AP Macro Midterm

The marginal benefit of consuming a good is

• the maximum amount a consumer is willing to pay for one more unit of the good

• the change in total expenditures as a result of buying one more unit of the good

• the change in average utility that results from consuming one more unit of the good

• the same as the total benefit

• equal to the marginal cost of the good

Which of the following MUST be true of the long run?

• Marginal Costs are constant

• At least one factor of production is fixed

• All factors of production are variable

• Average total costs are constant

• It's at least one year in duration

Which of the following is true in the elastic range of a firm's demand curve?

• The firm is maximizing total revenue.

• An increase in price will also lead to an increase in total cost.

• The firm should expand output to increase economic profits.

• Marginal revenue is negative.

• A decrease in price will likely lead to an increase in total revenue.

Which of the following is true of a price floor?

• An effective price floor will increase the quantity demanded of the good.

• The price floor would tend to create a shortage of the good in the market.

• The intention of the government in creating the price floor is to assist the producers of the good.

• To have an impact in the market for the good, the price floor should be set below the existing market price of the good.

• The creation of the price floor would not change the quantity supplied of the good if the supply curve were upward-sloping to the right.

In the short run, which of the following is true of a firm's average total cost of production?

• It is zero if the firm shuts down.

• It always increases when a firm increases production.

• It is equal to average fixed cost plus average variable cost.

• It is equal to marginal cost plus average fixed cost.

• It is equal to marginal cost plus average variable cost.

The study of economics is primarily concerned with which of the following?

• The fair and equal treatment of all housholds

• The allocation of scarce resource, given unlimited wants

• The development of the dynamics of group behavior

• The testing of hypothesis under controlled conditions

• The provision of conclusive answers to public policy issues

Why do people need to make choices?

• Limited resources

• Unlimited wants

• Limited time

• Unlimited resources

The additional satisfaction received from consuming an additional unit of a good is called the

• marginal product

• total utility

• marginal utility

• average utility

• average product

Which of the following statements describes an economy confronting scarcity?

• An economy can produce an elited amout of all goods

• Scarcity is elimited by government provisions of goods

• All individuals are able to satisfy their consumption desires

• If more of one good is produced a less of another good must be produced

• Scarcity only exists as a problem when there is more than one good to produce

An economy can produce a limitless amount of all goods. Scarcity is eliminated by government provision of goods. All individuals are able to satisfy their consumption desires. If more of one good is produced, less of another good must be produced. Scarcity only exists as a problem when there is more than one good to produce.

• An economy can produce a limitless amount of all goods.

• Scarcity is eliminated by government provision of goods.

• All individuals are able to satisfy their consumption desires.

• If more of one good is produced, less of another good must be produced.