Download AP Economics Midterm Questions

AP Economics Midterm Questions
Here is a sample of the kinds of questions you will find on the midterm exam. These are the questions
written by YOU the students….
1. If the average household income rises and we observe that the demand for pork chops
increases, pork chops must be
a. An inferior good
b. A normal good
c. A surplus good
d. A necessity
e. A shortage good
2. Suppose that aluminum is a key production input in the production of bicycles. If the price of
aluminum falls, and all other variables are held constant, we expect
a.
b.
c.
d.
e.
The demand for aluminum to rise
The supply of bicycles to rise
The supply of bicycles to fall
The demand for bicycles to rise
The demand for bicycles to fall
3. Which of the following is most likely an example of production inputs that can be adjusted in
the long run but not in the short run?
a.
b.
c.
d.
Amount of wood used to make a desk
Number of pickles put in a sandwich
The size of a McDonald’s kitchen
The amount of electricity consumed by a manufacturing plant
4. Why is fixed cost a straight line?
a.
b.
c.
d.
e.
It is a decreasing cost
It is an increasing cost
It equals zero
It does not change
Law of diminishing marginal returns
5. Which statement is true?
a.
b.
c.
d.
e.
Implicit cost is the monetary payment that must be made to obtain a resource
Marginal cost can never change
Fixed cost is set by the seller
Excise taxes are levied on the production of a specific product
Implicit cost is the hidden cost of production based on the value of opportunities you
gave up when you decided to produce
6. In 2003, the price of oil increased which in turn caused the price of natural gas to rise. This
can best be explained by saying that oil and natural gas are
a. Complementary goods and the higher price for oil increased the demand for natural
gas
b. Substitute goods and the higher price for oil increased the demand for natural gas
c. Complementary goods and the higher price for oil decreased the supply of natural gas
d. Substitute goods and the higher price for oil decreased the supply of natural gas
7. Refer to the diagram below. A government set price floor is illustrated at
B
A
C
E
a.
b.
c.
d.
e.
A
B
C
D
E
D
8. The relationship between quantity supplied and price is ____________ and the relationship
between quantity demand and price is _____________
a.
b.
c.
d.
e.
Inverse, Direct
Direct, Inverse
Inverse, Inverse
Direct, Direct
Normal, Opposite
9. When the price of a product rises, consumers shift their purchases to other products whose
prices are now relatively lower. This statement describes
a.
b.
c.
d.
e.
An inferior good
The rationing function of prices
The substitution effect
The income effect
The law of demand
10. Which of the following is NOT a determinant of demand?
a.
b.
c.
d.
e.
Technology
Taste and Preferences
Income
Number of consumers
Price of substitute goods
11. In the short run, as its output increases a firm’s average costs will eventually increase
because of
a. Economies of scale
b. Diseconomies of scale
c. Increasing quantities of capital for each worker to use
d. Increasing marginal returns
e. Diminishing marginal returns
12. Marginal revenue is the change in revenue that results from a one unit increase in
a.
b.
c.
d.
e.
Variable inputs
Variable inputs prices
Quantity sold
Product price
Average revenue
The following questions refer to the table below:
Output
0
1
2
3
4
5
6
Total Fixed Cost
$500
$500
$500
$500
$500
$500
$500
13. The average total cost of producing 4 units of output is:
a.
b.
c.
d.
e.
$800
$700
$300
$175
$200
Total Variable Cost
$0
$200
$360
$500
$700
$1,000
$1,800
14. The marginal cost of producing the 6th unit of output is:
a.
b.
c.
d.
e.
$800
$700
$300
$175
$200
Use the data below to answer the following question:
Units
Consumed
1
2
3
4
5
Marginal
Utility of X
20
15
10
5
2
Price of
Good X
$5
$5
$5
$5
$5
Marginal
Utility of Y
24
18
13
8
2
Price of
Good Y
$6
$6
$6
$6
$6
15. Given this schedule of price and marginal utility, which combination of Good X and Good Y
should the consumer use to maximize utility?
a.
b.
c.
d.
e.
1 unit of X and 3 units of Y
3 units of X and 1 unit of Y
2 units of X and 3 units of Y
3 units of each good
2 units of each good
16. If soda A and soda B are substitutes for each other, which of the following would cause the
price of soda B to rise?
a.
b.
c.
d.
e.
A new study is released showing that consumption of soda leads to diabetes
The price of aluminum cans decreases
A new law is passed requiring the recycling of all aluminum cans
The price of soda A increases
The price of soda B drops
17. Which of the following cost and production relationship is inaccurately stated?
a.
b.
c.
d.
e.
AFC = AVC – ATC
MC = TC / Q
TVC = TC – TFC
APL = TPL / QL
MC = W/MPL
18. The Law of Diminishing Marginal returns is responsible for
a.
b.
c.
d.
AVC first rising, then falling as output increases
AFC first rising, the falling as output increases
MP that first falls, the rises as output increases
MC that first falls then rises as output increases
19. A small business estimates that the price elasticity for its product is 3. In order to increase
total revenue, the firm would be best off if they
a.
b.
c.
d.
e.
Decreased prices as demand is elastic
Decreased prices as demand in inelastic
Increased prices as demand is elastic
Increased prices as demand is inelastic
Increased prices as demand is unit elastic
20. A leftward shift of the supply curve would be caused by
a.
b.
c.
d.
e.
An increase in resource costs
New suppliers entering the market
Consumers leaving the market
Firms finding out prices will fall next month
Technology