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AP Microeconomics Review Flashcards | StudBud
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AP Microeconomics Review
AP Microeconomics Review
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#Economics #AP #Microeconomics
Flashcards
56 cards
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Questions
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Answers
1
What is deadweight loss and what causes it in perfect competition?
Lost surplus due to Bubba
Lost surplus (gains) when market intervention happens, quota
Lost surplus when market gets heavy
Increase in Surplus due to market intervention
2
How does a non-price discriminatory monopolist price his/her good/service?
Price of demand above where MC=MR
Where MC=ATC min.
Where MC=MR
Where MR=D
3
How do you calculate Total Revenue?
B and C are wrong
A. Quantity (x) Price
C. ATC- TP
B. Quantity (x) Price- ATC
4
At what quantity do you produce? (Both perfect competition AND monopolies)
Where MC=ATC
Where ATC=AR
Where MR=MC
Where MR= ATC
5
What is the market structure when there are only a few large businesses in the market?
Monopoly
Perfect competition
Oligopoly
Monopolistic competition
6
What causes SHIFT in demand?
B.Change in expectations, number of consumers
A and B
C.Increasing price per unit output
A.Change in income, tastes/preferences, price of substitutes
7
What is absolute advantage
A person has lower opportunity cost to produce than another
A person has higher opportunity cost to produce than another
A person is able to produce more of a good than another
A person is able to produce less of a good than another
8
What is normal profit? What is economic profit on a cost curve graph?
Price charged is above the ATC; price charged is above LRATC
AVC min= MRDARP; Price above ATC
Economic profit=0/ATC min=MRDARP; Price above ATC
All of the above
9
What does MRDARP-- the market/equilibrium price in perfect competition-- stand for?
Marginal Revenue, Supply, Average Total Revenue, Price
Mr., Daniel, Anthony, Ronald, Pacific
Marginal Revenue, Demand, Average Revenue, Price
Marginal Revenue, Demand, Average Receipt, Perfect Comp.
10
What is non-cooperative behavior?
What is expected (through rational thought) in game theory
When firms ignore effects of their actions on others's
When firms collude successfully
When the lady in the game show undercut the guy
11
True or false: all costs are fixed in the short run
True
False
12
What is an average product called (we assume a good is this); what is the cheaper alternative?
Inferior good; normal good
Normal good; inferior good
Normal good; Bubba
Normal good; worse product
13
What are characteristics of inelastic curves; what are elastic curve characteristics?
Straight up, necessity; luxury, long-time, flatter
All of the below
Few subs., little part of income; many subs., much of income
TR increases if P increases; TR decreases if P increases
14
What is the main difference between a product market and a factor market?
Households demand in product market; firms demand in factor
Households supply in factor; firms supply in product market
Households demand in factor; firms demand in product market
Firms supply in factor market; households supply in product
15
What Law states that there will be shrinking marginal returns per unit input?
Law of conservation of marginal cost
Law of diminishing marginal returns
Law of Conservation of marginal returns
Law of growing marginal returns
16
How does society choose to address scarcity?
Deciding HOW to produce
Deciding WHAT to produce
Deciding FOR WHOM to produce
All of the above
17
Why is perfect competition good for workers and their wages?
Firms would maximize costs by hiring minorities
Firms can often set poor wages/poor standards
It theoretically reduces wage disparities
Firms can't entirely set poor wages, as in monopolies, etc
18
What causes a shift in a supply curve?
A.Change in price of input, related goods, technology
B. Change in amount of producers, expectations
All of the above
A and B
19
What is movement? What is a shift?
Changing position along the curve; changing curve position
Changing curve position; changing position along curve
20
What market structure does this model convey
A and C
C. Monopolistic Competition
A. Monopoly
B. Perfect competition
21
True or false: the (textbook) definition of "economics" is the study of scarcity and choice
False
True
22
What are economic cartels, and what is their legal status in the US?
They are trusts (alliances through collusion) -- are illegal
They are cat posters-- obviously allowed
They are individual firms fighting each other in the market
They are trusts-- they are legal
23
Which is an example of a factor market for apples?
Ladder (physical capital)
The apples/land (natural resources)
All of the above
Act of picking apples (labor)
24
How many firms are there in a monopoly
Not here
Only one-- it has total market control/ is price-setter
<--- Keep Looking
Below?
25
What are the four factors of production?
Land, Labor, Liquidity, Corn
Land, Labor, Capital, Entrepreneurship
Not the red triangle
Mike Sawicki, Mike Sawicki, Mike Sawicki, Mike Sawicki
26
Where does MC always intersect ATC and AVC?
They don't intersect
At their minimum points, respectively
At Marginal Revenue
Anywhere along their curves
27
What is a tradeoff?
Giving something up to have another thing
Bubba is a slacker
Having pizza instead of the nutter butter
Fowler moving to the Cardinals
28
Where is the most efficient point on a PPC?
Anywhere above the curve, assuming no shifts
Anywhere under the curve, assuming no shifts
Where the supply/demand curves intersect for both goods
Anywhere on the curve, regardless of movement
29
What do Production Possibilites curves look like/represent?
Outward bowing; model shows price/production relationship
Outward bowing; model representing tradeoffs in 2-item econ.
Inward bowing; model representing tradeoffs in 2-item econ.
Outward bowing; model shows production/price relationship
30
What is consumer surplus?
Area below price/ below supply curve
Area below price/below demand change
Area above price/ below demand curve
Area above price/ below supply curve
31
What do direction of shifts indicate?
Introduction/removal of new technology
Left: increasing (unit); Right: Decreasing (unit
Introduction/removal of new resources (general)
Right: increasing (unit); Left: Decreasing (unit)
32
Ceteris parabis, what happens to price and quantity when demand SHIFTS to the RIGHT?
Quantity demanded decreases, Price increases
Quantity demanded decreases, Price decreases
Quantity demanded increases, Price increases
Quantity demanded increases, Price decreases
33
What is "Tit-for-Tat" behavior?
In an oligopoly when consumers copy each others' behavior
In an oligopoly when companies follow dominant strategy
In a monopoly when companies mimic each others' behavior
In an oligopoly when producers mimic each others' behavior
34
In perfect competition, what happens in the long-run if a firm is making economic profit?
Firms will enter the market
Firms will leave the market
Firms will wait until the extra-long run to decide
Firms will neither leave nor enter the market
35
What is education as a factor?
Human capital
Natural resource
Entrepreneurship
Labor
36
What is positive behavior; what is normative behavior?
Being nice; being normal
All of the above
Objective logic (how econ actually works); subjective logic
Subjective logic (ideals); objective logic
37
What is game theory?
Situation involving a matrix to show outcomes of decisions
Study of interdependence between firms
All of the above (actually, this time)
Demonstrated through "The prisoner's dilemma"
38
What is dominant strategy?
Best choice a firm can do, regardless of other firm actions
In game theory, when no decisions are optimal
When MR=MC
When you gain money for action X and lose money for action Y
39
How do you calculate profit when given a Cost- Curve graph?
Add Quantity Output to Price charged
(None of these)
Multiply Quantity of Input by Quantity Output
Multiply Quantity Output by Price per Unit
40
What do price floors do? What do quotas do? How about price ceilings?
Set min price; set max quantity; set max price
Set max price; set max quantity; set min price
Set max quantity; set max price; set min price
Set min price; set max price; set max quantity
41
What are oligopolies?
Few companies that own vast control in a market
All of the above
Largely interdependent
A and C
42
What is the only market structure where a firm makes a profit in the long run?
Monopolistic Competition
Perfect Competition
Oligopoly
Monopoly
43
When is a business always taking an L in the short run (all market structures)?
When profit is above ATC
When profit is below AFC
When profit is below ATC
When profit is below MC
44
1. What are complements; 2. what are substitutes?
Saying nice things; aquatic vessels- "titutes"
Bubba slides into mailboxes
Goods similar to preferred item; items you often bundled
Items you often bundle together; similar goods to preferred
45
What is comparative Advantage?
A person is able to produce more of a good than another
A person's opportunity cost to produce is lower than another
The opportunity cost to produce is higher than another's
A person is able to produce less of a good than another
46
What is economies of scale?
When AVC (ATC) increase per unit input (to an extent)
When AVC (ATC) decrease per unit input (to an extent)
When businesses are very large and collude
When AVC exceeds MRDARP
47
What is collusion? (Read all answers VERY carefully-- may be more than one correct answer)
When businesses work together to bolster profits
ALL 4 of these
A form of building trusts, often through price-fixing
An illegal, anti-competitive business practice in the US
48
What are efficiency, equity, growth, freedom, stability, and security the basic components of?
The Communist Manifesto
6 Basic Economic Goals of the U.S.
6 "Good Things"
E.U. trade with Russia
49
What is the Gini Coefficient; is higher or lower better; what curve is it associated with
Measures political rights; lower; Nash
Measures inequality; lower; Lorenz
Measures inequality; higher; Lorenz
Measures inequality; lower; Nash
50
If price is below equilibrium, what will occur; what if price is above? (Perfect competition)
Absolutely nothing
Shortage; surplus
Surplus; shortage
Nash Equilibrium; monopolistic competition
51
True or false: a monopoly is economically efficient
False
True
52
How do businesses legally price discriminate nowadays in the US?
B. By racial and religious groups
A. By age groups
D. A and C
C. Through timing of purchases (I.e. airline tickets)
53
What is opportunity cost?
Finding if costs outweigh benefits of choise
Buying a burrito
What you give up to make another choice
Not being able to enjoy a burrito because you bought pizza
54
A company has a monopoly on expensive utilities: why might this situation prevent market-entry?
Nash Equilibrium
Complements are cheaper
Economies of scale
Substitutes are cheaper
55
How do you calculate profit?
TR-TC=P
TVC-TFC=P
TC-TR= P
TFC+TC=P
56
What is a business (firm) in perfect competition?
B and C only
C. A firm produces a standardized good with many substitutes
A. A price-setter
B. A price-taker
