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Practice Test 7 - AP Microeconomics

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

  1. A labor market for delivery drivers is shown in the table below. Labor demand is derived from the marginal revenue product (MRP) of drivers. Based on the labor market shown, what is the equilibrium wage and employment? Table: Delivery Driver Labor Market (per hour) - Wage ($/hour): 14, 15, 16, 17, 18 - Quantity of labor demanded (drivers): 600, 550, 500, 450, 400 - Quantity of labor supplied (drivers): 300, 350, 400, 450, 500
  2. Based on the constraints in the scenario, a city government has a fixed $10 million budget increase this year and is considering two competing uses: expanding bus service or hiring additional firefighters. Both programs have requested the full $10 million. Which fundamental economic problem is illustrated?
  3. Using the PPC shown, moving from point A to point B indicates which of the following?
  4. Using the supply data shown for a dairy cooperative in the short run (herd size cannot be increased quickly), calculate the price elasticity of supply (PES) between Point 1 and Point 2 using the midpoint method. Supply data (per day): - Point 1: $P = $4, $QsQ_s = 200 - Point 2: $P = $5, $QsQ_s = 220
  5. A market for ride-sharing trips in a downtown area increases traffic congestion for other drivers (a negative externality). Based on the externality shown in the graph, what is the socially optimal quantity of ride-sharing trips (in thousands per day)?
  6. In the market for electricians, a large infrastructure bill increases construction activity. Based on the labor market graph shown, which change best explains the shift shown?
  7. A city operates a free downtown Wi-Fi network with no login required. When many users connect at once, speeds slow for everyone, but the city has not implemented any way to block specific users from connecting. Based on the characteristics described, which type of good is the downtown Wi-Fi network during peak usage?
  8. In a perfectly competitive long-run equilibrium, firms earn zero economic profit. This implies that
  9. Because of scarcity, every choice involves a trade-off. This means that to get more of one thing, a person must
  10. In the market for coffee, if the current price is below the equilibrium price, which of the following will occur?
  11. A bakery's total cost to produce 40 loaves of bread is 200200. Its total cost to produce 41 loaves is 208208. What is the marginal cost of the 41st loaf?
  12. To maximize its short-run profit, a perfectly competitive firm will produce the quantity of output where
  13. Following a short-run increase in demand that leads to positive economic profits, what long-run adjustment will occur in a perfectly competitive, constant-cost industry?
  14. If the demand for a product is unit elastic, a 5 percent decrease in its price will cause the quantity demanded to increase by
  15. Based on the firm's cost and revenue information, is the firm earning normal profit? A home cleaning service earns total revenue of $75,000. Its explicit costs are $40,000 for supplies and hired help and $15,000 for advertising and insurance, for total explicit costs of $55,000. The owner gives up $18,000 in wages from another job and uses a vehicle that could be leased out for $2,000 per year (implicit costs total $20,000).
  16. Given the resource limitation described, a public school has only 30 seats in an AP Economics section and must allocate seats between seniors needing the course to graduate and underclassmen who want to take it early. A total of 45 students want to enroll. Which statement correctly explains why a choice must be made?
  17. The primary role of an economic system, whether it is market-based or command-based, is to
  18. Based on the changes described, the price of printers rises by 25%, and the quantity of printer ink cartridges demanded falls from 200 to 150 per month, with the price of ink unchanged. Using cross-price elasticity of demand (XED), are printers and ink cartridges substitutes, complements, or unrelated goods?
  19. Which of the following correctly compares the market demand curve and the demand curve faced by a firm in perfect competition?
  20. Given the resource limitation described, a community garden has a fixed 12 plots to allocate between tomatoes and peppers. Garden members want to plant tomatoes in 8 plots and peppers in 7 plots, but only 12 plots exist. The situation best demonstrates that…

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