AP®︎ Microeconomics: Topic 6.4 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 6.4 of AP Microeconomics – The Effects of Government Intervention in Different Market Structures.
Questions List
Topic 6.4
Question 1 Easy
This question tests the following: POL-4.A.4
What is the primary purpose of government intervention in imperfect markets?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Microeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 6.4: The Effects of Government Intervention in Different Market Structures
Learning Objective: POL-4.A
a. Define government policy interventions in imperfect markets. b. Explain (using graphs where appropriate) how government policies can alter market outcomes in perfectly and imperfectly competitive markets. c. Calculate (using data from a graph or table as appropriate) changes in market outcomes resulting from government policies in perfectly competitive and imperfectly competitive markets. Exclusion: A graph of inefficiency and policy due to collusion is beyond the scope of the course and the AP Exam.
Essential Knowledge: POL-4.A.1
Per-unit taxes and subsidies affect the total price consumers pay, net price firms receive, equilibrium quantity, consumer and producer surpluses, deadweight loss, and government revenue or cost. The impact of change depends on the price elasticity of demand and supply.
Essential Knowledge: POL-4.A.2
Lump-sum taxes and lump-sum subsidies do not change either marginal cost or marginal benefit; only fixed costs will be affected.
Essential Knowledge: POL-4.A.3
Binding price ceilings and floors affect prices and quantities differently depending on the market structures (perfect competition, monopoly, monopolistic competition, and monopsony) and the price elasticities of supply and demand.
Essential Knowledge: POL-4.A.4
Government intervention in imperfect markets can increase efficiency if the policy correctly addresses the incentives that led to the market failure.
Essential Knowledge: POL-4.A.5
Government can use price regulation to address inefficiency due to monopoly.
Essential Knowledge: POL-4.A.6
A natural monopoly will require a lump-sum subsidy to produce at the allocatively efficient quantity.
Essential Knowledge: POL-4.A.7
Governments use antitrust policy in an attempt to make markets more competitive.
