AP Microeconomics Unit 2 Practice Test

1)

For this monopolist, profit is the area represented by

2) Assume a firm hires labor for $15 each and sells its products for $3 each. If the MP of the third worker is 10, which of the following statements would be the most true?

3) Market economies

4) A monopoly with a straight, downward-sloping demand curve has a marginal revenue curve that is

5) In the market for goods and services in the circular flow diagram, households

6) If the market for corn is competitive, then

7)

Company A and Company B above operate in a non-collusive oligopolistic market. Each needs to decide whether to have a large or small advertising strategy. According to the data, the dominant strategy for Company A and Company B would be

8) Which of the following is a fundamental economic question?

9) If a capitalist society wants more coffee, then the relative price of coffee will

10) In the market for resources in the circular flow diagram, households

11) Of the following, which is the best representation of a positive externality?

12) If residents of a city oppose a new highway being built through local neighborhoods, what economic concept best describes their opposition?

13) In an oligopoly market, firms

14)

In the graph above, the shift in the supply curve from S to S1 for ice cream could occur because

15) If buyers bid up the price of a good, then

16) A price discriminating monopoly differs from a non-discriminating monopoly because a discriminating monopoly

17) A competitive firm’s demand for labor is determined directly by

18) The invisible hand

19) In a command economy

20) Company A and Company B are competing firms that are deciding whether or not to expand their operations. The payoff matrix provided shows the profit to be earned (expressed in thousands) from any decision that is made. Based on the data provided

21) The long-run average cost curve

22) Relative to a competitive product market with the same costs, a monopoly can be expected to involve

23) Marginal revenue equals marginal cost at the point where

24) Suppose we observe the price of a product rising and more of the product being bought and sold. This could be a result of

25) Allocative efficiency

26) If the relative price of coffee rises due to a change in tastes in a capitalist society, then

27) Clearing lakes and waterways of pollution will result in increased efficiency if

28) Marginal cost always intersects average variable cost at

29) A monopoly is less efficient than a perfect competitor because

30) Prices in capitalist economies are

31) Compared to a command economy, a capitalist economy emphasizes

32) Consider a profit-maximizing firm in a perfectly competitive market with several sellers and several buyers (i.e., the firm is a “price taker” of the goods it sells and a “price taker” of the hourly wages it pays its workers). If a technological innovation made by someone in this firm were to significantly raise the firm’s marginal physical product (but not that of any other firm’s), then this innovation would

33) Scarcity