AP Microeconomics FRQ Room

Advanced Cross-Price Elasticity: Substitutes vs. Complements

Analyze the relationship between two goods by computing the cross-price elasticity of demand.

Analysis of Implicit vs. Explicit Costs in Business Decisions

Discuss the differences between implicit and explicit costs in a business context and how they facto

Analyzing Shifts in Supply and Demand

This question examines the factors leading to shifts in supply and demand and requires a graphical a

Comparative Advantage and Trade Decisions

Evaluate comparative advantage between two countries and discuss potential gains from trade based on

Comparative Advantage in a Domestic Market

This question examines the concepts of absolute advantage and comparative advantage within a domesti

Consumer Choice under Budget Constraints

This question involves applying the marginal utility per dollar rule to determine the optimal consum

Cost-Benefit Analysis

Analyze the concept of cost-benefit analysis including the distinction between explicit and implicit

Cost-Benefit Analysis in Business Decisions

Analyze how cost-benefit analysis, including both explicit and implicit costs, informs business deci

Cost-Benefit Analysis in Investment Decisions

This question examines cost-benefit analysis in business decisions. Answer every part.

Cost-Benefit Analysis of a Public Policy

Apply cost-benefit analysis to evaluate a public infrastructure decision.

Cost-Benefit Analysis of a Public Policy Initiative

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

Evaluating Economic Systems: Market vs. Command

This question analyzes how different economic systems address resource allocation through the fundam

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 and Economic Efficiency

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

FRQ 1: Scarcity and Opportunity Cost

This question examines the fundamental economic concepts of scarcity and opportunity cost, and asks

FRQ 2: Production Possibilities Curve (PPC) Analysis

This question focuses on analyzing the Production Possibilities Curve as a means to illustrate oppor

FRQ 3: Cost-Benefit Analysis and Decision Making

This question evaluates your understanding of cost-benefit analysis and its importance for decision

FRQ 4: Comparative Advantage and Terms of Trade

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

FRQ 6: Market Analysis – Supply and Demand Shifts

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

FRQ 11: Profit Maximization in Competitive Markets

This question involves applying the principles of profit maximization in a perfectly competitive mar

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 17: Short-Run vs. Long-Run Firm Decisions

This question explores the differences between short-run and long-run decision-making in a firm's op

Integrative Analysis: Economic Concepts in Business Decision-Making

This integrative question requires you to apply several economic concepts—scarcity, opportunity cost

Managerial Decision-Making and Opportunity Costs

This question explores the role of opportunity cost in managerial decision-making. (a) Define oppor

Marginal Analysis in Consumer Choice

Discuss the role of marginal analysis in consumer decision-making, focusing on the concept of dimini

Marginal Costs in Production Decision

This question focuses on the concept of marginal cost and its role in production decision-making. (

Microeconomics vs. Macroeconomics

This question requires you to differentiate between microeconomics and macroeconomics, and to provid

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 Trade-offs in Policy Decisions

This question investigates the concepts of opportunity cost and trade-offs in government policy deci

Opportunity Cost and Trade-Offs in Production

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

Opportunity Costs and Trade-offs in Consumer Choices

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

Optimal Consumer Choice Under Budget Constraints

A consumer is deciding how to allocate a $$120$$ budget between Good M and Good N. The marginal util

Optimal Consumption Bundles Through Marginal Utility Per Dollar Analysis

Assess how consumers determine their optimal consumption bundles by equalizing marginal utility per

Optimal Consumption Rule and Marginal Utility per Dollar

This question explores the application of the optimal consumption rule in consumer choice. Answer al

Production Possibilities Curve Analysis

This question assesses your ability to interpret and analyze a Production Possibilities Curve (PPC).

Resource Allocation and Economic Systems Comparison

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

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 Costs

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

Scarcity and Public Policy: Analyzing Trade-offs in Government Spending

Discuss how scarcity necessitates trade-offs in public policy decisions, using the allocation of gov

Supply and Demand and Scarcity

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

The Role of Implicit and Explicit Costs

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

Analyzing Demand Shifts in a Local Market

This question explores the determinants of demand and their impact on the market. Answer the followi

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.

Crop Switching: Supply Decision in Agriculture Markets

A farmer produces both Crop A and Crop B. When the price of Crop B rises relative to Crop A, the far

Dust Pollution from Cement Production

A cement production facility emits dust during production, which imposes a negative health impact on

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 on Market Outcomes

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

Effects of a Price Ceiling on Public Transit Fares

A government imposes a price ceiling of $2 on public transit fares, while the market equilibrium is

Elasticity of Demand Calculation

This question measures your ability to calculate and interpret price elasticity of demand. Answer th

Elasticity of Supply and Total Revenue Impact

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

Elasticity of Supply Calculation

This question requires you to calculate the price elasticity of supply and discuss the factors influ

FRQ 1: Demand Analysis for Digital Cameras

Consider the following data for the market for digital cameras. Answer the following parts: (a) Usin

FRQ 1: Demand Shifts Analysis in the Smartphone Market

In the premium smartphone market, an increase in consumer income has led to a rise in demand. Firms

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 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 7: Market Intervention - Analysis of a Price Ceiling

In a market where the demand function is $$D: P = 150 - 2*Q$$ and the supply function is $$S: P = 20

FRQ 8: Impact of Technological Innovation on Supply and Market Equilibrium

A firm operating in a competitive market experiences a technological breakthrough that reduces its p

FRQ 9: Analyzing the Effects of a Price Floor in the Wheat Market

Suppose the government imposes a price floor on wheat that is set above the market equilibrium. The

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 12: Double Shift Scenario in a Market

Suppose a new health study increases the demand for a nutritious beverage, shifting the demand curve

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 14: Impact of Technological Advancements on the Tablet Market Supply

A new machine is introduced in the tablet industry that significantly lowers production costs. Answe

FRQ 14: Long-Run Adjustments in Perfect Competition

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

FRQ 16: Strategic Interaction Analysis in a Duopoly Using a Payoff Matrix

Consider two competing firms in a duopoly market facing the following payoff matrix for their pricin

FRQ 17: Graphical Interpretation of Market Equilibrium Changes in a New Product Market

A new product enters the market with the following demand and supply functions: $$D_0: P = 200 - 0.5

FRQ 18: Variable Elasticity Across Price Ranges

Consider a good that exhibits different elasticities in separate price ranges. The following tables

FRQ 19: Effects of Import Quotas in International Trade

A country imposes an import quota on automobiles to protect domestic producers. The domestic market

FRQ 20: Impact of Advertising on Market Equilibrium and Surpluses

A firm increases its advertising budget, which shifts the demand curve to the right in the market fo

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 a Price Floor on Market Outcomes

A government imposes a price floor in a market that is initially in equilibrium. Answer the followin

Impact of Technological Advancement on Supply

This question focuses on how technological changes affect market supply. Answer the following: (a)

Impacts of a Price Ceiling in the Dairy Market

The dairy market has an equilibrium price of $4 per gallon with 300 gallons sold. The government set

Import Quotas and Their Effects

This question examines the effects of government-imposed import quotas on domestic markets. Answer t

Long Run vs Short Run Elasticity: Comparative Analysis

This question asks you to compare short-run and long-run price elasticity of supply through definiti

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: Shortages and Surpluses

Examine situations of market disequilibrium and the self-correcting mechanisms of supply and demand.

Market Impact of Rent Controls on Housing

In a housing market, the original equilibrium is at $1,200 with 800 houses rented. Rent controls cap

Multi-step Analysis of Income and Price Elasticity on Market Revenue

A firm collects the following data: When price rises from $$\$20$$ to $$\$25$$, quantity demanded fa

Negative Externality in Widget Production

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

Per-Unit Tax and Market Efficiency

Consider a competitive market for a generic product. The government introduces a per-unit tax which

Price Elasticity of Demand Calculations

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

Producer Surplus and Consumer Surplus Calculation

In a market characterized by the demand curve $$P = 100 - Q$$ and the supply curve $$P = 20 + 0.5Q$$

Short-run vs Long-run Supply Elasticity Analysis

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

Substitute and Complement Effects

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

Supply Decrease Due to Rising Resource Costs

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

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

Waste Management in the Fast Food Industry

The fast food industry generates substantial waste, creating a negative externality for local commun

Accounting vs. Economic Profit Analysis

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

Analysis of Diminishing Marginal Returns in the Short Run

Consider a firm with a short-run production function given by $$Q = 50 + 20*L - L^2$$, where L repre

Analyzing MC and AVC: A Graphical Perspective

Interpret the relationship between the marginal cost (MC) and average variable cost (AVC) curves usi

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

Dairy Production and Manure Pollution

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

Deriving the Firm's Supply Curve from its MC Curve

Demonstrate how a firm's marginal cost (MC) curve forms the basis for its supply curve in a perfectl

Economic vs. Accounting Profit with Implicit Costs

A firm reports revenue of $$1200$$, explicit costs of $$900$$, and incurs an implicit cost of $$200$

FRQ 5: Economic Profit vs. Accounting Profit

A restaurant generates $1,000 in total revenue in one operating period. Its explicit costs (such as

FRQ 5: Profit Maximization in Perfect Competition

Firm D faces a market price of $20 and has a total cost function given by $$TC(Q) = 50 + 2*Q^2$$. Us

FRQ 6: Profit and Long-Run Equilibrium in Perfect Competition

In a perfectly competitive market, a firm has a total cost function given by $$TC(Q) = 100 + 5 * Q +

FRQ 8: Market Supply and Firm Production Decisions

Two firms operate in a competitive market where the market price is $30. Their total cost functions

FRQ 10: Analysis of Diseconomies of Scale

A clothing manufacturer has collected data on its average total cost (ATC) at various levels of outp

FRQ 11: Short-Run vs. Long-Run Production Decisions

A firm operates with a total cost function given by $$TC(Q) = 50 + 6 * Q + 0.5 * Q^2$$. Due to a dro

FRQ 12: Graphical Interpretation – Shifts in Cost Curves

Cost curves may shift due to changes in input prices, technology, or other external factors. Part A

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 19: Impact of Increased Wage on Production and Costs

A fast-food chain originally had a variable cost function of $$VC(Q) = 2 * Q + 0.1 * Q^2$$. Due to a

Impact of Government Tax on Production Costs

A local government imposes a fixed tax of $50 on a firm that previously faced a cost function of $$T

Impact of Scale on Average Total Cost

Discuss the relationship between output scale and average total cost in the context of economies of

Long-Run Average Cost Curve and Economies of Scale Analysis

A firm’s long-run average total cost (LRATC) is represented by the following curve. Use the graph an

Long-Run Equilibrium and Normal Profit in Perfect Competition

Analyze how firms in a perfectly competitive market achieve long-run equilibrium with normal profit.

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 and Scale Economies

A firm in the long run faces the cost function $$LRATC(Q) = 0.05*Q^2 - 0.8*Q + 30$$. Answer the foll

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 Analysis and Optimal Output

A competitive firm faces a market price of $15 per unit. Its total cost function is given by $$TC(Q)

Marginal Revenue and Marginal Cost Dynamics

In a perfectly competitive market, profit maximization occurs when marginal revenue (MR) equals marg

Market Supply Determination from Firm‐Level Cost Functions

In a perfectly competitive market, the market supply curve is derived from the aggregation of indivi

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

Perfect Competition Market Graph Analysis

In a perfectly competitive market, many small firms operate as price takers. Answer the following pa

Production Decisions Under Government Subsidies

A government subsidy of $$S = 2$$ per unit is provided to a firm whose original cost function is $$T

Production Efficiency and Factor Inputs

A firm is evaluating its production process to achieve maximum efficiency. Analyze production effici

Production Function Analysis

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

Profit Maximization in Perfect Competition

Consider a firm in a perfectly competitive market with a total cost function given by $$TC(Q) = 100

Short‐Run Production Costs Analysis

Consider a firm operating in the short run with fixed and variable costs. The following table shows

Steel Production and Industrial Pollution

The production of steel in an industrial market generates pollution that imposes additional external

Water Consumption and River Pollution

A market for water-intensive goods is resulting in excessive water use that pollutes local rivers. A

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

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 Dynamics in Imperfect Competition

Discuss the role of barriers to entry in imperfectly competitive markets and analyze their impact on

Barriers to Entry and Market Outcomes

Analyze the impact of barriers to entry on market structure and firm behavior in imperfectly competi

Cartels and Collusive Behavior in Oligopoly

Evaluate the dynamics of collusive behavior in oligopolistic markets, focusing on cartel formation a

Collusion and Cartel Behavior in Oligopolies

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

Cost Analysis in Boutique Electronics

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

Effects of Tax in the Fashion Apparel Market

The fashion apparel market, characterized by product differentiation and imperfect competition, face

Entry and Exit in Monopolistic Competition

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

FRQ 12: Repeated Game in Oligopoly Collusion

In an oligopolistic market, two firms interact repeatedly over time. Their decisions to cooperate or

FRQ 15: Stackelberg Leadership in Oligopoly

In an oligopolistic market, one firm acts as a leader while the other acts as a follower. The firms’

FRQ 16: Comparative Market Structure Analysis

Compare how monopoly, monopolistic competition, and oligopoly differ in terms of pricing, output, ef

FRQ 17: Sustainability of Collusion in Oligopolies

Firms in an oligopoly may attempt to collude to maximize joint profits. However, sustaining collusio

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 Price Controls and Subsidies in Monopolistic Competition

A government has imposed a price ceiling on a product produced in a monopolistically competitive ind

Government Regulation of a Natural Monopoly Market

A water utility company operates as a natural monopoly due to high fixed costs and economies of scal

Government Regulation of Natural Monopolies

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

Impact of Price Discrimination under Per‐Unit Tax

A monopolist that typically practices perfect price discrimination (charging each consumer their max

Impacts of Price Wars in Oligopolistic Markets

Price wars in oligopolistic markets can have significant short-run and long-run effects. Analyze the

Long-run Equilibrium in Monopolistic Competition

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

Monopoly Profit Maximization and Price Discrimination Analysis

Consider a monopolist with the following market conditions: Demand function $$P = 100 - 2*Q$$, and M

Nash Equilibrium Analysis in an Oligopolistic Market

This question explores the concept of Nash equilibrium within an oligopolistic market using a payoff

Negative Externality in Chemical Production

A chemical production firm in an imperfectly competitive market incurs negative externalities due to

Price Discrimination in a Natural Monopoly

Analyze the concept of price discrimination in the context of a natural monopoly. Your answer should

Regulatory Impacts on Monopoly: A Price Ceiling Analysis

Evaluate the effects of imposing a price ceiling on a monopoly and its resulting impact on market ou

Short-run and Long-run Outcomes in Monopolistic Competition

A firm operating in a monopolistically competitive industry experiences short-run profits due to a d

Strategic Pricing in Price Discrimination Scenarios

Evaluate a firm's strategic pricing decisions when engaging in price discrimination across different

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

Taxation and Innovation in Telecommunications

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

Taxation and Network Effects in the Video Game Consoles Market

The video game consoles market exhibits significant network effects. The government has imposed a $1

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

Technology Hardware Market Externalities

A firm producing high-end technology hardware in an imperfectly competitive market causes negative e

Third-Degree Price Discrimination and Welfare Effects

A monopolist can practice third-degree price discrimination by segmenting the market into two groups

Air Pollution from Cement Production

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

Analysis of Diminishing Marginal Returns

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

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

Analysis of MRP and MFC in Wage Determination

A firm employs labor where the marginal revenue product (MRP) is given by $$MRP = 100 - 5*L$$ and th

Analyzing Diminishing Marginal Returns and Factor Demand

Firms often experience diminishing marginal returns as more of a variable input is employed. Explain

Analyzing the Effects of a Tax on Labor Employment

A government tax on each worker hired increases the costs for firms. Analyze the impact of such a ta

Application of the Least Cost Rule

This question assesses the application of the least cost rule in a firm’s decision to choose between

Application of the Least Cost Rule in Factor Markets

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

Calculating Marginal Factor Cost

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

Comparative Factor Pricing: Changes in Input Prices

A firm employs both labor and capital. Initially, the prices are $$P_L = 10$$ and $$P_K = 20$$, with

Comparative Statics: Factor Price Increases and Labor Demand

Assume that a firm's demand for labor is derived from its product market. Analyze how an increase in

Comparative Statics: Impact of Training Subsidies on Labor Demand

This question examines the effect of training subsidies on labor demand through comparative statics

Comparing Monopsony and Competitive Labor Markets

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

Comparing Perfect Competition and Monopsonistic Factor Markets

Labor markets can take different forms. Compare and contrast a perfectly competitive labor market wi

Cost Minimization and the Least Cost Rule

A firm aims to minimize production costs while maintaining its output level by choosing the optimal

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

A firm operates in a perfectly competitive product market where the product sells at $20 per unit. T

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

Determinants of Labor Supply

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

Determinants of Labor Supply: Qualitative Analysis

Labor supply is influenced by various factors. Analyze these determinants and their impact on the la

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 Adjustments in Factor Markets

A firm with a production function $$Q = L^{0.6} * K^{0.4}$$ faces dynamic changes in its input marke

Economic Impact of Changing Government Policies on Factor Markets

A regional economy experiences simultaneous policy changes: an increase in the minimum wage and a re

Effects of Demographic Changes on Labor Supply

In a regional economy, demographic changes lead to a decrease in the labor supply. Assess the impact

Effects of Exogenous Wage Changes on Employment

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

Enhanced Productivity Through Training

A firm initiates a training program which successfully increases the marginal product of labor. Befo

Externalities in Food Production: Pesticide Use

A large-scale farm uses pesticides that result in runoff, which negatively impacts neighboring commu

Factor Market Equilibrium under a Binding Wage Subsidy

This question examines the impact of a government wage subsidy on the equilibrium in the labor marke

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

Firm Size, Economies of Scale, and Factor Demand

Large firms experiencing economies of scale may demand factors of production differently compared to

Graphing the Effect of a Per-Worker Subsidy in the Labor Market

To promote employment, the government provides a per-worker subsidy of $5 to firms. Evaluate the imp

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 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

Impact of Technological Improvement on Derived Demand

A firm upgrades its technology, which improves the productivity of labor. Initially, at a given leve

Impact of Wage Change on Factor Substitution

A firm uses both labor and capital in production. Initially, the cost minimizing input combination s

Interpreting Factor Demand Shifts Due to Product Price Changes

A firm experiences a decline in the market price of its final product from $50 to $40 while the marg

Introduction to Factor Markets: Basics and Equilibrium

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

Labor Supply Shifts Due to Immigration

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

Least Cost Rule and Factor Choice

A firm uses both labor and capital in production. It faces input prices of $$P_{L} = 15$$ and $$P_{K

Least-Cost Combination and Factor Price Ratio Analysis

This question involves analyzing the optimal combination of inputs by comparing the marginal product

Manufacturing and Community Health

A local manufacturing plant produces goods but its production generates hazardous waste that adverse

Marginal Analysis and Short-run Hiring Decisions

A firm faces diminishing marginal returns with a marginal product of labor described by $$MPL(L) = 2

Marginal Factor Cost and Hiring Decisions in Labor Markets

Understanding marginal factor cost (MFC) is critical for a firm’s hiring decision, especially in mar

Monopsonistic Labor Market Analysis

In a monopsonistic labor market, a single employer determines both the wage rate and employment leve

Multi-Factor Market Payoff and Equilibrium Analysis

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

Negative Externality in Mining Operations

A mining firm’s extraction activities generate dust and noise that reduce nearby property values, ge

Negative Externality in Renewable Energy Production

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

Negative Externality in Urban Transportation

In a major city, increased private car usage leads to higher air pollution and congestion, creating

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

Technological Advancements and Factor Market Decisions

A firm adopts new technology that increases its marginal product of labor. Initially, MPL is 7; afte

Technological Change and Factor Demand

A technological innovation increases labor productivity in a manufacturing firm. Analyze the impact

Temporary Surge in Derived Demand for Labor

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

The Role of Marginal Factor Cost in Employer Hiring Decisions

This question examines how a firm evaluates the marginal factor cost (MFC) when hiring under an upwa

Analyzing Negative Externalities and Corrective Tax

Consider a market where production causes a negative externality, leading to a divergence between th

Analyzing Price Controls: Price Ceiling and Price Floor Cases

This FRQ examines the effects of government-imposed price controls, such as price ceilings and floor

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

Antibiotic Overuse and External Costs: Addressing Resistance

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

Antitrust Policy and Market Efficiency in Monopolistic Competition

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

Comparing Per-Unit and Lump-Sum Taxes in Different Market Structures

This FRQ compares the effects of per-unit and lump-sum taxes on a firm operating in a monopolistic c

Comparing Per-Unit Tax and Lump-Sum Tax Effects

A firm in a perfectly competitive market is considering two types of taxes: a per-unit tax and a lum

Correcting Monopoly Externalities Through Taxation

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

Correcting Negative Externalities with a Per-Unit Tax

A market for Good X is characterized by a negative production externality. Producers face a private

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

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 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 15: Government Intervention to Address Pollution Externalities

Consider a market where production creates pollution, introducing a negative externality. Analyze ho

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 20: Short-Run Effects of Taxes and Subsidies on Market Equilibrium

Compare and contrast the short-run effects of a per unit tax and a per unit subsidy on a competitive

Government Policies and Their Impact on Income Distribution

This FRQ explores how government policies, particularly progressive taxation, can influence income d

Government Subsidy to Address a Positive Externality in Education

This FRQ examines how a per-student subsidy can correct an underprovided positive externality, such

Graphical Analysis of Social Welfare in a Competitive Market with External Costs

This FRQ requires analysis of social welfare in a competitive market where a negative externality ca

Market Failure due to Asymmetric Information

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

Market Power and Antitrust Policies

Evaluate the role of market power in creating socially inefficient outcomes and analyze how antitrus

Measuring Income Inequality: Lorenz Curve and Gini Coefficient

Income inequality is a significant issue in many economies. Analyze how income distribution is measu

Measuring Income Inequality: The Lorenz Curve and Gini Coefficient

Analyze income inequality by constructing a Lorenz curve and calculating the Gini coefficient using

Minimum Wage Effects in the Labor Market

Evaluate the impact of imposing a minimum wage above the market equilibrium on the labor market.

Non-price Regulation and Market Efficiency

A polluting industry is subject to non-price regulation in the form of mandated emission standards.

Positive Externalities and Subsidies Impact

Analyze how positive externalities lead to market underproduction and explain how government subsidi

Positive Externality in Renewable Energy Investment

Investment in renewable energy not only reduces fossil fuel use but also provides broad environmenta

Price Ceiling Impact on a Competitive Market

Consider a perfectly competitive market where the supply function is given by $$P = 25 + Q$$ and the

Public Goods and the Free Rider Problem

Public goods, characterized by non-excludability and non-rivalry, are often underprovided in free ma

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

Subsidies and Cost Structure in Perfect Competition

Consider a perfectly competitive firm with a total cost function: $$TC(Q) = 50 + 10*Q + 2*Q^2$$. The

Tax Incidence in Monopolistic Competition

This FRQ evaluates the effects of a per unit tax on a monopolistically competitive firm. Consider a

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