AP Economics Sample Test Questions & Answers– Micro –Unit 3
1. True statements about the theory of the firm in the short run and long run include which of the following? (E)
I. All input costs are fixed in the short run
II. All input costs are variable in the long run
III. At least one input price is fixed in the short run
A. I only
B. II only
C. III only
D. I and II only
E. II and III only
6. A firm’s short-run marginal cost curve will eventually increase because of (D)
a. more efficient production
b. economics of scale
c. diseconomies of scale
d. diminishing marginal returns
e. increasing marginal returns
8. Assume that a perfectly competitive firm is operating where marginal revenue is greater than marginal costs. To increase profits, the firm should (A)
a. increase production
b. decrease production
c. increase price
d. decrease price
e. do nothing
9. If the average variable cost of producing five units of a product is $100 and the average variable cost of producing six units is $125, then the marginal cost of producing the sixth unit is (C)
a. $125
b. $2
c. $250 (100 x 5 = 500); (125 x 6 = 750)
d. $350
e. $750
23. Consumer surplus for this profit maximizing monopolist will be represented by area: (B)
a. ABP5
b. ACP4
c. ADP3
d. AEP2
e. AGP
24. The profit maximizing price for this firm is (D)
a. P1
b. P2
c. P3
d. P4
e. P5
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