AP Microeconomics FRQ Room

Analyzing the Role of Positive and Normative Statements in Policy Debates

Evaluate how positive and normative statements influence policy debates and economic decision-making

Comparative Advantage and Trade

Analyze the roles of absolute advantage and comparative advantage in determining trade patterns betw

Comparative Advantage and Trade

Evaluate how comparative advantage leads to mutually beneficial trade between entities.

Comparative Advantage and Trade

This question explores the concepts of absolute advantage, comparative advantage, and the benefits o

Comparative Advantage and Trade Benefits

This question examines the concepts of absolute advantage and comparative advantage and their role i

Cost-Benefit Analysis of a Public Policy Initiative

Perform a cost-benefit analysis for a proposed public infrastructure project, identifying explicit a

Cost-Benefit Analysis: Implicit and Explicit Costs

This question explores the distinction between explicit and implicit costs using cost-benefit analys

Entrepreneurial Decision-Making: Factors of Production and Marginal Analysis

Analyze how entrepreneurs integrate factors of production and marginal analysis to optimize business

Evaluating the Impact of Governmental Subsidies

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

Factors of Production and Economic Efficiency

Discuss the role and interaction of the factors of production. Analyze how each factor contributes t

FRQ 4: Comparative Advantage and Terms of Trade

This question explores the concepts of absolute advantage, comparative advantage, and how terms of t

FRQ 7: Comparing Microeconomics and Macroeconomics

This question compares the two primary branches of economics by examining their scope, focus, and re

FRQ 9: Consumer Choice and Marginal Analysis

This question focuses on understanding consumer choice through the lens of marginal utility and the

FRQ 12: Efficiency and Economic Growth via the PPC

This question examines the concepts of productive and allocative efficiency using the Production Pos

FRQ 16: Optimal Consumption and Marginal Utility Analysis

This question examines consumer decision making through marginal utility analysis and the optimal co

Marginal Analysis and Consumer Choice

Evaluate how consumers maximize utility using marginal analysis and the optimal consumption rule.

Microeconomics vs. Macroeconomics Decision-Making

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

Opportunity Cost in Daily Decisions

This question examines the concept of opportunity cost in everyday decision-making.

Opportunity Costs and Trade-offs in Consumer Choices

Examine the concepts of opportunity costs and trade-offs in consumer decision-making.

Positive and Normative Economic Analysis

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

Price Controls and Subsidies: Impact on Market Equilibrium

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

Price Elasticity of Demand Calculation

This question tests your ability to compute and interpret both own-price elasticity and cross-price

Production Possibilities Curve (PPC) and Economic Growth

This question focuses on the Production Possibilities Curve (PPC) as a tool to illustrate trade-offs

Production Possibilities Curve (PPC) Interpretation

Analyze a production possibilities curve (PPC) to demonstrate understanding of efficient resource al

Resource Allocation Efficiency

This question explores the concepts of productive and allocative efficiency as they relate to resour

Resource Allocation in a Mixed Economic System

Evaluate how a mixed economic system handles resource allocation compared to purely market or centra

Resource Allocation in Mixed Economic Systems

Discuss how resource allocation is managed in mixed economic systems, emphasizing the role of govern

Scarcity and Opportunity Costs

This question examines the concepts of scarcity, opportunity cost, and trade-offs in economic decisi

Specialization, Comparative Advantage and Terms of Trade

This question analyzes the benefits of specialization along with the concepts of comparative advanta

Supply and Demand and Scarcity

Analyze how the concept of scarcity affects market supply and demand and the resulting equilibrium i

Technological Change and the PPC

Discuss the impact of technological change on an economy's Production Possibilities Curve (PPC).

Analysis of Market Disequilibrium: Shortage and Surplus

This question addresses market disequilibrium by analyzing the conditions that cause shortages and s

Analyzing Income Elasticity and Market Demand Changes

Examine how changes in income affect market demand by analyzing income elasticity.

Analyzing Shifts in Demand Due to Changes in Consumer Income

This question focuses on how changes in consumer income affect the demand curve and how normal versu

Analyzing Taxation and Elasticity in Market Outcomes

Assess the incidence of a per-unit tax in a market with elastic demand and inelastic supply.

Analyzing the Effects of Market Interventions Using Supply and Demand Functions

This question focuses on integrating supply and demand functions with market interventions to analyz

Basic Demand Analysis

This question examines the law of demand and the factors that cause the demand curve to slope downwa

Calculating Price Elasticity of Demand from Data

Using the data provided, analyze the price elasticity of demand for a product.

Combined Analysis of Supply, Demand, and Government Intervention: Price Ceiling Case Study

In a rental housing market, the original equilibrium rental price is $$\$800$$ and the equilibrium q

Deadweight Loss from Market Interventions

This question examines the concept of deadweight loss (DWL) due to market distortions. Answer the fo

Double Shifts in Supply and Demand

This question analyzes the outcomes when both the supply and demand curves shift simultaneously. Ans

Double Shifts: Simultaneous Changes in Supply and Demand

Examine the market outcome when both supply and demand shift simultaneously. Answer the following pa

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 Textbook Market

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

Effects of a Price Ceiling on Market Outcomes

A government sets a price ceiling below the current market equilibrium price in the housing market.

Elasticity of Supply: Short-run vs Long-run Analysis

A study in the widget market provides the following data: At a price of $$25$$, the quantity supplie

FRQ 2: Supply Response in the Automotive Tire Market

An automotive tire manufacturer experiences a technological innovation that lowers its production co

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 6: Cross Price Elasticity of Demand for Coffee and Tea

In the market for hot beverages, an increase in the price of coffee by 20% resulted in a 10% increas

FRQ 6: Market Intervention - Analysis of a Price Floor

Consider a market described by the demand function $$D: P = 150 - 2*Q$$ and the supply function $$S:

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 13: Evaluating the Effects of Tariffs in the Steel Market

The United States imposes a tariff on imported steel. Answer the following: (a) Draw a supply and de

FRQ 15: Short-Run vs Long-Run Supply Elasticities

Consider a market where the production of a commodity is difficult to adjust in the short-run but ea

FRQ 19: Analyzing Short Run vs. Long Run Supply Elasticity

A producer’s supply of a good is observed over two time periods. In the short run, a price increase

Government Intervention: Price Ceilings and Their Consequences

This question explores how price ceilings affect market outcomes by altering consumer and producer s

Graphical Analysis of Price Floors and Surpluses

This question delves into the concept of price floors and their impact on market surpluses and deadw

Hazardous Waste in Electronics Manufacturing

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

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

Impact of Technological Innovation on Supply

This question examines the impact of technological innovation on the supply curve and how it affects

Implications of a Price Floor in the Athletic Shoes Market

A price floor of $70 is set in the athletic shoes market where the equilibrium price is $60 with 600

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 Impact: Tariffs and Market Outcomes

The government imposes a tariff on imported electronics. Analyze how this tariff affects the domesti

International Trade: Tariffs and Quotas Impact

This question requires an analysis of government policies on international trade and their effects o

Long-run Market Adjustment in Competitive Markets

Analyze the long-run adjustments in a competitive market as firms enter or exit. Answer the followin

Market Disequilibrium: Analyzing Shortages and Surpluses

Discuss market disequilibrium by analyzing shortages and surpluses. Answer the following parts.

Monopolist Output, Revenue, and Price Discrimination

This question examines a monopolist's decision-making process regarding output and pricing, includin

Price Elasticity of Demand Calculations

This question requires you to calculate the price elasticity of demand using the midpoint formula, i

Price Elasticity of Supply: Practical Applications

A farm report indicates that when the price of corn increases from $$\$4$$ to $$\$5$$ per bushel, th

Short-run vs Long-run Supply Elasticity Analysis

Differentiate between short-run and long-run supply elasticities and illustrate these differences wi

Substitutability in Demand: Price Changes of Related Goods

Consider a scenario where an increase in the price of tea results in changes in the demand for coffe

Substitute and Complement Effects

This question explores the impact of changes in the price of related goods on demand. Answer the fol

Supply Analysis and Shifters

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

Supply Decrease Due to Rising Resource Costs

A significant increase in raw material costs causes the supply curve for a commodity to shift leftwa

Supply Shocks: Effects of a Technological Improvement

A technological advancement reduces production costs in an industry. The initial supply and demand c

Understanding the Role of Substitutes and Complements in Market Demand

This question examines the roles of substitutes and complements in influencing market demand and how

Water Contamination from Agricultural Pesticide Use

Excessive use of pesticides in agriculture can contaminate water supplies, imposing a negative exter

Accounting vs. Economic Profit Analysis

Examine the differences between accounting profit and economic profit using the provided numerical d

Agricultural Production and Pesticide Pollution

Agricultural production using heavy pesticides generates negative externalities that harm the enviro

Air Travel and Noise Pollution

Air travel contributes to noise pollution which represents a negative externality affecting communit

Analyzing Break‐Even and Shutdown Points

Define and contrast the break‐even point and the shutdown point for a firm in a competitive market.

Analyzing the Production Function and Marginal Returns

A firm produces widgets using labor as its only variable input. The table below shows the labor inpu

Automobile Emissions in Urban Areas

Urban areas are facing high levels of air pollution due to automobile emissions. Consider the market

Cost Curve Analysis and Graph Interpretation

A firm’s cost structure is illustrated in the graph provided. The graph displays the Marginal Cost (

Derivation of Cost Functions

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

Economic and Accounting Profit Calculation

A firm has the following financial data for a given period as shown in the table below. Use this dat

Effects of Scale on Long-Run Production Costs

A firm’s long-run average total cost (LRATC) is represented by the function $$LRATC = 100 + \frac{20

Entry and Exit Decisions: Market Adjustments in Perfect Competition

Evaluate the long-run entry and exit rules in a perfectly competitive market and analyze how these d

Entry and Exit in Perfect Competition (Long-run Analysis)

Consider a market where firms operate under perfect competition. The representative firm's total cos

Entry and Exit in Perfect Competition Analysis

A firm in a perfectly competitive market faces an average total cost (ATC) of $$25$$ per unit while

Estimating Average and Marginal Costs from a Cost Function

Given the total cost function $$TC(Q)= 5 + 2*Q + Q^2$$, (a) Derive the expressions for average tota

Fossil Fuel Energy Production and Pollution

Fossil fuel energy production has substantial negative externalities due to air pollution. Analyze t

FRQ 2: Short-Run Cost Analysis

Firm B operates in the short run and has a total cost function given by $$TC(Q) = 100 + 20*Q + 5*Q^2

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 4: Profit Calculation and Types of Profit

Firm C produces 200 units of its product and sells each unit at a market price of $10. The firm incu

FRQ 4: Profit Maximization: Equating Marginal Revenue and Marginal Cost

A firm operates in a market where it is a price taker. The firm’s marginal cost (MC) function is giv

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 11: Short Run versus Long Run Decision Analysis

A firm’s short-run total cost function is given by $$TC_{SR}(Q) = 100 + 5*sqrt(Q)$$, while its long-

FRQ 13: Marginal Analysis and Profit Maximization

A firm has a total cost function represented by $$TC(Q) = 40 + 6*Q + 2*Q^2$$ and operates in a marke

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: Combined Production and Cost Decision in a Competitive Market

Consider a firm with the production function $$Q = 3*L^{0.5}$$. The firm faces a fixed cost of $100

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: Entry and Exit Decisions in Perfect Competition

A small farm operates in a perfectly competitive market with a total cost function given by $$TC(Q)

FRQ 17: Marginal Cost and Revenue in Competitive Firms

In a perfectly competitive market, a firm’s output decision is determined by comparing marginal cost

FRQ 18: Analyzing Returns to Scale

Understanding returns to scale is essential in analyzing long-run production. Part A: Differentiate

FRQ 19: Profit Analysis with Changing Market Prices

Market prices can have a large impact on a firm’s profitability. Part A: Describe how a change in t

FRQ 20: Integrated Analysis: Production, Cost, and Market Entry in Perfect Competition

A tech startup operating in a perfectly competitive market has a total cost function given by $$TC(Q

Input Costs and Rental Rate Impacts on Production Decisions

A firm uses two inputs, capital (K) and labor (L), with a production function given by $$Q = 2*K + 3

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 Market Exit Decision

In a perfectly competitive market, a firm has an average total cost (ATC) of $$40$$ per unit while t

Long-Run Production Costs: Economies and Diseconomies of Scale

A firm’s long-run average total cost (LRATC) behavior is summarized in the table below: | Output (Q

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:

Mining and Environmental Degradation

Mining activities can cause significant environmental degradation, which is a negative externality n

Multi-stage Production Decision Analysis

A firm operates with capital fixed in the short run and uses labor as a variable input. The followin

Paper Production and Deforestation Externalities

Paper production can contribute to deforestation, an externality that is not reflected in the firm’s

Production Function Analysis

This question examines the production function and marginal product concepts. Consider the table pro

Profit Calculation and Cost Curve Graph Analysis

The table below shows a firm’s output levels along with corresponding total revenue and total cost v

Profit Maximization in Perfect Competition

Consider a firm operating in a perfectly competitive market with the cost function $$TC(Q) = 2*Q^2 +

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: 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

A firm faces a fixed cost of $150 and a variable cost function given by $$VC(Q) = 5*Q + 0.5*Q^2$$. T

Technological Improvement and Production Efficiency

A technological improvement shifts the firm’s production function. Prior to the improvement the func

Technological Improvements and Cost Impact

A firm adopts a new technology that increases the marginal product of labor. (a) Explain how this

Trade‐Offs Between Fixed and Variable Inputs

A firm that has been operating in the short run (with at least one fixed input) decides to shift to

Widget Manufacturing and Air Pollution

A widget manufacturing firm operates in a market that experiences a negative externality from its ai

Advertising and Strategic Interaction in Oligopoly

Examine the role of advertising in shaping competitive interactions among firms in an oligopolistic

Advertising Effects in Monopolistic Competition

A firm in a monopolistically competitive market launches an advertising campaign to differentiate it

Analyzing Returns in Eco-Friendly Furniture

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

Assessing Cost Structures in Handmade Jewelry

A handmade jewelry business operates in an imperfectly competitive market. The firm has a fixed cost

Barriers to Entry and Market Structure Dynamics

Discuss the role of barriers to entry in shaping market structures. Use real-world examples where ap

Calculating Price Elasticity in a Monopoly

Determine the price elasticity of demand for a monopolist and discuss its implications for pricing d

Collusion and Cartel Behavior in Oligopolies

Examine the reasons behind cartel formation and the challenges such groups face in maintaining collu

Comparative Efficiency in Monopolistic Competition vs. Monopoly

Compare the efficiency outcomes in a monopolistic competition market and a pure monopoly.

Cost Analysis in Boutique Electronics

A boutique electronics firm operates under imperfect competition. The firm has a fixed cost of $900,

Cost Evaluation for Craft Clothing Co.

Craft Clothing Co. operates in a market with imperfect competition. The firm has a fixed cost of $40

Cost Structures and Natural Monopoly Dynamics

Natural monopolies operate on the declining portion of their Average Total Cost (ATC) curve. Analyze

Dominant Strategy and Nash Equilibrium in Oligopoly

Analyze a strategic decision scenario in an oligopolistic market using game theory.

Efficiency Analysis in Custom T-Shirts

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

Efficiency Analysis in Imperfect Markets

Examine the concepts of allocative and productive efficiency and compare efficiency outcomes between

Elasticity and Marginal Revenue in Monopoly Pricing

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

Entry and Exit in Monopolistic Competition

Analyze how entry and exit in monopolistic competition affect firm profits and market equilibrium.

Externalities and Market Inefficiencies in the Online Streaming Sector

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

FRQ 7: Monopoly Deadweight Loss Analysis

A monopolist faces the market demand function $$P = 120 - 2*Q$$ and has a constant marginal cost of

FRQ 10: Third-Degree Price Discrimination in Monopolies

A monopolist serves two separate markets where demand conditions differ. In Market A, the demand fun

FRQ 11: Cost Analysis in Monopolistic Competition

A firm in a monopolistically competitive market faces a fixed cost of $$F = 100$$ and a constant var

FRQ 14: Price Elasticity Analysis in Differentiated Markets

A firm operating in a monopolistically competitive market notices changes in consumer responsiveness

FRQ 18: Merger Effects in Oligopolistic Markets

In an oligopolistic industry composed of four firms, a merger takes place resulting in a combined fi

Game Theory in Oligopolies: Prisoner's Dilemma

Analyze the Prisoner’s Dilemma in the context of duopolistic competition and its implications for co

Government Intervention in Monopoly Markets

Analyze the effects of government-imposed price controls on monopolistic markets.

Government Intervention in Natural Monopolies

Evaluate the need for government intervention in natural monopolies and its impact on pricing and ma

Government Regulation of Natural Monopolies

This question explores the existence of natural monopolies and examines government interventions aim

Graphical Analysis of Allocative and Productive Efficiency in Monopolies

Analyze the efficiency losses in monopoly markets by comparing the firm’s output to the socially opt

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

Imperfect Competition and Differential Pricing Strategies

Discuss differential pricing strategies in imperfectly competitive markets and evaluate their impact

Interdependence in Oligopolistic Markets and the Kinked Demand Curve

Firms in oligopolistic markets are interdependent. Using the kinked demand curve model, analyze how

Long-Run Adjustments in Monopolistic Competition

In monopolistic competition, firms initially earn economic profits but eventually, market entry erod

Long-run Equilibrium in Monopolistic Competition

Discuss the adjustments that lead to long-run equilibrium in monopolistic competition and the implic

Market Adjustments in Monopolistic Competition

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

Market Concentration and Collusion in Oligopolies

Market concentration in oligopolistic industries can lead to collusion. Analyze how high market conc

Market Entry and Demand Curve Adjustments in Monopolistic Competition

This question investigates how the entry of new firms affects the demand curve faced by an incumbent

Market Externality in the Craft Brewery Industry

A local craft brewery in an imperfectly competitive market faces negative externalities due to incre

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

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

Monopoly Profit Maximization

Examine the profit-maximizing behavior of a monopolist.

Natural Monopoly: Pricing and Regulation

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

Oligopolistic Market Externality in the Airline Industry

In the airline industry, which is characterized by oligopolistic competition, each airline’s operati

Profit Maximization in Virtual Reality Experiences

A virtual reality (VR) experience firm operates in an imperfectly competitive market. The firm has a

Short-Run and Long-Run Analysis in Monopolistic Competition

Examine the transition from short-run profit to long-run normal profit in a monopolistically competi

Tax Effects in a Monopolistically Competitive Differentiated Goods Market

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

Taxation and Innovation in Telecommunications

In the telecommunications market, rapid innovation is key. A $4 per‐unit tax is imposed on firms in

Taxation Impact in an Oligopolistic Market

In an oligopolistic market where only a few firms dominate, assume that the underlying market can be

Technological Change and Market Structure in Imperfect Competition

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

Analysis of Derived Demand Curve Shifts

This question requires you to analyze shifts in the derived demand curve for labor and to explain ho

Analysis of Diminishing Marginal Returns

Using production data, analyze diminishing marginal returns and discuss its implications on producti

Assessing the Derived Demand for Labor in Various Industries

This question requires you to compare how differences in production processes affect the derived dem

Calculating Marginal Factor Cost

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

Calculating Marginal Revenue Product from Production Data

A firm’s hiring decision is based on the marginal revenue product (MRP) of labor. Using given produc

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: Perfect Competition vs. Monopsony

A table below presents data for a competitive labor market and a monopsonistic market. | Scenario

Comparative Analysis: Perfect Competition vs. Monopsony in Factor Markets

This question examines the differences in hiring decisions and wage determinations between competiti

Comparing Monopsony and Competitive Labor Markets

This question investigates the differences in hiring decisions between a competitive and a monopsoni

Comparing Subsidies and Price Controls in Labor Markets

A government is evaluating two policies to increase employment from 100 to 130 workers: a per-worker

Cost Analysis and Factor Input Decisions

A firm produces output using the production function $$Q = L^{0.5} * K^{0.5}$$, where L is labor and

Derived Demand and Labor Hiring Decision in Perfect Competition

A firm, Timber Furniture Company, produces handcrafted furniture using labor as a key input. The mar

Derived Demand and Marginal Revenue Product Calculation

A firm's marginal product of labor (MPL) is given by $$MPL(Q) = 100 - 2*Q$$ and its product sells at

Determinants of Labor Supply

Labor supply in a market is influenced by various factors. Consider three determinants: personal val

Determining Labor Market Equilibrium from Supply and Demand Equations

The labor market is represented by the following equations: Supply: $$w = 10 + 0.2*L$$ Demand: $$w =

Dynamic Factor Demand under Seasonal Demand Shifts

This question analyzes how seasonal fluctuations in product demand affect the firm's derived demand

Economies of Scale and Cost Analysis

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

Effects of Exogenous Wage Changes on Employment

Consider a competitive labor market where the government enacts a minimum wage that is above the mar

Efficiency Analysis in Factor Markets with Subsidies

The government introduces a per-worker subsidy to stimulate employment in a slow-growing sector. Ana

Evaluating Wage Differentiation in Skilled vs. Unskilled Labor Markets

This question analyzes the employment of skilled and unskilled labor using their respective marginal

Factor Market Equilibrium and Derived Demand Analysis

Consider a perfectly competitive labor market in which firms base their hiring decisions on the marg

Factor Premium and Least Cost Input Combination

A firm uses both labor and capital in its production process. The cost minimizing condition is achie

Factors Affecting Labor Supply and Demand

List and describe three determinants of labor demand and three determinants of labor supply. (a) For

Impact of Derived Demand Shock from Increased Product Price

A smartphone manufacturer experiences an increase in the final product price from $$P = 400$$ to $$P

Impact of Government Policy on Factor Supply

This question evaluates the effect of a government-imposed minimum wage, which is set above the comp

Impact of Productivity Increases on Labor Demand

A firm experiences a technological innovation that increases worker productivity. Analyze the effect

Impact of Trade Liberalization on the Derived Demand for Labor in Local Manufacturing

Following trade liberalization, a local manufacturing sector faces reduced product demand, which in

Labor Supply and Demand in Competitive Markets

Consider a competitive labor market. Analyze the market equilibrium and the effects of a binding min

Labor Supply Elasticity and Wage Changes

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

Least Cost Input Mix Determination

A firm uses labor and capital to produce output with marginal products given by $$MPL = 40 - 2*L$$ a

Marginal Factor Cost and Hiring Decisions in Monopsony

In a monopsonistic labor market, a firm faces the wage function $$w = 100 + 2*L$$ and its marginal r

Marginal Productivity Analysis

A firm has the following marginal product (MP) schedule. The product price is $30. | Workers | MP |

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

Multi-Factor Market Payoff and Equilibrium Analysis

This question integrates strategic interactions with factor market decisions by examining a payoff m

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 Externalities in Tech Manufacturing

A semiconductor manufacturing plant generates hazardous waste that contaminates local water supplies

Negative Externality in Textile Production

A textile factory’s production process releases pollutants that impose additional costs on nearby re

Optimal Use of Labor and Capital

A firm produces gadgets using both labor and capital. The marginal product of labor (MPL) is 20 and

Output Substitution between Labor and Capital

This question examines the least cost rule and the substitution between labor and capital by compari

Profit Maximization in Perfectly Competitive Factor Markets

A firm operating in a perfectly competitive labor market hires workers until its marginal revenue pr

Seasonal Variations in Labor Supply in the Retail Sector

During the holiday season, a retail firm experiences a temporary change in labor supply due to incre

Short-run vs. Long-run Factor Market Decisions

Analyze the differences between a firm's short-run and long-run cost structures and factor market de

Welfare Implications of Monopsonistic Labor Markets

Monopsonistic labor markets often result in inefficiencies compared to competitive markets. Analyze

Analyzing Income Inequality: Lorenz Curve and Gini Coefficient

Income inequality in an economy can be assessed using tools like the Lorenz curve and the Gini coeff

Analyzing Positive Externalities and Subsidy Policies

Examine a market where a positive externality exists, causing the marginal social benefit (MSB) to e

Analyzing the Impact of Subsidies on Equilibrium in a Monopolistically Competitive Market

This FRQ investigates the effect of a per-unit subsidy on equilibrium outcomes in a monopolistically

Antibiotic Overuse and External Costs: Addressing Resistance

The overuse of antibiotics in healthcare can lead to antibiotic resistance, a negative externality t

Correcting Externality in a Monopolistic Market

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

Correcting Negative Consumption Externalities with Taxes

Analyze the impact of a per-unit tax designed to correct a negative consumption externality in a mar

Correcting Negative Externalities in the Cigarette Market

The cigarette market suffers from a negative externality due to adverse health impacts from smoking.

Correcting Negative Externalities Through Taxation

A production process in a market generates a negative externality. The private cost to the firm is l

Dynamic Analysis of Externality Correction over Time

Over time, technological innovations can reduce the external cost associated with a negative externa

Evaluating Price Ceilings in the Rental Housing Market

Consider a rental housing market where the government imposes a price ceiling.

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

Evaluating the Role of Antitrust Policy in Promoting Competition

This FRQ assesses the role of antitrust policy in addressing market concentration. A recent merger i

External Cost Assessment: Shifting Curves and Equilibrium

Assess the impact of a negative externality on market equilibrium and determine the corrective tax n

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 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 19: Government Subsidies and Public Goods Underinvestment

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

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 Lump Sum vs. Per Unit Taxes on Firms

Firms operate under different types of tax regimes. Analyze the effects of a lump sum tax compared t

Impact of Technological Improvements on External Costs

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

Inequality and Income Redistribution Policy

Examine the current state of income inequality using a Lorenz curve and propose income redistributio

Long Run Effects of Government Subsidies on Market Structure

An industry receives government subsidies in the short run. Over time, these subsidies may alter mar

Long-Run Equilibrium Adjustments: Entry and Exit in a Competitive Market

Examine how a perfectly competitive market adjusts in the long run when firms earn positive economic

Market Failure due to Asymmetric Information

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

Minimum Wage Laws in Monopsonistic Labor Markets

In a monopsonistic labor market, a single dominant employer has wage-setting power.

Price Floor in Agricultural Markets

The government has implemented a binding price floor to support wheat farmers' incomes. Analyze the

Price Floors and Their Effects on Surpluses

Examine the impact of implementing a price floor in a perfectly competitive market. Discuss how it a

Promoting Positive Externalities with Subsidies

In the market for higher education, positive externalities lead to a divergence between private and

Public Goods Provision and the Free-Rider Problem

This FRQ explores why public goods are underprovided in a free market and the role of the free-rider

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

Subsidizing Urban Green Spaces: Addressing Positive Externalities

Urban green spaces provide benefits beyond individual enjoyment by improving air quality and communi

Tax Structures and Income Inequality

Compare how different tax structures (progressive, proportional, and regressive) impact income distr

The Impact of Minimum Wage Laws on Employment and Inequality

Analyze the effects of a binding minimum wage on the labor market for low-skilled workers. Assume th

Understanding Public Goods and the Free Rider Problem

Public goods, such as national defense, tend to be underprovided in a competitive market because of