AP MicroeconomicsMr. Meier

Penn Manor HS

Unit 1 (~3 questions)Unit 2 (~3-4 questions)

Unit 3 (~12-14 questions)Unit 4 (~20-24 questions)

Which of the following is true?

A. TC = (AVC + AFC) * QB. TFC = TC at all levels of outputC. AVC + AFC = TCD. MC = TC – TFCE. ATC = AVC + MC

A firm’s short run supply curve is equivalent to its _________________ above _________________.

Implicit costs of a “Mom & Pop” owned business include

A. Their accounting profitsB. Their to accounting costsC. The earnings that could have been earned by

using resources elsewhereD. The revenue their business earned this yearE. The Average Revenue of other Mom & Pop

businesses

Which of the following is NOT correct about economies of scale?A. They are associated with increases in outputB. They are associated with the increasing

portion of the LR ATC curveC. They are associated with the decreasing

portion of the LR ATC curveD. They demonstrate decreases in per unit

average total costs as plant size increaseE. They may be caused by increased

specialization and technology

Marginal Cost (MC) is equal to average variable cost (AVC) and Average Total Cost (ATC) when:A. MC intersects AVC and ATC at their maximum

pointsB. AVC and ATC intersect MC at its maximum

pointC. AVC and ATC intersect MC at its minimum pointD. MC intersects AVC and ATC at their minimum

pointsE. The economy is in the recovery phase of the

business cycle

In the long run, a perfectly competitive firm without government intervention will ALWAYS achieve:

A. Productive Efficiency?B. Allocative Efficiency?

(Yes or no – for each)

For which of the following market structures are the most substitutes available to consumers?A. Perfect CompetitionB. Monopolistic CompetitionC. OligopolyD. MonopolyE. All of the above

Which of the following market structures has the greatest degree of elasticity?

A. Perfect CompetitionB. Monopolistic CompetitionC. OligopolyD. MonopolyE. All of the above

At what P will this firm earn a normal profit?

Below what P will this firm shut down in the short run?

Above what P will this firm earn economic profit?

At what P will this firm earn an economic profit?

In the long run, what will be this firm’s output level?

A firm never choose to produce at price P BECAUSE…

Is this graph showing a firm in SR or LR ? In the LR, how will the following change?

A. On Market Graph: Demand, Supply, PriceB. On Firm Graph: ATC, MR, Output level

Which of the following market structures has the largest number of sellers?

A. Perfect CompetitionB. Monopolistic CompetitionC. OligopolyD. MonopolyE. All of the above

Which of the following market structures is NOT a price maker?

A. Perfect CompetitionB. Monopolistic CompetitionC. OligopolyD. MonopolyE. All of the above

Firms maximize their profits by producing a level of output at which

A. MC = AFCB. MC = MRC. P = ATCD. MR = AVCE. P = AVC

In the short run, the shutdown point is equal toA. Minimum point on the ATC curveB. Maximum point on the ATC curveC. Minimum point on the AVC curveD. Maximum point on the AVC curveE. Minimum point on the MC curve

The demand curve for a typical firm operating under perfect competition isA. Upward slopingB. Downward slopingC. Perfectly verticalD. Perfectly horizontalE. Concave to the origin

Which of the following is NOT typically true for the perfectly competitive firm in the long run?A. P = Minimum ATCB. P = Marginal RevenueC. P = Minimum AVCD. P = Marginal CostE. The firm earns a normal profit

Consumer surplus is

A. The price of a good divided by its marginal utility

B. The marginal utility of a good divided by its price

C. The total utility of the goodD. The difference between what the good is

worth to the consumer and its market priceE. Consumers’ annual savings

Given this $2 per unit tax, calculate the following:

(a) PS before the tax

(b) PS after the tax(c) DWL(d) Total Gov’t

Revenue

The utility maximizing rule is to choose the combination of goods that …A. Has the highest marginal utility of each good

in the basket.B. Has the lowest prices for the goodsC. Has the greatest difference between marginal

utility and priceD. The marginal utility over price for each good

is equal.E. The marginal utility over price for each good

is equal, within the budget constraint.

Copy this graph, and label the following with the given letterA. Constant Returns to

ScaleB. Diseconomies of

ScaleC. Economies of Scale

Give one possible cause your firm could experience:A. Economies of ScaleB. Diseconomies of Scale

According to the principle of diminishing marginal utility, as you increase the quantity consumed…

A. Marginal utility stays the sameB. Total utility stays the sameC. Marginal utility decreasesD. Marginal utility and total utility both decreaseE. Total utility declines

At any given output level, on a firm graph, the vertical difference between ATC and AVC is equal to what?

If a firm is earning an accounting profit, what do you know must be true about the firm’s economic profit?

Draw a side-by-side graph for perfectly competitive Industry/Firm earning short run profits.A. What two points are used to define the right

edge of the PROFIT box?

Draw a side-by-side graph for perfectly competitive Industry/Firm earning a short run loss.A. What two points are used to define the right

edge of the LOSS box?

In the short run, a perfectly competitive firm without government intervention will ALWAYS achieve:

A. Productive Efficiency?B. Allocative Efficiency?

Yes or no.

If tacos cost $2 each, Identify the following:

MU for the 4th taco MU/P for the 3rd taco How many tacos will

this consumer choose to purchase?

Why must the Marginal Cost curve ALWAYS intersect ATC and AVC at their minimums?

If you open a McDonald’s Franchise, list (a) two expenses that would be considered EXPLICIT costs, and two expenses that would be considered IMPLICIT costs.

If the government imposes a tax on the production of pencils, what will happen to each of the following?

(increase or decrease)

A. Price sellers receiveB. Quantity of pencils soldC. Consumer surplusD. DeadWeightLoss (DWL)

If the government imposes a subsidy on milk, what will happen to each of the following?

(increase or decrease)

A. Price paid by the buyersB. Quantity of milk producedC. Producer SurplusD. DeadWeightLoss (DWL)

How are costs different in the LONG RUN different than the SHORT RUN?

Which is more likely to promote future economic growth?

A. Investment in more capital goodsB. Investment in more consumer goods

WHY?

If the price of frosted flakes increases from $4 to $5 per box, and as a result the quantity demanded of a DIFFERENT good (X)increases from 20 million to 30 million …A. Calculate the cross elasticity of demand for

good X with respect to Frosted Flakes.B. What does this tell you about how these

goods are related?

WHY is it impossible for a perfectly competitive firm to earn a profit or loss in the long run?

Yes, they are a price taker, and Mr. Meier says so… but what actually CHANGES in the LR to eliminate SR profits or losses??