AP Microeconomics Unit 2 Practice Test

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

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

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

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

5) In a command economy

6) If the market for corn is competitive, then

7) The long-run average cost curve

8) 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

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

10)

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

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

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

13) Market economies

14) Scarcity

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

16) Marginal revenue equals marginal cost at the point where

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

18) 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

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

20) Marginal cost always intersects average variable cost at

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

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

23) In an oligopoly market, firms

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

25) Allocative efficiency

26)

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

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

28) The invisible hand

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

30) 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?

31)

For this monopolist, profit is the area represented by

32) Prices in capitalist economies are

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