AP Microeconomics practice test
Practice questions for all six AP Microeconomics units: basic concepts, supply and demand, costs and perfect competition, imperfect competition, factor markets and market failure. Answer in your browser and read why each answer is right.
Question 1 of 25
A rational decision maker keeps doing an activity as long as
Question 2 of 25
In a day, a worker in Country A can make 4 shirts or 2 hats. A worker in Country B can make 3 shirts or 3 hats. Which country has the comparative advantage in hats?
Question 3 of 25
A production possibilities curve that is bowed outward shows
Question 4 of 25
The price of coffee rises. What happens in the market for tea, a substitute?
Question 5 of 25
A 10% price increase causes a 20% drop in quantity demanded. What is true?
Question 6 of 25
A minimum wage set above the market equilibrium wage causes
Question 7 of 25
Consumer surplus is the area
Question 8 of 25
A good's income elasticity of demand is negative. The good is
Question 9 of 25
A per-unit tax is placed on a good with an upward-sloping supply curve and a downward-sloping demand curve. What happens?
Question 10 of 25
The law of diminishing marginal returns causes
Question 11 of 25
As a firm increases output in the short run, average fixed cost
Question 12 of 25
A perfectly competitive firm maximizes profit by producing where
Question 13 of 25
In the short run, a perfectly competitive firm should shut down when the price falls below
Question 14 of 25
In long-run equilibrium, a perfectly competitive firm earns
Question 15 of 25
Why is a monopolist's marginal revenue less than price?
Question 16 of 25
Compared with a perfectly competitive industry with the same costs, a monopoly
Question 17 of 25
Under perfect price discrimination, what happens to consumer surplus?
Question 18 of 25
In a two-player game, a dominant strategy is a strategy that
Question 19 of 25
In long-run equilibrium, a monopolistically competitive firm
Question 20 of 25
A firm in a perfectly competitive product market sells output for $4. The 5th worker adds 10 units of output. What is that worker's marginal revenue product?
Question 21 of 25
A firm hiring in a perfectly competitive labor market hires workers until
Question 22 of 25
A factory's pollution harms nearby residents. Without government action, the market
Question 23 of 25
Which policy best corrects a positive externality such as vaccinations?
Question 24 of 25
A public good is
Question 25 of 25
A Gini coefficient of 0 means
AP Microeconomics key terms
Flip through these flashcards to review the terms that come up most often. Use the arrow keys or click a card to flip it.
| Marginal analysis | Keep going while MB ≥ MC; the optimum is MB = MC. |
| Comparative advantage | Lower opportunity cost of producing a good. |
| Price elasticity of demand | % change in quantity demanded ÷ % change in price. Above 1 elastic, below 1 inelastic. |
| Total revenue test | Elastic: price up → TR down. Inelastic: price up → TR up. |
| Cross-price elasticity | Positive: substitutes. Negative: complements. |
| Price ceiling below equilibrium | Shortage |
| Price floor above equilibrium | Surplus |
| Profit-maximizing rule | Produce where MR = MC. |
| Shutdown rule | Shut down in the short run if P < minimum AVC. |
| Long-run perfect competition | P = MR = MC = minimum ATC; zero economic profit. |
| Monopoly price | Set Q where MR = MC, then charge the price on the demand curve above it. |
| Marginal revenue product | MRP = MP × MR; hire until MRP = MRC. |
| Negative externality | MSC > MPC; market overproduces. Fix: per-unit tax. |
| Positive externality | MSB > MPB; market underproduces. Fix: per-unit subsidy. |
| Public good | Nonexcludable and nonrival; free-rider problem. |
See all 15 cards
Marginal analysisKeep going while MB ≥ MC; the optimum is MB = MC.
Comparative advantageLower opportunity cost of producing a good.
Price elasticity of demand% change in quantity demanded ÷ % change in price. Above 1 elastic, below 1 inelastic.
Total revenue testElastic: price up → TR down. Inelastic: price up → TR up.
Cross-price elasticityPositive: substitutes. Negative: complements.
Price ceiling below equilibriumShortage
Price floor above equilibriumSurplus
Profit-maximizing ruleProduce where MR = MC.
Shutdown ruleShut down in the short run if P < minimum AVC.
Long-run perfect competitionP = MR = MC = minimum ATC; zero economic profit.
Monopoly priceSet Q where MR = MC, then charge the price on the demand curve above it.
Marginal revenue productMRP = MP × MR; hire until MRP = MRC.
Negative externalityMSC > MPC; market overproduces. Fix: per-unit tax.
Positive externalityMSB > MPB; market underproduces. Fix: per-unit subsidy.
Public goodNonexcludable and nonrival; free-rider problem.
About the AP Microeconomics exam
- Section I: 60 multiple-choice questions in 70 minutes, about two-thirds of the score.
- Section II: 3 free-response questions (1 long, 2 short) in 60 minutes including a 10-minute reading period, about one-third of the score.
- Free-response questions expect correctly labeled graphs: supply and demand, cost curves for a perfectly competitive firm, monopoly, labor markets and externalities.
Questions
Are these real AP Microeconomics exam questions?
No. They are original practice questions written to match the topics and style of the AP Microeconomics course. For released exam questions, see AP Central from the College Board.
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