Key Concepts of AP Microeconomics Exam 2024

What is scarcity in economics?

• The distribution of income among households

• The ability of resources to meet all wants

• The limited nature of society's resources

• The overabundance of goods in a market

What does a point inside the production possibilities curve represent?

• Efficient production

• Economic growth

• Inefficient production

• Technological advancement

What causes a movement along the demand curve?

• A change in income

• A change in the price of the good

• A change in market size

• A change in consumer preferences

What is the outcome of a binding price ceiling?

• Price stability

• Equilibrium

• A shortage

• A surplus

Which market structure is characterized by many firms selling identical products?

• Monopolistic competition

• Perfect competition

• Oligopoly

• Monopoly

What is a key feature of monopolistic competition?

• Price taking

• High barriers to entry

• Product differentiation

• A single seller

What is a positive externality?

• A cost paid by the government

• A cost incurred by producing a good

• A benefit experienced by third parties

• A benefit received by the buyer of a good

How can the government correct a negative externality?

• By providing subsidies

• By imposing a tax

• By increasing supply

• By setting a price floor

What does the Lorenz curve illustrate?

• Price elasticity

• Consumer surplus

• Income distribution

• Market efficiency

What type of tax is characterized by a higher percentage of income taken from the wealthy?

• Ad valorem tax

• Progressive tax

• Proportional tax

• Regressive tax