AP Microeconomics 🤑
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Multiple Choice Practice for Production, Cost, and the Perfect Competition Model
Welcome to Unit 3 AP Macroeconomics Multiple Choice Questions! Grab some paper and a pencil 📄 to record your answers as you go. You can see how you did on the Unit 3 Practice Questions Answers and Review sheet once you're done. Don't worry, we have tons of resources available if you get stumped 😕 on a question. And if solo study is not your thing, join a group in Hours!
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Facts about the test: The AP Microeconomics exam has 70 multiple choice questions and you will be given 1 hour to complete the section. That means it should take you around 8 minutes to complete 10 questions.
*The following questions were not written by College Board and, although they cover information outlined in the AP Microeconomics Course and Exam Description, the formatting on the exam may be different.
1. All of the following are examples of fixed costs EXCEPT
A. CEO contracted salary
B. Insurance
C. Raw materials
D. Rent
2. What are the characteristics of total product (TP) and marginal product (MP) during diminishing marginal returns?
A. TP is increasing, MP is decreasing
B. TP is decreasing and MP is increasing
C. TP is stays the same, MP is increasing.
D. TP is decreasing and MP stays the same
3. The long-run in microeconomics refers to
A. a concept that is too far out in the distant future that it should not be considered.
B. a period of time when the wages are "sticky" and will not change.
C. a period of time around three months.
D. a period when all resources/factors are variable and the market can react.
4. Why do economies of scale occur?
A. Total production is decreasing at the same time.
B. Because of the law of diminishing marginal utility.
C. People who produce more will use specialization and mass production techniques.
D. The cost of production per unit increases with mass production techniques.
5. The long run average total cost curve looks like
A. the short run average total cost curve
B. a marginal cost curve.
C. the demand curve.
D. a perfectly elastic supply curve.
6. Why is accounting profit different from economic profit?
A. Accounting profit does not include implicit costs.
B. Economic profit will never equal zero.
C. Accounting profit does not include explicit costs.
D. Economic profit does not include opportunity cost.
7. What is the profit maximizing rule?
A. MR=MC
B. MC=Min AVC
C. MC=P
D. MC=Min ATC
8. All of the following are characteristics of perfect competition EXCEPT
A. Low barriers to entry
B. Price makers
C. Many small firms
D. Identical products
9. The demand curve for the individual firm in a perfectly competitive market is
A. unable to be determined with this information.
B. perfectly elastic.
C. perfectly inelastic.
D. elastic.
10. If the average total cost per unit of product X is $5 at 5 units and the total revenue at 5 units is $50, what is the profit made per unit?
A. $0 profit
B. $5 profit
C. $10 profit
D. $15 profit
11. Which rule is associated with price dipping below AVC in a perfectly competitive system.
A. shut down rule
B. profit maximization rule
C. loss minimization rule
D. Law of diminishing marginal returns
12. Should the firm in a perfectly competitive market continue to produce if its AVC is $4, its ATC is $8, and its AR is $5? Is the firm making a loss or a profit?
A. Yes, loss.
B. Yes, profit.
C. No, loss.
D. Unable to determine with the given information.
13. The firm's marginal cost curve about the AVC in a perfectly competitive market structure behaves like a
A. long-run aggregate supply curve.
B. demand curve.
C. total product curve.
D. supply curve
14. The government imposes a per-unit tax on a good in a perfectly competitive market. Which of the following is most likely to happen?
A. No change will occur.
B. ATC, AVC, and MC will shift
C. ATC and AFC will shift. AVC and MC will stay the same.
D. AVC will stay the same, but MC and ATC will shift.
15. If a lump sum tax is placed on the production of a product, which of the following will happen?
A. No change will occur.
B. The MC and AVC will shift and change the ATC, but the AFC will remain the same.
C. The AFC and the ATC will increase but MC and AVC will stay the same.
D. The AFC, ATC, and MC will shift, but AVC will remain the same.
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Browse Study Guides By Unit
💸Unit 1 – Basic Economic Concepts
📈Unit 2 – Supply & Demand
🏋🏼♀️Unit 3 – Production, Cost, & the Perfect Competition Model
⛹🏼♀️Unit 4 – Imperfect Competition
💰Unit 5 – Factor Markets
🏛Unit 6 – Market Failure & the Role of Government
📝Exam Skills: FRQ/MCQ
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