AP Microeconomics Practice Test 22

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Question 15 questions

Time 18 minutes

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1. The production of chicken often results in offending odors that are picked up by the wind and blown over rural communities. This is an example of a ______ externality, the result of which are spillover ______ and an _______ of resources to chicken production.

2. Which of the following choices is true of both perfectly competitive firms and monopolistically competitive firms?

3. The monopolistically competitive price is above marginal revenue because

4. Deadweight loss in industries with market power is a result of

5. If the government wishes to regulate a natural monopoly so that it earns a normal profit, it sets

6. Which of the following would improve the efficiency of a monopoly market?

7. Which of the following increases the demand for interstate truck drivers?

8. A monopsony employer hires labor up to the point where

9. The price of labor is $5 and the price of capital is $10 per unit. Using the table below, what is the least-cost combination of labor and capital that should be hired to produce 18 units of output?

10. A cartel is often the result of

11. Suppose the state requires hairdressers and manicurists to pass a series of exams to be certified cosmetologists. How does this policy change the supply of cosmetologists, the equilibrium wage, and the price of a manicure?

SUPPLY OF COSMETOLOGISTS     WAGE     PRICE OF MANICURES

12. The local market for bankers is currently in equilibrium. Which of the following increases the local wage paid to bankers?

13. The U.S. government collects tax revenue, buys military equipment from many private firms, and uses this equipment to provide national defense to all Americans. This is a good example of

14. Which of the following scenarios is the best example of a positive externality?

15. Because of the free-rider effect, the private marketplace tends to