Hello! Need help with micro questions. Please list the letter that best answers the question and give a brief explanation as to why you pick that answer. Explanations can include mathematics, fully labeled graphs, sentences. Thank you!

Multiple-Choice Questions 1. The study of microeconomics includes measuring the 6. Which of the following would cause an increase in the a. profit of a corporation. quantity demanded of tea? b. national output level. a. an increase in the supply of coffee, a substitute c. size of the money supply. b. a decrease in the price of coffee, a substitute d. overall level of prices. c. a decrease in the price of tea e. number of people unemployed in the economy. d. a decrease in the supply of sugar, a complement e. an increase in the price of sugar, a complement 2. Economic models are a. exact replicas of the real world using the concept of 7. Which of the following would occur in the market for ceteris paribus. grapefruit if an increase in popularity caused the price b. exact replicas of the real world using the concept of of grapefruit to rise? a. a shift of the demand curve to the left laissez faire. c. simplifications of the real world using the concept b. a shift of the supply curve to the right c. a movement down along the supply curve of laissez faire. d. a movement up along the supply curve d. simplifications of the real world using the concept e. a movement down along the demand curve of ceteris paribus. e. simplifications of the real world using the concept 8. Assuming relatively elastic supply and demand curves, of caveat emptor. which of the following would occur if the market quantity were to fall below the equilibrium quantity due 3. What does a straight production possibilities curve to a quota in a competitive market? indicate? a. a deadweight loss a. no specialization of resources and increasing b. a market surplus opportunity costs c. a violation of the law of demand b. no specialization of resources and decreasing d. a less elastic demand opportunity costs e. the development of a horizontal demand curve c. no specialization of resources and constant 9. A new price ceiling set below the equilibrium price in opportunity costs a competitive market with relatively elastic supply and d. specialization of resources and decreasing demand would result in which of the following? opportunity costs a. an increase in the quantity demanded and an e. specialization of resources and constant opportunity increase in the quantity supplied costs b. an increase in the quantity demanded and no change 4. Due to shortcomings in pure forms of command and in the quantity supplied market economies, most counties today have c. an increase in the quantity demanded and a decrease in the quantity supplied a. traditional economies. d. a decrease in the quantity demanded and an increase b. socialist economies. in the quantity supplied c. barter economies. e. a decrease in the quantity demanded and no change d. communist economies. in the quantity supplied e. mixed economies. 10. Two goods are complements in consumption if the 5. Optimal cost-benefit analysis does not factor in costs associated that are a. income elasticity of demand is positive. a. variable. b. income elasticity of demand is negative. b. marginal. c. cross-price elasticity of demand is positive. c. sunk. d. cross-price elasticity of demand is negative. d. explicit. e. price elasticity of demand is greater than one. e. implicit. AP Microeconomics Exam Practice Test 815Refer to the table provided to respond to Questions 11 and 12. The 15. Which of the following curves always falls as output numbers in the table represent the numbers of solar panels or increases? bicycles that can be produced by the countries of Alpha and a. the marginal cost curve Omega each day if they completely specialize in one good or the b. the average variable cost curve other using the same resources. Assume that each country faces c. the average total cost curve constant opportunity costs. d. the average fixed cost curve e. the total fixed cost curve Quantity of solar panels Quantity of bicycles 16. If a firm's long-run average total cost falls as output Alpha 12 24 rises, the firm is experiencing Omega 15 a. economies of scale. 11. What do the numbers in the table indicate about b. economies of scope. Omega? c. diseconomies of scale. a. It has a comparative advantage in the production of d. increasing marginal returns. bicycles. e. diminishing marginal returns. b. It has a comparative advantage in the production of 17. If a firm experiencing decreasing returns to scale solar panels. doubles all of its inputs, which of the following will c. The opportunity cost of producing 1 solar panel is occur? 1/3 of a bicycle. a. Output will decrease. d. It should focus its effort on the production of solar b. Output will less than double. panels only. c. Output will more than double. e. Because Omega does not have an absolute advantage d. Total cost will decrease. in producing either good, Omega cannot carry out e. Fixed cost will decrease. mutually beneficial trade with Alpha. 18. What is necessarily true about a perfectly competitive 12. If something changed in Omega that allowed it to make market? up to 15 solar panels or up to 45 bicycles, a. In the long run, economic profits are positive. a. Omega's opportunity cost of producing 1 bicycle b. In the short run, there are no fixed costs. would be 3 solar panels. c. Productive efficiency will be achieved in the short b. Omega would have the comparative advantage in run. the production of solar panels. d. Allocation efficiency is not achieved in the short run. c. Omega would not trade with Alpha, since Omega e. Productive efficiency will be achieved in the long now has an absolute advantage in producing both run. goods. d. there would be no change in the good in which 19. What is one way to distinguish implicit costs from Omega should specialize in order to maximize the explicit costs? gains from trade. a. Checks are written only for explicit costs. e. Omega would be willing to trade 4 bicycles for 1 b. Checks are written only for implicit costs. solar panel. c. All costs are implicit, but some are also explicit. 13. Which of the following is true when marginal product is d. All costs are explicit, but some are also implicit. e. All opportunity costs are implicit. decreasing? a. Average product is necessarily decreasing. 20. Having a minimum efficient scale that is relatively small b. Average product is necessarily increasing. contributes to the likelihood that a market will be c. Average product could be increasing or decreasing. a. perfectly competitive. d. Total cost is increasing at a decreasing rate. b. a monopoly. e. Marginal cost is decreasing. c. an oligopoly. d. a monopsony. 14. For what type of good does a decrease in income lead to e. highly concentrated. an increase in demand? a. a normal good 21. Which two market structures are characterized by free b. an inferior good entry into and exit from the industry in the long run? c. a good with price-elastic demand a. monopolistic competition and monopoly d. a good with price-inelastic demand b. monopolistic competition and perfect competition e. a good with price-unit-elastic demand c. monopolistic competition and oligopoly d. oligopoly and perfect competition e. monopoly and perfect competition 816 AP Microeconomics Exam Practice Testif supply increases and the demand curve is downward- sloping, which of the following is necessarily true? . consumer surplus increases 27. To maximize utility, consumers should allocate their income to equate the b. consumer surplus decreases c. consumer surplus is unaffected a. marginal utility received from each good. d. producer surplus is unaffected b. marginal utility per dollar spent on each good. e. producer surplus increases c. total utility received from each good. d. quantity purchased of each good Firms generally produce the quantity that equates e. dollars spent on each good. marginal revenue with 28. In a perfectly competitive industry, the long-run supply a. price, because that minimizes average total cost. curve is flatter and more elastic than the short-run b. average total cost, because that minimizes total cost. supply curve due to c. average variable cost, because that stabilizes costs. a. the availability of more substitutes. d. marginal cost, because that minimizes average total cost. b. the availability of more complements. e. marginal cost, because that maximizes profit or c. economies of scale. minimizes loss. d. diseconomies of scale. e. easy exit and entry of firms. For a competitive firm, if marginal revenue exceeds marginal cost at the current level of output and the firm 29. Jennifer owns a hot dog vending business. Each is currently earning economic losses, what could the month she spends $1,000 on fixed capital and $2,000 on buns, hot dogs, and supplies. Jennifer's monthly firm certainly do? a. increase output to ensure economic profits total revenue is $3,000. In order to start this business, Jennifer had to quit her teaching job, in which she b. decrease output to ensure economic profits earned $2,500 per month and had no work-related c. increase output to reduce economic losses expenses. Jennifer earns d. decrease output to reduce economic losses a. an accounting profit of $5,500. e. shut down to reduce economic losses b. an accounting profit of $3,000. Use the following figure to answer Question 25. c. a normal profit. d. an economic profit of $0. Price e. an economic profit of -$2,500. ($) Supply 30. When marginal revenue is positive and decreasing for a 10 9 monopolist, what is happening to total revenue? a. It is increasing at an increasing rate. b. It is decreasing at the same rate as marginal 00 revenue. c. It is decreasing faster than marginal revenue. AU a d. It is increasing at a decreasing rate. e. It is decreasing slower than marginal revenue. 31. What type of tax would collect $1,000 from a person Now with a $10,000 income, $2,000 from a person with a $20,000 income, and $4,000 from a person with a Demand $40,000 income? 0 1 2 4 5 6 7 8 9 10 a. a progressive tax Quantity b. a proportional tax 25. At the equilibrium price, producer surplus is c. a regressive tax a. $6. d. an excise tax b. $8. e. a tax incidence c. $12. 32. What would happen to the consumer surplus that d. $16. was lost if a perfectly competitive market became a e. $24. monopoly facing the same demand and costs? 6. The price below which a firm in a perfectly competitive a. All of it would be gained by the monopolist. industry will exit the market in the long run is b. Some of it would be gained by the monopolist, and the rest would be part of the deadweight loss. determined by the minimum c. It would all be part of the deadweight loss. a. marginal cost. d. It would be paid to the government in taxes. b. average total cost. e. It would be transferred to the Federal Trade c. total cost. Commission. d. total variable cost. e. average fixed cost. AP Microeconomics Exam Practice Test 817