AP Microeconomics FRQ Room

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

Cost-Benefit Analysis in Business Decisions

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

Cost-Benefit Analysis in Decision-Making

This question focuses on cost-benefit analysis by distinguishing between explicit and implicit costs

Economic Growth via the Production Possibilities Curve

This question examines economic growth through shifts in the Production Possibilities Curve (PPC).

Economic Systems and Government Policy

This question explores how different economic systems allocate resources and the impact of governmen

Economic Systems: Market, Command, and Mixed Economies

Discuss the different types of economic systems, highlighting their characteristics and how they add

Evaluating Efficiency in an Economy

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

Factors of Production and Resource Allocation

This question assesses your understanding of the factors of production and how they contribute to re

FRQ 6: Market Analysis – Supply and Demand Shifts

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

FRQ 9: Consumer Choice and Marginal Analysis

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

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 13: Market Failures – Externalities and Public Goods

This question explores market failures by examining negative externalities and the provision of publ

Impact of Economic Growth on Production Possibilities

An economy initially has a production possibilities frontier (PPC) connecting 100 units of Good A to

Implicit vs. Explicit Costs in Business Decision-Making

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

Labor vs. Capital: Analyzing Factors of Production

Evaluate the efficiency of resource allocation by comparing the use of labor and capital in producti

Marginal Analysis and Diminishing Returns

Apply marginal analysis to determine the point of diminishing marginal utility and discuss its impli

Marginal Analysis in Consumer Choice

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

Marginal Analysis in Production Decisions

Apply the concepts of marginal cost and marginal revenue using marginal analysis to determine the pr

Marginal Product and Diminishing Returns

This question focuses on the concept of marginal product of labor and diminishing returns. Answer ev

Market Equilibrium and Surplus Analysis

This question addresses market equilibrium and the calculation of consumer and producer surplus, fol

Micro vs. Macroeconomics Perspectives

This question requires you to contrast the scope and analysis of microeconomics and macroeconomics.

Microeconomics vs. Macroeconomics Analysis

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

Microeconomics vs. Macroeconomics Distinction

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

Optimal Consumption and Marginal Utility Analysis

A consumer has a budget of $$100$$ to spend on Good X and Good Y. The price of Good X is $$10$$ and

Optimal Consumption Rule and Budget Allocation

Analyze consumer choice by applying the optimal consumption rule to determine efficient budget alloc

Optimal Consumption Rule and Marginal Utility per Dollar

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

Positive vs. Normative Economics Analysis

Analyze the difference between positive and normative economics and evaluate their roles in economic

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) Analysis

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

Production Possibilities Curve (PPC) Interpretation

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

Resource Allocation and Decision-Making Across Economic Systems

Analyze how different economic systems allocate resources and the trade-offs involved in their decis

Resource Scarcity and Market Outcomes

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

Scarcity and Opportunity Cost Analysis

This question asks you to explain basic economic concepts such as scarcity, opportunity cost, and tr

Scarcity and Opportunity Cost Analysis

Analyze how the concept of scarcity influences decision-making at both individual and societal level

Scarcity and Opportunity Costs

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

Shifts in the PPC and Economic Growth

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

Specialization, Comparative Advantage and Terms of Trade

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

Supply and Demand: Scarcity and Resource Allocation

Examine how resource scarcity affects market equilibrium and surplus measures using a supply and dem

Time Allocation and Opportunity Costs

An individual has 24 hours in a day and must choose how many hours to dedicate to paid work versus l

Trade-offs in Resource Allocation Decisions

A small business owner must decide between investing in new technology, expected to increase product

Analysis of Market Disequilibrium: Shortage and Surplus

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

Analyzing Market Dynamics through Price Elasticities and Surplus Loss

This question tests your ability to integrate price elasticity calculations with analysis of total r

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 and Shifts

This question assesses the basic principles of demand, its determinants, and the law of demand.

Comparative Analysis of Demand and Supply Elasticities

Compare and contrast the determinants of elasticity for demand and supply, and use numerical data to

Comparative Statics: Demand Increase

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

Consumer and Producer Surplus Analysis with Demand and Supply Shifts

Examine how a change in market conditions, such as a shift in demand or supply, affects consumer and

Cross Price Elasticity and Market Competition

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

Cross Price Elasticity: Identifying Substitutes and Complements

In a certain market, the quantity demanded of Good A changes when the price of Good B alters. Analyz

Cross-Price and Income Elasticity of Demand Analysis

A market survey reveals that when the price of tea increases by 10%, the quantity demanded for coffe

Determining Market Equilibrium from Demand and Supply Functions

Consider a market where the demand curve is given by $$P = 100 - Q$$ and the supply curve is $$P = 2

Double Shift: Simultaneous Increase in Demand and Supply

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

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 Subsidies on Supply and Welfare

This question explores how subsidies affect market outcomes. Answer the following: (a) Describe the

Effects of Supply-Side Taxes and Subsidies on Market Equilibrium

This question examines how government interventions in the form of taxes and subsidies affect market

Environmental Externality in Apparel Production

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

Environmental Impact in Car Manufacturing

Car manufacturing processes often have unaccounted environmental costs due to toxic emissions. In th

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 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 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 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 17: Reservation Price and Producer Surplus

A firm’s minimum acceptable price (reservation price) for a product is provided along with the actua

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 Government-Imposed Price Floor

Examine the effects of a government-imposed price floor on a market.

Impact of Government-Imposed Price Ceiling in the Residential Rental Market

A government has imposed a price ceiling in the residential rental market aimed to keep rents afford

Impact of Technological Innovation on Supply

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

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

Interpreting Supply Shifts due to Changes in Input Costs

Analyze the impact of an increase in the cost of raw materials on the supply curve in a competitive

Law of Diminishing Marginal Utility and the Demand Curve

Discuss how the law of diminishing marginal utility contributes to the downward-sloping nature of th

Manufacturing Emissions and Public Health

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

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

Producer Surplus and Consumer Surplus Calculation

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

Supply Analysis and Market Response

This question examines the basic concept of supply, the effects of technological change on productio

Supply Chain Dynamics: Effects of a Change in the Number of Sellers

In a market with the initial demand curve $$P = 60 - Q$$ and initial supply curve $$P = 20 + Q$$, an

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.

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

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

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

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

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

Data Center Services and Energy Consumption Externality

Large data centers contribute to increased energy consumption, causing negative externalities that a

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

Economies and Diseconomies of Scale Analysis

Discuss the impact of economies and diseconomies of scale on a firm's long-run cost structure using

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

Fishing Industry and Overfishing Externalities

The fishing industry often suffers from overfishing, which can be viewed as a negative externality a

FRQ 3: Long-Run Production Costs: Economies and Diseconomies of Scale

Company XYZ is reviewing its long-run production costs. The firm’s long-run average total cost (LRAT

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 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 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 9: Production Decisions Under a Shift in Demand

A firm operating in a perfectly competitive market faces a shift in demand. The attached graph shows

FRQ 13: Cost Structure and Profit Maximization in a Bakery

A bakery has a fixed cost of $300 and a variable cost function given by $$VC(Q) = 2 * Q + 0.5 * Q^2$

FRQ 14: Cost Minimization in the Long Run

Consider a firm seeking to minimize its long-run costs. A graph showing the firm's LRATC curve is pr

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 18: Industry Entry and Exit Decisions

In a perfectly competitive industry, a representative firm faces a total cost function of $$TC(Q) =

FRQ 20: Cost Function Evolution and Scaling Decisions

A firm’s cost function is given by $$TC(Q) = 200 + 3*Q + 0.5*Q^2$$ and it operates in a perfectly co

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

Industry Supply and Firm’s Cost Structure

An industry consists of 10 identical firms, each with a cost function $$TC(Q) = Q^2 + 40$$. The mark

Input Price Changes and Cost Curvature

Analyze the impact of an increase in input prices on a firm's cost curves.

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)

Labor Productivity and Optimal Hiring Decisions

A firm records the following production data for varying levels of labor input. Use this data to ana

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

Paper Production and Deforestation Externalities

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

Production Function Analysis and Diminishing Marginal Returns

A firm uses labor as its only variable input. The table below shows the firm’s labor input (L) and t

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 Calculation and Determination

Using the provided revenue and cost data, calculate the firm's profits and distinguish between accou

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 in a Competitive Firm

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

Role of Implicit Costs in Economic Decision-Making

A consultant leaves a job with an annual salary of $80,000 to start his own firm. The firm’s explici

Short-Run Cost Analysis and Graphing Cost Curves

A firm’s cost structure in the short run consists of fixed and variable costs. The firm has a fixed

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 Shutdown Decision in Perfect Competition

A firm in a perfectly competitive market is analyzing its short-run operations. The following cost d

Technological Improvement and Production Efficiency

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

Telecommunications and Electromagnetic Pollution

The production of telecommunications equipment can generate electromagnetic pollution, a negative ex

Widget Manufacturing and Air Pollution

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

Advertising Effects in Monopolistic Competition

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

Analyzing Efficiency Costs of Monopoly Market Power

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

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 Long-Run Efficiency in Monopolistic Competition

In some monopolistically competitive markets, high barriers to entry limit the number of firms, lead

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

Collusion and Cartel Behavior in Oligopolies

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

Cost Structures in Monopolistic Competition

Examine the implications of cost structures on firm behavior in monopolistic competition.

Determining Diminishing Returns in Tech Gadgets

Tech Gadgets Inc. produces electronic devices in a market with some degree of imperfect competition.

Environmental Externality in the Automobile Industry

In the automobile industry, firms operate in an imperfectly competitive market and produce vehicles

External Cost in the Pharmaceutical Market

A pharmaceutical company operating in an imperfectly competitive market generates negative externali

Externality Impact in a Regional Utility Company

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

FRQ 5: Advertising Effects on Demand Elasticity in Monopolistic Competition

A monopolistically competitive firm launches an advertising campaign aimed at reducing the price ela

Government Regulation of a Natural Monopoly

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

Government Regulation of Natural Monopolies

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

Impact of Price Floors in Monopolistic Competition

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

Long-Run Adjustments in Monopolistic Competition

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

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 Entry in Monopolistic Competition: Short-Run vs. Long-Run Equilibrium

In monopolistic competition, firms earn economic profits in the short run, which attract new entrant

Monopolistic Competition: Short-run vs. Long-run Equilibrium

Analyze the profit dynamics of firms under monopolistic competition in both short-run and long-run s

Monopoly Profit Maximization

Examine the profit-maximizing behavior of a monopolist.

Monopoly Profit Maximization and Regulation

This question requires analysis of a monopoly firm's profit-maximizing decisions and the impact of g

Nash Equilibrium Analysis in an Oligopolistic Market

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

Natural Monopoly and Regulation

Examine the characteristics of a natural monopoly and the regulatory measures used to address its in

Natural Monopoly: Pricing and Regulation

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

Negative Externality in a Local Manufacturing Firm

This FRQ examines the impact of a negative externality in an imperfectly competitive market. In a lo

Oligopoly and Game Theory: Payoff Matrix Analysis

This question focuses on oligopolistic markets and the application of game theory. You will analyze

Price Discrimination in Monopolistic Competition with a Negative Externality

A firm in a monopolistically competitive market practices price discrimination while generating a mi

Price Discrimination with Externalities in the Telecommunications Market

A large telecommunications firm that practices price discrimination also imposes negative externalit

Price Elasticity and Price Discrimination Strategies

Analyze how variations in price elasticity of demand enable firms to engage in third-degree price di

Product Differentiation in Monopolistic Competition

Analyze the role of product differentiation and advertising in a monopolistically competitive market

Profit Maximization in Boutique Bakery

A boutique bakery operates in a market with features of imperfect competition. The bakery incurs a f

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

Taxation and Price Discrimination in the Software Industry

In the software industry, firms often practice price discrimination to capture consumer surplus. Sup

Adjustment in Factor Demand Due to a Product Demand Shock

A firm experiences a downward shock in product demand causing the product price to fall from $30 to

Analyzing a Minimum Wage Impact in a Competitive Labor Market

Consider a competitive labor market for retail workers where the equilibrium wage is $10 per hour. T

Analyzing Derived Demand in Response to Changes in Final Product Markets

An increase in the price of the final product can lead to a higher derived demand for labor. Examine

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

Assessing the Derived Demand for Labor in Various Industries

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

Basic Factor Market Hiring Decision: MRP and Wage Comparison

A firm in a perfectly competitive labor market is evaluating its hiring decision. The marginal produ

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 Factor Demand: Product Market Shifts

A firm experiences an increase in product demand, which affects its derived demand for labor. (i) E

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 Perfect Competition and Monopsonistic Factor Markets

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

Cost Minimization and Factor Substitution in Production

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

Derived Demand Impact from Product Market Conditions

A decline in product market prices can negatively affect the derived demand for labor. Suppose initi

Determinants of Labor Supply

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

Diminishing Marginal Returns and Hiring Decisions

A firm experiences diminishing marginal returns to labor as more workers are employed. (a) Explain t

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

Effect of Wage Changes on Labor Hiring Decisions

This question focuses on how changes in the wage rate affect the hiring decisions of a firm operatin

Effects of Demographic Changes on Labor Supply

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

Efficiency Analysis in Factor Markets with Subsidies

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

Externalities in Agriculture: Overuse of Fertilizers

Excessive fertilizer use in agriculture leads to nutrient runoff that damages aquatic ecosystems. An

Factor Markets Under Imperfect Competition: Monopsony Case Study

Examine a monopsonistic labor market and derive the equilibrium conditions. Compare your findings wi

Factor Premium and Least Cost Input Combination

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

Factor Supply: Impact on Wage Equilibrium

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

Factors Affecting Labor Supply and Demand

Examine how various determinants influence labor demand and labor supply in factor markets.

Government Intervention and Factor Market Outcomes

A government policy imposes a binding minimum wage in the labor market. The following table summariz

Government Intervention: Tax on Hiring in Labor Markets

The government imposes a per-worker tax of $4 on firms in a competitive labor market. Analyze how th

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 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 External Shocks on Labor Demand

A technological innovation in a production process increases worker productivity by 20%. Initially,

Impact of Immigration on Domestic Labor Supply

A country experiences an inflow of immigrants, which increases the domestic supply of labor. Initial

Impact of Productivity Increases on Labor Demand

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

Introduction to Factor Markets: Basics and Equilibrium

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

Labor Market Equilibrium and Elasticities

This question evaluates your understanding of labor market equilibrium and elasticity measures.

Long-Run Adjustments in Factor Markets due to Entry and Exit

Over the long run, the entry and exit of firms in a product market affect the derived demand for lab

Manufacturing and Community Health

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

Marginal Factor Cost Analysis

A firm faces an upward sloping labor supply schedule and must determine its marginal factor cost (MF

Marginal Factor Cost Determination in a Monopsony

A monopsonistic firm has a labor supply function given by $$w = 5 + 0.4*L$$. The firm must determine

Marginal Factor Cost Explanation

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

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

Monopolistic Competition in Factor Markets

Analyze the behavior of factor markets under conditions of monopolistic competition and discuss the

Monopsonistic Labor Market Analysis

In a monopsonistic labor market, a single employer faces an upward sloping labor supply curve. Suppo

Negative Externalities in Tech Manufacturing

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

Profit Maximisation in a Monopsonistic Labor Market

In a small town, a single large factory operates as the sole employer (a monopsonist) in the local l

Profit Maximization and Hiring Decisions in Competitive Factor Markets

A firm in a competitive labor market determines its number of hires by equating its marginal revenue

Profit Maximization in Factor Markets: Equating MRP and MFC

A firm in a perfectly competitive labor market uses labor as an input. Its production function yield

Returns to Scale and Labor Demand

This question explores the relationship between returns to scale and the marginal revenue product of

Short-Run Factor Adjustments and Diminishing Marginal Returns

This question explores how diminishing marginal returns in labor affect a firm’s short-run hiring de

Understanding Factor Markets and Derived Demand

Define 'Factor Markets' and 'Derived Demand'. (a) Provide concise definitions for each term. (b) Ill

Wage Differentials and Human Capital

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

Water Consumption in Beverage Industry

A beverage company uses large quantities of water in its production process, leading to environmenta

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

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

Antitrust Policies and Market Efficiency Improvement

Antitrust policies are enacted to reduce market power and promote competitive markets. Answer the fo

Comparative Analysis: Lump-Sum Tax vs. Per-Unit Tax

A competitive firm operates with a total cost function $$TC(Q) = 100 + 3*Q + Q^2$$. Compare the impa

Comparative Policy Analysis: Tax vs Subsidy vs Regulation

Policymakers have several tools to correct market failures due to externalities. Compare the effects

Comparing Lump-sum Taxes and Per Unit Taxes

Compare and contrast the economic impacts of lump-sum taxes versus per unit taxes in a competitive m

Congestion Externality in Urban Transportation

Heavy car usage during rush hour leads to congestion, which imposes additional time and monetary cos

Correcting Negative Externalities in the Cigarette Market

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

Dynamic Analysis of Externality Correction over Time

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

Effects of Price Floors on Market Efficiency

Analyze the impact of imposing a price floor in a perfectly competitive market.

Evaluating the Efficacy of Anti-Poverty Programs in Reducing Inequality

A government has implemented various anti-poverty programs such as income transfers, scholarships, a

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 Wage Subsidies versus Minimum Wages

Consider two policies aimed at improving labor market outcomes: a minimum wage and a wage subsidy. A

Externality from Pesticide Use in Agriculture

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

FRQ 6: Effects of Price Floors in the Labor Market

Examine the impact of a minimum wage (price floor) in the labor market. Analyze changes in employmen

FRQ 9: Progressive Taxation and Income Inequality

Discuss how progressive taxation can reduce income inequality in an economy. Use graphical analysis

FRQ 11: Comparing Taxation and Subsidies for Negative Externalities

Evaluate the effectiveness of taxes versus subsidies in correcting negative externalities. Compare t

FRQ 12: Impact of Price Ceilings on Housing Markets

Analyze how a government-imposed price ceiling affects the housing market. Assess the changes in con

FRQ 14: Government Intervention in R&D Markets

The market for research and development (R&D) exhibits positive externalities, often resulting in un

FRQ 19: Government Subsidies and Public Goods Underinvestment

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

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 Intervention in Insurance Markets with Asymmetric Information

Insurance markets often suffer from adverse selection due to asymmetric information. Analyze how gov

Government Intervention: Taxation, and Price Ceilings

Evaluate how government interventions, specifically per-unit taxes and price ceilings, can be employ

Healthcare Market Externalities and Policy Intervention

Analyze how negative externalities in the healthcare market, such as under-vaccination, can lead to

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

Inequality and Income Redistribution Policy

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

Market Power and Antitrust Regulation: A Comparative Analysis

Evaluate how market power in a monopolistic market leads to inefficiency and how antitrust policies

Minimum Wage Policy in Labor Markets

A minimum wage policy acts as a price floor in the labor market. Analyze its impact on employment an

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

Positive Externality in Vaccination Markets

Vaccination not only benefits the individual receiving the vaccine but also provides external benefi

Price Floor in Agricultural Markets

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

Public Goods and the Free-Rider Problem in National Defense

Public goods like national defense are often underprovided in free markets due to the free‐rider pro

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

Quantifying Deadweight Loss from a Per-Unit Tax in a Competitive Market

Consider a perfectly competitive market with the following functions: Demand: $$P = 100 - 2*Q$$ and

Subsidizing Urban Green Spaces: Addressing Positive Externalities

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

Subsidy Impact Analysis in Markets with Positive Externalities

Analyze the impact of a per unit subsidy in a market that experiences positive externalities.

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

The Effects of a Price Floor in the Labor Market

Examine how a binding price floor affects a labor market. Assume the labor market is initially in eq

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