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AP Micro Midterm Review questions with complete solutions.
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AP Micro Midterm Review questions withcomplete solutions
If nnthe nnonly nntwo nnfirms nnin nnan nnindustry nnsuccessfully nncollude nnto nnmaximize nntheir nnjoint nnprofit, nnthe
nnprice nnfor nnthe nnproduct nnwill nnbe nn_______________. nn- nncorrect nnanswer-Above nnthe nnmarginal nncost nnof
nnproduction
If nnthere nnare nnmany nnfirms nnin nnan nnindustry nnand nneach nnfirm's nnproduct nnis nnindistinguishable nnfrom nnthe
nnproducts nnof nnall nnother nnfirms, nnthe nnindividual nnfirm's nndemand nncurve nnwill nnbe
nn____________________. nn- nncorrect nnanswer-Horizontal nnand nnidentical nnfor nneach nnfirm
What nndoes nnit nnmean nnif nnan nneconomy nnhas nna nnstraight-line nnproduction nnpossibilities nncurve? nn(2) nn-
nncorrect nnanswer-1. nnThe nnopportunity nncost nnof nnproducing nnanother nnunit nnis nnconstant
2. nnResources nnare nncompletely nnadaptable nnto nnalternative nnuses
In nnthe nnshort nnrun, nna nnperfectly nncompetitive nnfirm nnshould nnshut nndown nnwhenever nn_____________. nn-
nncorrect nnanswer-Minimum nnaverage nnvariable nncost nnexceeds nnprice
A nnconstant-cost, nnperfectly nncompetitive nnindustry nnis nnin nnlong-run nnequilibrium. nnIf nnthe nndemand nnfor
nnthe nngood nnincreases, nnthe nnprice nnwill nn___________. nn- nncorrect nnanswer-Remain nnunchanged
What nnis nnthe nnleast-cost nncombination nnof nncapital nnand nnlabor nnneeded nnto nnproduce nna nngiven nnlevel nnof
nnoutput? nn- nncorrect nnanswer-MPL/PL nn= nnMPK/PK
When nnmarginal nnproduct nnexceeds nnaverage nnproduct, nnaverage nnproduct nnis nn_______. nn- nncorrect
nnanswer-Increasing
If nna nnfirm nnis nnmaximizing nnshort-term nnprofits nnand nnprice nnis nngreater nnthan nnaverage nnvariable nncost, nnat
nnthe nnfirm's nnlevel nnof nnoutput nnmarginal nnrevenue nnis nn________________ nnmarginal nncost. nn- nncorrect
nnanswer-Equal nnto
,What nnis nneconomics? nn- nncorrect nnanswer-The nnsocial nnscience nnconcerned nnwith nnhow nnindividuals,
nninstitutions, nnand nnsociety nnmake nnoptimal nnchoices nnunder nnconditions nnof nnscarcity
What nnis nnan nnopportunity nncost? nn- nncorrect nnanswer-The nnvalue nnof nnthe nnnext nnbest nnthing
What nndo nnindividual nnconsumers nnlook nnfor? nn- nncorrect nnanswer-Opportunities nnto nnincrease nntheir nnutility
What nnis nnutility? nn- nncorrect nnanswer-Pleasure, nnhappiness, nnor nnsatisfaction nnobtained nnfrom nnconsuming
nna nngood nnor nnservice
What nnis nnmarginal nnanalysis? nn- nncorrect nnanswer-Comparisons nnof nnmarginal nnbenefits nnand nnmarginal
nncosts, nnusually nnfor nndecision nnmaking
What nnis nnmicroeconomics? nn- nncorrect nnanswer-The nnpart nnof nneconomics nnconcerned nnwith nndecision
nnmaking nnby nnindividual nncustomers, nnworkers, nnhouseholds, nnand nnbusiness nnfirms
What nnis nnthe nnother-things-equal nnassumption? nn- nncorrect nnanswer-The nnassumption nnthat nnfactors
nnother nnthan nnthose nnbeing nnconsidered nnby nnthe nneconomist nndo nnnot nnchange
What nnis nnthe nndifference nnbetween nnpositive nnand nnnormative nneconomics? nn- nncorrect nnanswer-Positive
nneconomics nnconcerns nnwhat nnis nn(describes nneconomic nnbehavior nnand nnwhat nnthe nneconomy nnis nnlike)
nnwhile nnnormative nneconomics nnconcerns nnwhat nnought nnto nnbe nn(value nnjudgements nnabout nnwhat nnthe
nneconomy nnshould nnbe nnlike nnor nnhow nnto nnachieve nncertain nngoals)
What nnis nnthe nneconomizing nnproblem? nn- nncorrect nnanswer-The nnneed nnto nnmake nnchoices nnbecause
nneconomic nnwants nnexceed nneconomic nnmeans
What nnare nnthe nnfactors nnof nnproduction? nn- nncorrect nnanswer-Land, nnlabor, nncapital, nnand nnentrepreneurial
nnability
What nnassumptions nnare nnmade nnby nnthe nnProduction nnPossibilities nnModel? nn(4) nn- nncorrect nnanswer-Full
nnemployment nn(the nneconomy nnis nnemploying nnall nnof nnits nnavailable nnresources)
, Fixed nnresources nn(the nnquantity nnand nnquality nnof nnthe nnfactors nnof nnproduction nnare nnfixed)
Fixed nntechnology nn(the nnstate nnof nntechnology nnis nnconstant)
Two nngoods nn(the nneconomy nnis nnproducing nnonly nntwo nngoods)
What nnis nnthe nnlaw nnof nnincreasing nnopportunity nncosts? nn- nncorrect nnanswer-As nnthe nnproduction nnof nna
nnparticular nngood nnincreases, nnthe nnopportunity nncost nnof nnproducing nnan nnadditional nnunit nnrises
What nncauses nnthe nnlaw nnof nnincreasing nnopportunity nncosts? nn- nncorrect nnanswer-Economic nnresources nnare
nnnot nncompletely nnadaptable nnto nnalternative nnuses nn(and nnworkers nnare nnbetter nnat nndoing nncertain nntasks
nnthan nnothers)
What nnis nnoptimal nnallocation? nn- nncorrect nnanswer-Where nnmarginal nncost nnis nnequal nnto nnmarginal nnbenefit
Where nnis nnthere nnunemployment nnin nna nnPPC nncurve? nn- nncorrect nnanswer-Any nnpoint nninside nnthe nncurve
nn(because nnif nnthere nnwas nnfull nnemployment nnthe nneconomy nnwould nnoperate nnon nnthe nncurve)
What nncauses nneconomic nngrowth? nn(3) nn- nncorrect nnanswer-1. nnIncrease nnin nnsupplies nnof nnresources
2. nnImprovements nnin nnresource nnquality
3. nnTechnological nnadvances
What nngoods nnpromote nneconomic nngrowth? nn- nncorrect nnanswer-Capital nngoods
Research nnand nneducation
Preventative nnmedicine
What nnis nna nncomparative nnadvantage? nn- nncorrect nnanswer-A nnperson/country nnhas nna nncomparative
nnadvantage nnover nnanother nnif nnit nnhas nna nnlower nnopportunity nncost nnof nnproduction nnof nna nngood
What nnis nnan nnabsolute nnadvantage? nn- nncorrect nnanswer-A nnperson nnor nncountry nncan nnproduce nnmore nnof
nna nngood nnwith nnthe nnsame nnresources
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