AP Microeconomics FRQ Room

Comparative Advantage and International Trade

This question focuses on comparative advantage and its role in international trade. Answer all parts

Comparative Advantage and Trade Decision

Analyze comparative advantage using given production data for two countries and discuss the gains fr

Consumer Choice and Budget Constraint

This question examines consumer choice within the framework of a budget constraint.

Evaluating Efficiency in an Economy

An economy is operating on its Production Possibilities Frontier (PPC), yet evidence suggests that t

Evaluating the Impact of Governmental Subsidies

This question focuses on how a government subsidy affects market equilibrium and economic welfare.

Evaluating Trade-Offs in Personal Decision Making

Examine how individuals face trade-offs and opportunity costs when making personal decisions, such a

Factors of Production Analysis

Examine the role of the four factors of production in an economy. Discuss how each factor contribute

Factors of Production and Resource Allocation

Discuss the four factors of production and explain how they influence resource allocation in an econ

FRQ 6: Market Analysis – Supply and Demand Shifts

This question explores how scarcity and changes in available resources can shift market outcomes wit

FRQ 10: Evaluating Explicit vs. Implicit Costs in Business Decisions

This question examines how firms account for different types of costs in order to make informed busi

FRQ 15: Policy Decision Trade-Offs and Cost-Benefit Analysis

This question focuses on how policymakers use cost-benefit analysis to evaluate trade-offs in public

Impact of Scarcity on Innovation: A Case Study

Evaluate how scarcity of critical resources affects a firm's innovation and production strategies.

Impacts of External Shocks on the PPC

Analyze how external shocks, such as natural disasters, can affect an economy's production possibili

Implicit vs. Explicit Costs in Business Decision-Making

A local entrepreneur is considering launching a startup. The analysis shows explicit startup costs o

Marginal Analysis and Consumer Choice

This question tests your understanding of marginal utility and the principle of diminishing marginal

Microeconomics vs. Macroeconomics Analysis

This question focuses on differentiating microeconomics and macroeconomics and their applications.

Microeconomics vs. Macroeconomics Decision-Making

This question asks you to differentiate between microeconomics and macroeconomics and provide real-w

Microeconomics vs. Macroeconomics Distinction

Differentiate between microeconomics and macroeconomics by defining each branch and providing distin

Opportunity Cost and Strategic Business Decisions

This question requires you to analyze opportunity cost in the context of strategic business decision

Opportunity Cost and Trade-Offs in Production

Analyze the trade-offs involved in production decisions by calculating opportunity costs from given

Positive and Normative Economic Analysis

Examine the differences between positive and normative economic analysis using the example of evalua

Positive vs. Normative Economics

This question explores the differences between positive and normative economic analysis.

Price Controls and Subsidies: Impact on Market Equilibrium

Consider the market for a necessary medication where the initial equilibrium is determined by the de

Production Possibilities Curve (PPC) Analysis

Analyze the Production Possibilities Curve (PPC) and the implications of shifts in the curve.

Resource Allocation and Economic Systems Comparison

Analyze different economic systems and how they answer the three fundamental economic questions rega

Resource Allocation in a Mixed Economic System

This question explores resource allocation in a mixed economic system where both market forces and g

Resource Scarcity and Market Outcomes

A key input in electronics manufacturing, such as rare earth metals, experiences global scarcity due

Scarcity and Decision-Making Across Contexts

Scarcity is a fundamental economic problem that forces both individuals and governments to make trad

Scarcity and Opportunity Cost in Resource Allocation

Discuss the concepts of scarcity and opportunity cost in the context of personal budgeting. Consider

Shifts in the PPC and Economic Growth

Analyze how economic growth, driven by factors like technological improvement, affects the productio

The Role of Implicit and Explicit Costs

This question explores the distinctions between implicit and explicit costs, and how these costs inf

Trade-offs in Capital Investment Decisions

Examine the trade-offs involved in making capital investment decisions in terms of explicit and impl

Trade-offs in Government Policy Decision

Analyze the concept of trade-offs in government budget allocation using cost-benefit analysis.

Air Pollution from Coal Power Plants

Coal power plants emit pollutants that lead to air quality degradation. In this market, the equilibr

Changes in Consumer Preferences and Market Equilibrium

A new trend increases the popularity of a specific tech gadget, causing a shift in consumer preferen

Comparative Statics: Demand Increase

For a market with an initial demand curve $$P = 80 - 2Q$$ and supply curve $$P = 20 + Q$$, a rise in

Cross Price Elasticity and Income Elasticity

This question examines other elasticities beyond price elasticity: cross price elasticity and income

Cross Price Elasticity and Market Competition

Investigate the relationship between two goods using cross-price elasticity of demand.

Cross Price Elasticity: Substitutes vs. Complements

Cross price elasticity of demand measures how the quantity demanded for one good responds to a chang

Demand Elasticity and Total Revenue Dynamics

Using provided data, analyze the impact of a price change on quantity demanded and total revenue in

Double Shift: Simultaneous Increase in Demand and Supply

In a market where both demand and supply increase simultaneously, analyze how the equilibrium price

Effect of a Price Ceiling and Import Quota

Discuss the outcomes of government intervention in the housing market through a price ceiling and an

Effects of a Price Ceiling in the Essential Medicines Market

To ensure affordability of essential medicines, the government imposes a price ceiling at $35 in a m

Effects of a Price Ceiling in the Textbook Market

A public university implements a price ceiling of $80 on textbooks to make them more affordable. Pre

Elasticity of Supply and Total Revenue Impact

A firm observes that its quantity supplied changes as the market price shifts. Analyze how supply el

Environmental Externality in Apparel Production

Factories producing apparel sometimes emit pollutants into waterways, imposing an environmental exte

FRQ 2: Supply Analysis and Shifts in the Smartphone Market

Consider the following supply schedule for smartphones. Answer the following parts: (a) Plot the sup

FRQ 4: Calculating Price Elasticity of Demand and its Impact on Total Revenue

A local restaurant charges $10 for a specific dish and sells 100 plates per day. After reducing the

FRQ 5: Price Elasticity of Supply in the Electronics Market

A manufacturer observes that when the price of an electronic gadget increases from $200 to $240, the

FRQ 7: Calculating Income Elasticity of Demand

A department store finds that when consumer incomes increase by 5%, the quantity demanded for brande

FRQ 9: Welfare Analysis with Tax Implementation and Deadweight Loss

Consider a market with the demand function $$D: P = 150 - Q$$ and the supply function $$S: P = 50 +

FRQ 10: Cross Price Elasticity of Demand between Coffee and Tea

In a local market, data shows that the quantity demanded of coffee is influenced by changes in the p

FRQ 11: Analyzing Market Surplus and Adjustments

A certain electronic gadget is sold at a price above its equilibrium level, resulting in a surplus.

FRQ 14: Long-Run Adjustments in Perfect Competition

A perfectly competitive market initially experiences short-run economic profits. Over time, new firm

FRQ 16: Impact of External Shocks on the Oil Market

A major technological discovery has significantly reduced the cost of extracting oil. Assume the ini

FRQ 20: Integrated Analysis in the Electric Vehicle Market

Electric vehicles (EVs) have been gaining popularity. Initially, the market demand is given by $$D:

Hazardous Waste in Electronics Manufacturing

Electronics manufacturing can produce hazardous waste that creates significant environmental damage.

Impact of a Price Ceiling during a Pandemic in the Fast Food Market

During a pandemic, a government imposes a price ceiling of $8 on fast food to protect consumers, low

Impact of Government-Imposed Price Floor in the Agricultural Market

A government has set a price floor for wheat at $3 per unit in an effort to support farmers. Prior t

Impact of Minimum Wage as a Price Floor in the Labor Market

In a competitive labor market for unskilled workers, the equilibrium wage is $12 per hour with 100,0

Impact of Price Floors on Markets

This question examines the effects of price floors on market outcomes. Answer the following: (a) De

Income Effects on Normal and Inferior Goods

This question examines how changes in consumer income affect the demand for normal and inferior good

Income Elasticity and Good Classification

Income elasticity of demand measures how quantity demanded changes in response to changes in consume

International Trade Policies: Tariffs and Quotas Impact on Domestic Markets

This question explores the impact of international trade policies on domestic markets, focusing on t

Manufacturing Emissions and Public Health

A manufacturing plant emits pollutants that have adverse effects on local public health. The market

Market Analysis under a Price Ceiling in the Coffee Market

The government introduces a price ceiling of $2.50 on coffee, in a market with an original equilibri

Market Disequilibrium and Adjustment Mechanisms

This question examines the concept of market disequilibrium and how markets adjust to eliminate shor

Market Equilibrium, Consumer and Producer Surplus

This question focuses on understanding market equilibrium and the calculation of consumer and produc

Negative Externality in Widget Production

In the widget market, a factory produces widgets while emitting pollutants that impose an external c

Price Elasticity of Supply Analysis

Evaluate the price elasticity of supply given a firm's output response to a change in price.

Supply Analysis and Shifters

This question focuses on the law of supply and factors that shift the supply curve. Answer the follo

Supply Shift: Impact of Technology on Production

A technological innovation reduces production costs for suppliers in the market for Product Y. Analy

Technological Improvements and the Supply Curve

Assess how improvements in technology affect the supply curve in a competitive market.

Traffic Congestion in the Ride-Sharing Market

Ride-sharing services contribute to traffic congestion, which imposes additional social costs not bo

Waste Disposal in Pharmaceutical Production

A pharmaceutical company produces surplus medications that eventually become waste, leading to envir

Accounting vs. Economic Profit Analysis

A restaurant owner operates in a competitive market and, over a month, earns a total revenue of $200

Bottled Water Production and Plastic Waste

The production of bottled water has externalities associated with plastic waste. Evaluate the result

Calculating the Shutdown Point

Determine the shutdown point for a firm based on its variable cost structure using mathematical anal

Calculation of Short-run Production Costs

Examine short-run production costs for a firm using the provided data. Analyze fixed and variable co

Comparative Statics: Changes in Input Prices

A firm’s short-run total cost is given by $$TC = 30 + 6*Q + Q^2$$. Suppose a rise in the wage rate c

Comprehensive Profit Maximization under Perfect Competition

A firm in a perfectly competitive market faces the following conditions: its total cost function can

Cost Curve Comparison: Short Run vs. Long Run

A firm’s cost environment is depicted in the graph below, which shows several short-run Average Tota

Cost Functions and Marginal Cost Curve Calculation

A firm’s total cost function is given by $$TC(Q) = 5*Q + 3*Q^2 + 40$$. Analyze the cost structure ba

Cost Minimization in the Long Run

Firms aim to minimize costs in the long run by choosing the optimal scale of production. (a) Define

Dairy Production and Manure Pollution

Dairy production can create negative externalities, notably through manure pollution. Analyze the re

Derivation of Cost Functions

A firm's total cost is composed of fixed and variable costs. Derive the total cost function and anal

Effect of a Per-Unit Subsidy on Production and Deadweight Loss

A government introduces a per-unit subsidy of $3 for a firm operating in a competitive market. The f

FRQ 1: Production Function and Diminishing Marginal Returns Analysis

A company uses labor as its only variable input in the production process. The table below shows the

FRQ 2: Short-Run Production Cost Analysis

A firm operates in the short run with a fixed cost (FC) of $200. Its variable cost (VC) function is

FRQ 3: Profit Maximization in a Competitive Market

Consider a competitive firm with a total cost function given by $$TC(Q) = 0.5*Q^2 + 50$$ Part A: D

FRQ 5: Short-Run Shutdown Decision Analysis

A firm faces a fixed cost of $500 and has a variable cost function given by $$VC(Q) = 4 * Q + Q^2$$.

FRQ 7: Accounting vs. Economic Profit Analysis

A restaurant owner reports total revenue of $1000. The explicit costs incurred are $700, and the imp

FRQ 7: Exit Rule and Long-Run Equilibrium in Perfect Competition

Firm E is operating at an output level of Q = 100 with an Average Total Cost (ATC) of $18, while the

FRQ 11: Cost Minimization in the Long Run

Long-run cost minimization requires firms to choose the combination of inputs that minimizes the tot

FRQ 14: Graphing the Production Function

A firm’s production function is given by $$Q = 8 * L - (L^2)/2$$, where L represents the units of la

FRQ 14: Impact of Price Controls on Competitive Firms

Government-imposed price controls can affect both consumer and producer surplus in a market. Part A

FRQ 15: Impact of Increased Rental Rate on Production

A firm that utilizes both labor and capital to produce goods faces an increase in the rental rate of

FRQ 16: Comparative Analysis of Fixed and Variable Inputs

A restaurant uses a fixed input (a head chef) and variable inputs (waitstaff) to produce meals. The

FRQ 17: Strategic Interactions Using a Payoff Matrix

Two firms in an industry face strategic choices regarding their production levels. The following pay

FRQ 18: Cost Metrics Comparison: Average and Marginal Costs

A firm produces gadgets and has a total cost function described by $$TC(Q) = 200 + 4 * Q + 0.2 * Q^2

FRQ 20: Long-Run Equilibrium in Perfect Competition

In the long run, competitive markets adjust so that firms earn zero economic profit, and only normal

Graph Analysis of Perfect Competition Market Supply and Demand

The following graph represents the market for Good X in a perfectly competitive market. Answer the

Graphing Cost Curves and Determining Shutdown Point

A firm’s short-run cost structure is represented by several cost curves. Based on the provided graph

Industry-Wide Cost Minimization in Perfect Competition

Consider a representative firm in a perfectly competitive market with the total cost function given

Input Price Change Impact Analysis

A firm’s cost function is given by $$TC(Q) = 2*Q^2 + 50$$ when the rental rate of capital is $$r = 1

Input Price Changes and Cost Curves in Perfect Competition

Suppose a firm in a competitive market experiences an increase in the rental rate of capital. (a)

Long-Run Entry and Exit Decisions in Perfect Competition

In a perfectly competitive market, firms can enter or exit based on profit conditions. Suppose a fir

Long-Run Production Costs and Economies of Scale

A firm’s long-run average total cost (LRATC) data is provided in the table below. Use this informati

Long‐Run Market Equilibrium and Entry/Exit

In a perfectly competitive market with free entry and exit, firms earn economic profits or losses in

Marginal, Average and Total Cost Analysis

For a firm with the total cost function $$TC(Q) = 20 + 4*Q + 3*Q^2$$, answer the following parts:

Multi-Stage Production Decision and Profit Maximization

A firm operates with a total cost function of $$TC(Q) = 5 + 10*Q + Q^2$$. Answer the following quest

Production Function Analysis

A firm uses labor as its only variable input. The table below shows the number of workers (L) employ

Profit Calculation: Accounting vs Economic Profit

A firm reports total revenue of $1,000 and explicit costs of $600. If the opportunity cost of the fi

Profit Maximization and MR = MC Analysis

Examine the profit maximization condition in a perfectly competitive market and solve for the profit

Profit Maximization in a Competitive Firm

A perfectly competitive firm has a total cost function given by $$TC(Q) = 20 + 4*Q + Q^2$$ and faces

Profit Types and Profit Maximization

A firm sells its product at $$50$$ per unit. In a given period, the firm incurs explicit costs of $$

Short-Run Decision and the Shutdown Rule

A firm has a cost function $$TC(Q) = 3*Q^2 + 50$$, where fixed costs are $$50$$. The market price ha

Short-Run Production Cost Analysis

Consider a firm operating in the short-run with cost data as shown. The fixed cost (FC) is constant

Short-Run Production Cost Analysis: Bakery Cost Curves

A small bakery has fixed costs of $$FC = 50$$ and hires workers at a wage rate of $$w = 15$$ per wor

Short-run Shutdown Decision Analysis

Assess the shutdown decision for a firm in the short run based on its variable costs relative to mar

Short-Run vs. Long-Run Cost Curves Comparative Analysis

A firm has several short-run average total cost (ATC) curves corresponding to different plant sizes.

Short-Run vs. Long-Run Strategic Decisions in Perfect Competition

A firm in a perfectly competitive market faces a short-run total cost function of $$TC = 200 + 10*Q

Analyzing Efficiency Costs of Monopoly Market Power

Market power in a monopoly often leads to efficiency losses. Evaluate these losses by analyzing allo

Analyzing Returns in Eco-Friendly Furniture

An eco-friendly furniture maker operates in an imperfectly competitive market. The firm has a fixed

Barriers to Entry in Various Market Structures

The degree of barriers to entry distinguishes market structures. Using the table provided, answer th

Comparative Analysis of Elasticities: Monopoly vs. Monopolistic Competition

In this question, you will compare the price elasticity of demand for a monopolist versus a firm in

Cost and Revenue Analysis in Monopolistic Competition

Analyze the cost and revenue structure of a firm in monopolistic competition.

Demand and Pricing Strategies in Imperfect Markets

Analyze how demand elasticity affects pricing strategies in imperfectly competitive markets.

Efficiency Analysis in Custom T-Shirts

Custom T-Shirts operates in a niche market with imperfect competition. The firm has a fixed cost of

Elasticity and Marginal Revenue in Monopoly Pricing

This question links the concepts of price elasticity of demand and marginal revenue (MR) in monopoly

Externalities and Market Inefficiencies in the Online Streaming Sector

An online streaming service, operating in an imperfectly competitive market, creates negative extern

Externality Impact in a Regional Utility Company

A regional utility company supplying electricity operates in an imperfectly competitive market and g

Game Theory and Collusion in an Oligopoly

Consider an oligopolistic market where two firms are deciding whether to "Cooperate" (maintain high

Game Theory in Oligopoly: Dominant Strategy and Nash Equilibrium

Consider a duopoly where each firm must choose between cooperating or competing. Use game theory to

Government Intervention in Luxury Smartphone Accessories Market

Consider a monopolistically competitive market for luxury smartphone accessories. Firms differentiat

Government Regulation of a Natural Monopoly

A natural monopoly is subject to government regulation that forces it to set price equal to its aver

Impact of Advertising in Monopolistic Competition

Examine the role of advertising in shaping demand and profitability in monopolistic competition.

Impact of Price Floors in Monopolistic Competition

This question focuses on the effects of imposing a price floor in a monopolistically competitive mar

Impacts of a Price Floor in a Monopolistic Competition Market

A government imposes a price floor in a monopolistically competitive market. Initially, the market i

International Externalities in the Steel Market

An international steel producer, operating in an imperfectly competitive market, generates considera

Long-Run Tax Effects in the Coffee Shops Market

In the coffee shops market, which exhibits characteristics of imperfect competition in the long run,

Marginal Returns in a Craft Brewery

A craft brewery operates in an imperfectly competitive market. It has a fixed cost of $350, pays a w

Market Adjustments in Monopolistic Competition

Analyze the short‐run and long‐run adjustments in a monopolistically competitive market where firms

Market Entry and Exit in Monopolistic Competition

Discuss the dynamics of market entry and exit in monopolistic competition and their effects on long-

Market Power and Pricing in a Monopoly

A monopolist who enjoys considerable market power sets its output by comparing marginal revenue (MR)

Market Structure Analysis in Imperfect Competition

This question examines your understanding of different market structures in the context of imperfect

Monopolistic Competition: Short-Run and Long-Run Equilibrium Analysis

This question examines your understanding of monopolistic competition, including the firm’s demand c

Natural Monopoly: Pricing and Regulation

Analyze the formation and pricing behavior of natural monopolies and the effect of government regula

Negative Externalities and Regulatory Challenges in the Shipping Industry

A shipping company operating within an oligopolistic market is responsible for significant negative

Price Discrimination Strategies in Imperfectly Competitive Markets

This question focuses on price discrimination in monopoly settings. You will explain the differences

Production Function Evaluation in a Mobile App Firm

A mobile app development firm operates in an imperfectly competitive market. The firm has a fixed co

Tax and Advertising in a Monopolistically Competitive Market

In a market where firms engage in heavy advertising to differentiate their products, assume a monopo

Tax Effects in a Monopolistically Competitive Differentiated Goods Market

Consider a market characterized by monopolistic competition where firms sell differentiated products

Tax Effects in a Regional Housing Market

In a regional housing market characterized by elements of imperfect competition, the government impo

Tax Impact on Eco-Friendly Products Market

In the market for eco-friendly products, growing environmental concerns have prompted the government

Tax Impacts in the Online Streaming Services Market

In the competitive online streaming services market, the government has imposed a $1 per‐unit tax. E

Technological Change and Market Structure in Imperfect Competition

Analyze the impact of technological advancements on the cost structure and entry dynamics in imperfe

The Role of Advertising in Monopolistic Competition

Discuss the influence of advertising on market demand and firm profitability in monopolistic competi

Adjustments to Rising Labor Costs: Firm's Response

Investigate how a firm adjusts its hiring decision in response to an increase in wages in a competit

Air Pollution from Cement Production

A cement production firm generates air pollution that is not reflected in its production costs, resu

Analysis of MRP and MFC in Competitive and Monopsonistic Labor Markets

This question examines the relationship between marginal revenue product (MRP) and the marginal fact

Application of the Least Cost Rule in Factor Markets

A firm uses both labor and capital as inputs in its production process. It faces the following data:

Budget Constraints and Factor Markets

This question integrates isocost and isoquant analysis to determine the cost-minimizing combination

Calculating Marginal Factor Cost

Using the provided labor cost schedule, calculate the Marginal Factor Cost (MFC) and interpret its i

Changes in Derived Demand due to Technological Advances

This question examines the impact of technological improvements on the derived demand for labor. A f

Comparative Analysis of Labor and Capital Markets

A firm must decide between hiring additional labor or investing in capital. Consider that product de

Comparative Analysis of Perfect Competition and Monopsony in Labor Markets

Consider two labor market scenarios. In a perfectly competitive market, the equilibrium wage is $$w

Comparing Factor Market Outcomes: Monopsony versus Perfect Competition

Consider two distinct labor markets: one that operates under perfect competition and one that is cha

Cost Minimization and Factor Substitution in Production

This question involves applying the least cost rule to determine the optimal combination of labor an

Cost Minimization and Factor Substitution Using the Least Cost Rule

A firm uses both labor and capital for production. The firm’s technology yields a marginal product o

Derived Demand and Marginal Revenue Product in Factor Markets

A firm’s demand for labor is derived from the demand for its product, and the marginal revenue produ

Derived Demand Calculation and Graphing

A competitive firm hires labor based on its marginal product. The marginal product of labor (MPL) is

Derived Demand for Capital Analysis

Consider a firm that rents capital for production. The marginal product of capital is given by $$MPK

Deriving Marginal Revenue Product from a Production Function

A firm’s production function is given by $$Q = L^{0.5} * K^{0.5}$$. With capital fixed at K = 100 an

Economies of Scale and Cost Analysis

Evaluate whether a firm is experiencing economies of scale by analyzing its cost data.

Economies of Scale and Factor Demand

This question explores how economies of scale, which reduce average production costs as output incre

Effects of Changing Factor Prices on Cost Structure

A firm operating in a perfectly competitive labor market faces a constant wage rate. Suppose the wag

Effects of Unionization on Labor Costs and Employment

This question discusses how unionization affects labor markets, particularly through changes in marg

Factor Market Equilibrium under Demand and Supply Shifts

A new government policy increases the minimum wage, while at the same time an innovation boosts work

Factor Supply Shifts: Effects on Employment and Wages

This question evaluates the impact of an increase in labor supply, due to a rise in the number of qu

Factor Supply: Impact on Wage Equilibrium

Consider a local labor market where the supply of labor is influenced by factors such as personal va

Government Intervention in Factor Markets

This question evaluates the effects of government intervention in labor markets and its impact on ma

Graphical Analysis of Supply and Demand in Factor Markets

Refer to a provided graph of the labor market. Answer the following: (i) Identify and label the lab

Impact of an Influx of Migrant Workers on Labor Supply

A local economy experiences an influx of migrant workers, causing a shift in the labor supply curve.

Impact of Government Subsidy on Labor Market Dynamics

A government subsidy for worker training increases worker productivity, thereby affecting the derive

Impact of Increased Productivity on Labor Demand

A technological breakthrough increases worker productivity in an industry. Analyze the effect of thi

Impact of Input Price Change on Factor Demand

A firm initially pays $30 per unit for labor and $50 per unit for capital. If the wage rate increase

Input Substitution Under Changing Relative Factor Prices

This question examines how changes in relative prices affect the firm's input mix for cost minimizat

Introduction to Factor Markets: Basics and Equilibrium

Discuss and illustrate key concepts in factor markets including factor markets themselves, derived d

Labor Supply Elasticity and Wage Changes

This question tests your understanding of labor supply elasticity and its implications when wages ch

Labor Supply Shifts Due to Immigration

This question explores the effects of an influx of immigrants on the labor market, particularly on l

Labour Supply Elasticity and Worker Response Analysis

Consider the following labor market data: | Wage ($) | Labor Supplied (workers) | |----------|------

Least Cost Input Combination

Analyze how the least cost rule guides a firm's decision in combining labor and capital.

Marginal Factor Cost and Derived Demand Calculation

A firm's marginal product of labor is given by $$MPL = 50 - 0.5*Q$$, its product sells at a price of

Marginal Factor Cost Explanation

Define marginal factor cost (MFC) and explain its role in firms’ hiring decisions in a perfectly com

Market for Factor Inputs: Understanding Derived Demand

This question examines how firms derive the demand for factors such as labor based on the final prod

Monopsonistic Factor Market Analysis

This question focuses on analyzing labor market outcomes under a monopsonistic structure and compari

Multi-Input Factor Market Analysis with Budget Constraint

A firm uses both labor and capital with production functions characterized by $$MPL = 15 - 0.3*L$$ a

Negative Externality in Oil Refining

An oil refinery produces oil but its refining process emits pollutants that impose additional costs

Negative Externality in Renewable Energy Production

A biofuel production facility, while generating renewable energy, leads to deforestation and loss of

Negative Spillover in Chemical Production

A chemical manufacturing firm produces industrial chemicals but emits harmful substances during prod

Profit Maximization in Perfectly Competitive Factor Markets

This question addresses how firms in perfectly competitive factor markets maximize profits by equati

Skill-Biased Technological Change and Labor Market Outcomes

Recent technological advancements have increased the productivity of skilled workers relative to uns

Strategic Interaction in Hiring: Duopoly Payoff Matrix in Factor Bidding

This question examines strategic interactions between two firms competing to hire skilled workers us

Technological Change and Factor Market Adjustments

A new technology increases a firm's labor productivity. Initially, the firm's marginal revenue produ

Temporary Surge in Derived Demand for Labor

A firm experiences a temporary surge in product demand, causing its marginal revenue product for lab

Wage Differentials and Human Capital

Examine the factors contributing to wage differentials between skilled and unskilled labor, and anal

Allocation of Resources and Social Welfare in a Perfectly Competitive Market

Consider a small market for apples with the demand function $$P = 20 - 0.5*Q$$ and the supply functi

Allocative Efficiency and Deadweight Loss

Using a market for Good X, analyze the conditions for social efficiency and identify any inefficienc

Allocative Efficiency and Market Outcomes in a Competitive Market

Consider a market for Good X operating under perfect competition. Allocative efficiency is achieved

Analyzing Deadweight Loss in Imperfect Markets

Deadweight loss (DWL) measures the inefficiency created by market distortions. Analyze how DWL arise

Analyzing the Impact of a Progressive Income Tax on Labor Supply

Evaluate how a progressive income tax influences individual labor supply decisions. Consider both th

Antitrust Policy and Market Efficiency in Monopolistic Competition

Discuss how market power in monopolistic competition can lead to inefficiency and how antitrust inte

Comparing Subsidy and Tax Approaches to Externality Correction

Governments use both taxes and subsidies to correct market externalities. Compare these two approach

Correcting Externality in a Monopolistic Market

A monopolistic firm produces a good that generates a negative externality. In addition to the ineffi

Correcting Monopoly Externalities Through Taxation

A monopolist operates in a market where a negative externality causes the social marginal cost to ex

Cost-Benefit Analysis in Regulatory Policy

A government is considering imposing a regulation to reduce harmful emissions from factories. This r

Effects of a Per-Unit Tax in a Competitive Market

This FRQ examines the impact of a per-unit tax on a competitive market. Consider how the imposition

Effects of Subsidies on Monopolistic Competition

Government subsidies can influence firm behavior in monopolistic competition by altering cost struct

Evaluating Public Goods Provision: Efficiency and Government Intervention

Discuss the challenges associated with the provision of public goods and how government intervention

Evaluating the Efficiency of Public Expenditures for Public Goods

This FRQ assesses the efficiency of public expenditures aimed at providing public goods. Using the p

Externality from Pesticide Use in Agriculture

Farmers using pesticides may impose external costs on the environment, such as damage to neighboring

FRQ 1: Graphing the Impact of a Per Unit Tax on Market Efficiency

Analyze the impact of a per unit tax on a competitive market for Good X. In this problem, you will d

FRQ 2: Evaluating Government Intervention for a Negative Externality

Examine a market for Widgets that exhibits a negative externality. In this scenario, the marginal pr

FRQ 3: Correcting a Positive Externality with a Subsidy in the Education Market

In the market for education services, positive externalities result in underproduction relative to t

FRQ 4: Market Inefficiency in Monopolistic Competition

Discuss how market power in monopolistic competition can lead to allocative inefficiency and assess

FRQ 13: Minimum Wage in a Monopsony Labor Market

Analyze the effects of imposing a minimum wage in a monopsonistic labor market. Explain how it affec

FRQ 17: Anti-Trust Policies and Market Efficiency

Analyze how anti-trust policies can improve market efficiency by reducing market power.

FRQ 18: Progressive Tax System and Its Effect on Income Distribution

Evaluate the effect of a progressive tax system on income distribution and overall societal welfare.

FRQ 19: Government Subsidies and Public Goods Underinvestment

Analyze the market failure associated with the underproduction of public goods and evaluate the role

Government Intervention in a Monopolistic Market

A monopolistic firm is subject to government intervention in the form of a price ceiling. Analyze th

Government Intervention in External Markets: Case Study Analysis

A city faces significant air pollution from local manufacturing. In response, the government impleme

Graphical Analysis of Subsidies: Perfectly Competitive vs. Monopolistic Competition

Evaluate the impact of per-unit subsidies on market outcomes in both perfectly competitive and monop

Impact of a Price Ceiling on Market Efficiency

This FRQ examines how a price ceiling affects market equilibrium, consumer surplus, producer surplus

Impact of Technological Improvements on External Costs

A factory implements a new technology that reduces its emission of pollutants, thereby lowering the

Impacts of Non-Price Regulation on Manufacturing Costs

A manufacturing industry faces new non-price regulations, such as stricter emission standards. Answe

Internalizing Positive Externalities via Subsidies

In a market with positive externalities, the private marginal benefit (MB) is lower than the social

Market Dysfunction Due to Asymmetric Information: The 'Lemons' Problem

This FRQ examines how asymmetric information can lead to market failure, using the 'lemons' problem

Market Failure due to Asymmetric Information

This FRQ explores how asymmetric information can lead to market failure. Consider the market for use

Market Failure from Asymmetric Information

Asymmetric information can lead to market failure in various industries. Answer the following:

Market Power and Antitrust Policies

Market power can lead to inefficient market outcomes. Analyze how antitrust policies can improve mar

Market Power and Price Discrimination

A firm with significant market power employs price discrimination strategies in different consumer s

Market Power, Monopolies, and Antitrust Policy

Consider a monopolistic firm operating in the market for Good Z, where its market power leads to dev

Per Unit Tax in Perfect Competition vs. Monopolistic Market

Examine the effects of a per unit tax in both a perfectly competitive market and a monopolistic mark

Price Ceiling Effects in Monopolistic Competition

Investigate how a binding price ceiling might affect a firm operating under monopolistic competition

Public vs. Private Goods and the Free-Rider Problem

Compare and contrast public and private goods, and analyze the free-rider problem associated with pu

Short-Run Versus Long-Run Effects of Government Intervention

This FRQ contrasts the short-run and long-run effects of government intervention on a firm's product

Social Efficiency and Market Outcomes Analysis

Analyze the concept of social efficiency in market outcomes from a perfectly competitive market pers

Taxation and Income Distribution: Progressive vs. Regressive Taxes

Different tax structures can have significant effects on income distribution.

Taxation Effects on a Firm's Cost Structure: Per-Unit vs. Lump-Sum Tax

A firm operating in a perfectly competitive market faces typical cost curves. Government policy is c