AP Microeconomics Quiz

What is the basic economic problem that all societies face?

• Inflation

• Scarcity

• Overproduction

• Unemployment

If the price of a substitute good increases, what happens to the demand for the original good?

• Increases

• Decreases

• Stays the same

• Becomes zero

Which of the following is a normative statement?

• The unemployment rate is 5%.

• Government should provide healthcare to all citizens.

• The inflation rate was 3% last year.

• A higher interest rate discourages borrowing.

In a perfectly competitive market, firms are:

• Price makers

• Price takers

• Monopolists

• Price setters

Which of the following is a characteristic of a public good?

• Excludability

• Rivalry

• Non-rivalry

• High costs

What is the opportunity cost of attending college?

• The tuition fees

• The money you could have earned working full-time

• The cost of books

• Living expenses

When marginal cost equals marginal revenue, a firm:

• Should shut down

• Maximizes its profit

• Minimizes its loss

• Is at a break-even point

A price floor set above the equilibrium price will:

• Cause a shortage

• Cause a surplus

• Have no effect

• Increase demand

In a monopoly, the demand curve facing the firm is:

• Vertical

• Downward sloping

• Upward sloping

• Horizontal

What happens in the long run to firms in a perfectly competitive market?

• They earn positive economic profits.

• They earn zero economic profits.

• They face decreasing costs.

• They monopolize the market.