AP MICROECONOMICS FINAL EXAM () UPDATED
QUESTIONS AND VERIFIED ANSWERS, 100% GUARANTEE PASS
competitive market - (answer)a market in which there are many buyers and sellers of
the same good or service, none of whom can influence the price at which the good or
service is sold
supply and demand model - (answer)model of how a competitive market works
demand schedule - (answer)shows how much of a good or service consumers will be
willing and able to buy at different prices
quantity demanded - (answer)is the actual amount of a good or service consumers are
willing and able to buy at some specific price
demand curve - (answer)a graphical representation of the demand schedule; it shows
the relationship between quantity demanded and price
law of demand - (answer)says that a higher price for a good or service, all other things
being equal, leads people to demand a smaller quantity of that good or service
change in demand - (answer)a shift of the demand curve, which changes the quantity
demanded at any given price
movement along the demand curve - (answer)a change in the quantity demanded of a
good that is the result of a change in that good's price
substitutes - (answer)if a rise in the price of one of the goods leads to an increase in the
demand for the other good
complements - (answer)if a rise in the price of one of the goods leads to a decrease in
the demand for the other good
normal good - (answer)when a rise in income increases the demand for a good
inferior good - (answer)when a rise in income decreases the demand for a good
individual demand curve - (answer)illustrates the relationship between quantity
demanded and price for an individual consumer
quantity supplied - (answer)is the actual amount of a good or service people are willing
to sell at some specific price
supply schedule - (answer)shows how much of a good or service producers would
supply at different prices
,supply curve - (answer)shows the relationship between the quantity supplied and the
price
law of supply - (answer)says that, other things being equal, the price and quantity
supplied of a good are positively related
change in supply - (answer)is a shift of the supply curve, which changes the quantity
supplied at any given price
movement along the supply curve - (answer)is a change in the quantity supplied of a
good arising from a change in the good's prices
input - (answer)a good or service that is used to produce another good or service
individual supply curve - (answer)illustrates the relationship between quantity supplied
and price for an individual producer
equilibrium - (answer)an economic situation when no individual would be better off
doing something different
equilibrium price - (answer)the price at which the quantity demanded of a good equals
the quantity supplied of that good
market-clearing price - (answer)also referred as equilibrium price, the price at which the
quantity demanded of a good equals the quantity supplied of that good
equilibrium quanitty - (answer)quantity of the good bought and sold at the equilibrium
price
surplus - (answer)when the quantity supplied exceeds the quantity demanded; occur
when the price is above its equilibrium level
shortage - (answer)when the quantity demanded exceeds the quantity supplied; occur
when the price is below its equilibrium level
price controls - (answer)legal restrictions on how high or low a market price may go
price ceiling - (answer)a maximum price sellers are allowed to charge for a good or
service
price floor - (answer)a minimum price buyers are required to pay for a good or service
inefficient allocation to consumers - (answer)people who want the good badly and are
willing to pay a high price don't get it, and those who care relatively little about the good
and are only willing to pay a relatively low price do get it
, wasted resources - (answer)people expend money, effort, and time to cope with the
shortages caused by the price ceiling
inefficiently low quality - (answer)sellers offer low quality goods at a low price even
though buyers would prefer a higher quality at a higher price
black market - (answer)a market in which goods or services are bought and sold
illegally—either because it is illegal to sell them at all or because the prices charged are
legally prohibited by a price ceiling
minimum wage - (answer)a legal floor on the hourly wage rate paid for a worker's labor
inefficient allocation of sales among sellers - (answer)those who would be willing to sell
the good at the lowest price are not always those who manage to sell it
inefficiently high quality - (answer)sellers offer high-quality goods at a high price, even
though buyers would prefer a lower quality at a lower price
quantity control (quota) - (answer)an upper limit on the quantity of some good that can
be bought or sold
license - (answer)gives its owner the right to supply a good or service
demand price - (answer)a given quantity is the price at which consumers will demand
that quantity
supply price - (answer)a given quanitty is the price at which producers will supply that
quantity
wedge - (answer)a quantity control, or quota, drives this between the demand price and
the supply price of a good; that is, the price paid by buyers ends up being higher than
that received by sellers
quota rent - (answer)difference between the demand and supply price at the quota
amount; the earnings that accrue to the license-holder from ownership of the right to sell
the good; equal to the market price of the license when the licenses are traded
deadweight loss - (answer)value of foregone mutually beneficial transactions.
substitution effect - (answer)the effect of a change in the price of a good is the change
in the quantity of the good demanded as the consumer substitutes the good that has
become relatively cheaper for the good that has become relatively more expensive
QUESTIONS AND VERIFIED ANSWERS, 100% GUARANTEE PASS
competitive market - (answer)a market in which there are many buyers and sellers of
the same good or service, none of whom can influence the price at which the good or
service is sold
supply and demand model - (answer)model of how a competitive market works
demand schedule - (answer)shows how much of a good or service consumers will be
willing and able to buy at different prices
quantity demanded - (answer)is the actual amount of a good or service consumers are
willing and able to buy at some specific price
demand curve - (answer)a graphical representation of the demand schedule; it shows
the relationship between quantity demanded and price
law of demand - (answer)says that a higher price for a good or service, all other things
being equal, leads people to demand a smaller quantity of that good or service
change in demand - (answer)a shift of the demand curve, which changes the quantity
demanded at any given price
movement along the demand curve - (answer)a change in the quantity demanded of a
good that is the result of a change in that good's price
substitutes - (answer)if a rise in the price of one of the goods leads to an increase in the
demand for the other good
complements - (answer)if a rise in the price of one of the goods leads to a decrease in
the demand for the other good
normal good - (answer)when a rise in income increases the demand for a good
inferior good - (answer)when a rise in income decreases the demand for a good
individual demand curve - (answer)illustrates the relationship between quantity
demanded and price for an individual consumer
quantity supplied - (answer)is the actual amount of a good or service people are willing
to sell at some specific price
supply schedule - (answer)shows how much of a good or service producers would
supply at different prices
,supply curve - (answer)shows the relationship between the quantity supplied and the
price
law of supply - (answer)says that, other things being equal, the price and quantity
supplied of a good are positively related
change in supply - (answer)is a shift of the supply curve, which changes the quantity
supplied at any given price
movement along the supply curve - (answer)is a change in the quantity supplied of a
good arising from a change in the good's prices
input - (answer)a good or service that is used to produce another good or service
individual supply curve - (answer)illustrates the relationship between quantity supplied
and price for an individual producer
equilibrium - (answer)an economic situation when no individual would be better off
doing something different
equilibrium price - (answer)the price at which the quantity demanded of a good equals
the quantity supplied of that good
market-clearing price - (answer)also referred as equilibrium price, the price at which the
quantity demanded of a good equals the quantity supplied of that good
equilibrium quanitty - (answer)quantity of the good bought and sold at the equilibrium
price
surplus - (answer)when the quantity supplied exceeds the quantity demanded; occur
when the price is above its equilibrium level
shortage - (answer)when the quantity demanded exceeds the quantity supplied; occur
when the price is below its equilibrium level
price controls - (answer)legal restrictions on how high or low a market price may go
price ceiling - (answer)a maximum price sellers are allowed to charge for a good or
service
price floor - (answer)a minimum price buyers are required to pay for a good or service
inefficient allocation to consumers - (answer)people who want the good badly and are
willing to pay a high price don't get it, and those who care relatively little about the good
and are only willing to pay a relatively low price do get it
, wasted resources - (answer)people expend money, effort, and time to cope with the
shortages caused by the price ceiling
inefficiently low quality - (answer)sellers offer low quality goods at a low price even
though buyers would prefer a higher quality at a higher price
black market - (answer)a market in which goods or services are bought and sold
illegally—either because it is illegal to sell them at all or because the prices charged are
legally prohibited by a price ceiling
minimum wage - (answer)a legal floor on the hourly wage rate paid for a worker's labor
inefficient allocation of sales among sellers - (answer)those who would be willing to sell
the good at the lowest price are not always those who manage to sell it
inefficiently high quality - (answer)sellers offer high-quality goods at a high price, even
though buyers would prefer a lower quality at a lower price
quantity control (quota) - (answer)an upper limit on the quantity of some good that can
be bought or sold
license - (answer)gives its owner the right to supply a good or service
demand price - (answer)a given quantity is the price at which consumers will demand
that quantity
supply price - (answer)a given quanitty is the price at which producers will supply that
quantity
wedge - (answer)a quantity control, or quota, drives this between the demand price and
the supply price of a good; that is, the price paid by buyers ends up being higher than
that received by sellers
quota rent - (answer)difference between the demand and supply price at the quota
amount; the earnings that accrue to the license-holder from ownership of the right to sell
the good; equal to the market price of the license when the licenses are traded
deadweight loss - (answer)value of foregone mutually beneficial transactions.
substitution effect - (answer)the effect of a change in the price of a good is the change
in the quantity of the good demanded as the consumer substitutes the good that has
become relatively cheaper for the good that has become relatively more expensive
