cost
77
Point X in this graph is showing
a production possibility that is not possible
Unemployed resources
All of the above
Allocative efficiency
78
At the point of price A, economic profits are
ABLI
ACMG
ABKH
ABJG
79
According to the graph, if a firm wanted to maximize
revenue
they should produce how many?
1
12
0. They should shut down production.
8
80
What is the economic term to describe point A?
Economies of Scale
Diseconomies of Scale
81
Which of the following is NOT a factor of production?
Land
Capital
Goods and Services
Labor
82
You recently get a raise and your income increases. What will happen?
Your demand for Tesla cars (a normal good) will decrease.
Your demand for Spam (an inferior good) will decrease.
Your supply for Spam (an inferior good) will increase.
Price doesn't shift the curve.
83
A price control does what to a market?
reduces shortages
creates dead weight loss
makes it more efficient
balances the market fairly
84
What of the following is
NOT
true for this firm?
They should produce 6 to maximize profit.
Marginal revenue is $15.
If they maximize profit TR will be $90.
They are operating at a profit.
85
Consumer surplus is indicated by which colored area?
Green
Grey
Blue
White
86
What is normal profit?
Fixed Costs + Variable Costs
Zero Economic Profit
Total Revenue - (Explicit + Implicit Costs)
Total Revenue - Explicit Costs
87
This graphic is modeling what?
the relationship between substitue goods
the relationship between complimentary goods
a change in quantity demand and a change in demand
the relationship between price controls and the government
88
What are the factors of production?
Capital, entrepreneurship, Laziness, Nothing
Land, Labor
Donald Trump
Land, Labor, Capital, entrepreneurship
89
The model shown depicts
a price floor
a shortage
a price ceiling
an efficient market
90
What is the definition of economics?
study of resources and allocation
study of choices
all of the above work just fine
study of scarcity
91
Which of the following is correct?
Firm 2's dominant strategy is to price low
Firm 1's dominant strategy is to price high
Firm 1's dominant strategy is to price low
Firm 2's dominant strategy is to price high
92
Identify deadweight loss on this monopoly graph
ACF
ADG
ABE
BCJ
