AP Microeconomics U2 and U6 Practice Quiz

A nation engages in international trade with its trading partners and is currently an importer of aluminum. Imposing an import tariff on aluminum will affect the domestic market for aluminum in which of the following ways?

• Domestic Q_s: increase

  Domestic CS: Decrease

  Domestic PS: Decrease

• Domestic Q_s: increase

  Domestic CS: Decrease

  Domestic PS: Increase

• Domestic Q_s: No Chg

  Domestic CS: Decrease

  Domestic PS: Decrease

• Domestic Q_s: Decrease

  Domestic CS: Increase

  Domestic PS: Decrease

• Domestic Q_s: Decrease

  Domestic CS: Increase

  Domestic PS: Increase

Which of the following is always true about a negative externality?

• It can be corrected by the government subsidizing the good or activity that creates the externality.

• It results in a market output that is smaller than the socially optimal output.

• It results in a market output that is greater than the socially optimal output.

• It results in a larger deadweight loss than a positive externality does.

• It results in a smaller deadweight loss than a positive externality does.

The graph provided shows the imposition of a per-unit tax on producers. Which areas represent government tax revenue, producer surplus, and deadweight loss after the imposition of the tax?

• The government tax revenue is P5P3MJ; The producer surplus is P3P1L; The deadweight loss is JNL.

• The government tax revenue is P5P2NJ; The producer surplus is P6P5J; The deadweight loss is P4P5J.

• The government tax revenue is JNL; The producer surplus is P3P1NM; The deadweight loss is MLN.

• The government tax revenue is P5P2NJ; The producer surplus is P2P1N; The deadweight loss is JNL.

• The government tax revenue is P5P3MJ; The producer surplus is P3P1L; The deadweight loss is JML.

When Tom’s income increases from 100 to 120, the quantity of golf balls he purchases increases from 10 to 12. What is Tom’s income elasticity of demand, and what type of good is a golf ball for Tom?

• Income elasticity of demand is 1, and golf balls are a normal good for Tom.

• Income elasticity of demand is -1, and golf balls are an inferior good for Tom.

• Income elasticity of demand is 10, and golf balls are a normal good for Tom.

• Income elasticity of demand is -10, and golf balls are an inferior good for Tom.

• Income elasticity of demand is 20, and golf balls are a normal good for Tom.

Which of the following combinations is most likely to result in the demand for a product being highly price inelastic?

• The product has few close substitutes and represents a small percentage of a consumer’s income.

• The product has few close substitutes and represents a large percentage of a consumer’s income.

• The product has many close substitutes and represents a small percentage of a consumer’s income.

• The product has many close substitutes and represents a moderate percentage of a consumer’s income.

• The product has many close substitutes and represents a large percentage of a consumer’s income.

The cross-price elasticity of demand for flashlights and Good H is 2.5. This indicates which of the following?

• Flashlights and Good H are inferior goods.

• Flashlights and Good H are normal goods.

• Flashlights and Good H are substitutes in consumption.

• Flashlights and Good H are complements in consumption.

• Flashlights and Good H both have elastic demand.

Which of the following is the best example of the free-rider problem?

• A company gives away free samples of a new product.

• A single firm is the sole supplier of corn oil.

• There are economies of scale in the production of passenger elevators.

• It is difficult to exclude those who do not pay for a good from enjoying the benefits of the good.

• There is free entry and exit into production of toothpaste, but products are not homogeneous.

Private supply of public goods is most likely to result in

• less than the efficient level of output, due to the free-rider problem

• less than the efficient level of output, due to the problem of insufficient competition

• more than the efficient level of output, due to lower costs of private firms

• more than the efficient level of output, due to the existence of externalities

• an overuse of these goods

If the imposition of a per-unit tax on a good reduces the total consumer surplus by more than the reduction of total producer surplus in a competitive market, then which of the following must be true?

• The price sellers receive decreases by more than the amount of the tax.

• The price buyers pay increases by more than the amount of the tax.

• Demand is less elastic than supply.

• Demand is more elastic than supply.

• Demand and supply are both unit elastic.

The graph above illustrates the labor market for teenage workers. The current minimum wage for all workers is W1. If Congress introduces a sub-minimum wage, W2 that applies only to teenagers, what is the most likely effect on teenage employment?

• Teenage employment will increase because firms will want to hire more teenagers at W2 than at W1.

• Teenage employment will increase because more teenagers will want to work at W2 than at W1.

• Teenage employment will decrease because fewer teenagers will want to work at W2 than at W1.

• Teenage employment will decrease because firms will want to hire fewer teenagers at W2 than at W1.

• Teenage employment will stay the same because the market-clearing wage is lower than W1 and W2.