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Practice Test 6 - AP Microeconomics

20 questions. Answer them in any order, then submit to see your score and every explanation.

  1. Based on the PPC shown, which statement best describes point E?​
  2. For a profit-maximizing perfectly competitive firm, productive efficiency is achieved when the firm produces at the quantity where
  3. Based on the firm's cost and revenue information, which statement correctly compares accounting and economic profit? A bakery earns total revenue of $90,000. Its explicit costs are $70,000. The owner also forgoes a $15,000 salary elsewhere and uses a building she owns that could be rented out for $10,000 per year.
  4. A monopolist movie theater sells the same movie ticket to two identifiable groups. Students with valid IDs can buy a ticket for $8, while nonstudents pay $14. Surveys show students are more price sensitive (more elastic demand) because they have more substitutes and lower incomes. Based on the monopolist's pricing strategy, which type of price discrimination is illustrated?
  5. Based on the constraints in the scenario, a factory has a fixed supply of 60 kilograms of aluminum this week and can use it to produce either bicycles or scooters. Each bicycle requires 6 kg and each scooter requires 4 kg. The factory wants to produce 8 bicycles and 6 scooters, but that would require 8(6)+6(4)=728(6)+6(4)=72 kg of aluminum. Which fundamental economic problem is illustrated?
  6. When a shortage exists in a competitive market, which of the following is most likely to occur to restore equilibrium?
  7. A market for fertilizer used on lawns leads to chemical runoff into local streams (a negative externality). Based on the externality shown in the graph, is the market outcome socially efficient?
  8. Based on the monopsonistic labor market shown in the table, a single agricultural processor is the only major employer of packers in a rural county. The labor supply to the firm is upward sloping, so MFC exceeds the wage. The processor's MRP schedule is shown. How many workers does the monopsonist hire and at what wage? Monopsony labor market data
    Workers (L)Wage ($/hour)MFC ($/hour)MRP ($/hour)
    1131332
    2141530
    3151728
    4161926
    5172124
    6182322
    7192520
  9. Based on the income distribution shown, Region 1 reports the following shares of total annual income by quintile: Bottom 20% = 4%, Second 20% = 9%, Middle 20% = 14%, Fourth 20% = 23%, Top 20% = 50%. Region 2 reports: Bottom 20% = 4%, Second 20% = 9%, Middle 20% = 14%, Fourth 20% = 23%, Top 20% = 50%. Which statement best describes the change in inequality between Region 1 and Region 2?
  10. Based on the PPC shown, the opportunity cost of increasing production of Good X from point A to point B is best measured as which of the following?
  11. Using the PPC shown, the opportunity cost of moving from point A to point B is best measured as which of the following?
  12. A coffee shop is considering extending its hours by adding one more hour each night (each "unit" is one added hour per night for the month). According to the marginal benefit and marginal cost data in the table, should the shop add the 4th hour? <table> <tr><th>Added hour (Q)</th><th>MB from added hour, $</th><th>MC of added hour, $</th></tr> <tr><td>1</td><td>220</td><td>120</td></tr> <tr><td>2</td><td>180</td><td>140</td></tr> <tr><td>3</td><td>150</td><td>150</td></tr> <tr><td>4</td><td>120</td><td>170</td></tr> <tr><td>5</td><td>90</td><td>190</td></tr> </table>
  13. Based on the Lorenz curve shown for Country Z, what does the Lorenz curve indicate about income distribution? The horizontal axis is cumulative percent of households, and the vertical axis is cumulative percent of income.
  14. A competitive labor market exists for hotel housekeepers. Based on the labor market shown in the table, what is the equilibrium wage and quantity of labor employed? (Quantity of labor is measured in number of workers.)
  15. A streaming service is a monopolist for a niche sports channel. It offers two plans for the same content: Plan Basic costs $10 per month for up to 1 screen, and Plan Plus costs $16 per month for up to 4 screens. Consumers self-select, and the firm does not need to observe each buyer's exact willingness to pay. Based on the monopolist's pricing strategy, which type of price discrimination is illustrated?
  16. Based on the supply curve shown, if the market price is $6, what is the quantity supplied on S1?
  17. A student tracks demand for coffee shop pastries as local incomes change. When average monthly income rises from $2,000 to $2,200 (a 10% increase), the quantity demanded of pastries rises from 50 to 55 per week (a 10% increase). Based on the changes described, using income elasticity of demand (YED), is the good normal or inferior?
  18. Which of the following explains why the price elasticity of demand for fresh green beans is likely greater than the price elasticity of demand for all vegetables?
  19. An apartment building has a rooftop garden that is accessible only to residents with key fobs. When few residents use it, each person's enjoyment is largely unaffected by others, but during peak times the space becomes crowded and additional users reduce enjoyment for others. Based on the characteristics described, which type of good is access to the rooftop garden?
  20. A small business has total fixed costs of 500500 per month. In a particular month, it produces 20 units of output with a total variable cost of 400400. What is the average total cost of production for that month?

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