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.

Comparative Advantage and International Trade

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

Consumer Choice Under Budget Constraints

This question examines consumer choice under a budget constraint and the impact of diminishing margi

Cost-Benefit Analysis in Business Decisions

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

Cost-Benefit Analysis of a Public Infrastructure Project

A city is considering investing in a new public transit system. The explicit cost of the project is

Cost-Benefit Analysis: Evaluating Investment Decisions

This question examines the steps involved in cost-benefit analysis and its application to investment

Diminishing Marginal Utility and Returns

Discuss the concepts of diminishing marginal utility and diminishing marginal returns, and provide a

Economic Systems and Resource Allocation

Analyze how different economic systems answer the three fundamental questions of economics (what to

Economic Systems and Resource Allocation

Analyze different economic systems and their approaches to resource allocation.

Economic Systems and Resource Allocation

This question examines the differences among economic systems and their methods of resource allocati

Evaluating Efficiency in an Economy

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

Evaluating Entrepreneurial Investment Decisions Amid Scarcity

Assess how the concept of scarcity and opportunity cost informs an entrepreneur’s decision-making in

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

Factors of Production and Economic Growth

This question explores the four factors of production and how changes in these factors can influence

Factors of Production and Resource Allocation

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

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 8: Opportunity Costs in Decision Making

This question requires you to discuss opportunity costs, particularly focusing on business decisions

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

Graphical Analysis of Market Shifts due to Resource Scarcity

Analyze how resource scarcity affects market equilibrium using a supply and demand framework.

Interpreting Costs in a Business Venture

This question deals with the identification and evaluation of implicit and explicit costs in a busin

Opportunity Cost and Strategic Business Decisions

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

Opportunity Cost and Trade-offs in Policy Decisions

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

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

Positive vs. Normative Economics

Examine the differences between positive and normative economics and apply these concepts to real-wo

Positive vs. Normative Economics

This question deals with distinguishing between positive and normative economics. Answer each part c

Scarcity and Household Budget Allocation

Analyze how scarcity influences household budgeting decisions and discuss trade-offs using a given m

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 in Resource Allocation

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

Trade-offs in Government Policy Decision

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

Utility Maximization and Consumer Choice: Optimization Problem

This question requires you to solve a consumer choice optimization problem using utility maximizatio

Air Pollution from Coal Power Plants

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

Analyzing Market Dynamics through Price Elasticities and Surplus Loss

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

Basic Demand Analysis

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

Calculating Deadweight Loss from Taxation

Analyze the inefficiency created by a per-unit tax in a market by calculating the deadweight loss.

Changes in Consumer Preferences and Market Equilibrium

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

Comparative Analysis of Demand and Supply Elasticities

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

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

Cross Price Elasticity and Income Elasticity

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

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 Gasoline Market

In an effort to make gasoline more affordable, a government imposes a price ceiling at $2.80 per gal

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

Environmental Impact in Car Manufacturing

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

FRQ 4: Price Elasticity of Supply in a Local Bakery

A local bakery adjusts its production based on price changes. The following data represents the quan

FRQ 5: Consumer and Producer Surplus Calculation

Consider a market where the demand function is $$D: P = 200 - 2*Q$$ and the supply function is $$S:

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 9: Welfare Analysis with Tax Implementation and Deadweight Loss

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

FRQ 10: Evaluating Deadweight Loss due to Price Ceiling in the Rental Housing Market

Consider a rental housing market with an equilibrium rent of $1200 per month. A government-imposed p

FRQ 13: Elasticity and Total Revenue Test

A firm observes that when it increases the price of its product from $$P = 10$$ to $$P = 12$$, the q

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

Graphical Analysis of Price Floors and Surpluses

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

Impact of a Government-Imposed Price Floor

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

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

Implications of a Price Floor in the Electronic Goods Market

In the market for electronic goods, equilibrium occurs at $350 for 2,000 units. A price floor is set

Income Elasticity and Good Classification

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

Market Disequilibrium: Shortages and Surpluses

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

Market Effects of Advertising

A major advertising campaign is launched for a product, which is expected to influence consumer beha

Market Equilibrium and Surplus

Consider the market for good X described by the equations: $$Q_d = 100 - 2*P$$ and $$Q_s = 20 + 3*P$

Market Equilibrium, Consumer and Producer Surplus

Analyze market equilibrium and welfare analysis in a widget market.

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

Price Elasticity of Demand Analysis – Calculation and Interpretation

This FRQ assesses a firm's pricing strategy using elasticity measures. Answer the following parts us

Price Elasticity of Demand Calculation

A firm observes the following data for the market demand of its product at different prices: | Pric

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

Supply Analysis and Shifters

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

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 Shocks: Effects of a Technological Improvement

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

Wastewater Contamination in Textile Production

Textile manufacturing can generate wastewater that contaminates local water bodies. In this market,

Water Contamination from Agricultural Pesticide Use

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

Agricultural Production and Pesticide Pollution

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

Analysis of Long-Run Production Costs

Discuss the long-run production cost structure of a firm, focusing on the concepts of economies of s

Analyzing Break‐Even and Shutdown Points

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

Cost Curve Analysis and Graph Interpretation

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

Cost Optimization with Fixed and Variable Inputs

A firm incurs a fixed cost of $$500$$ and experiences decreasing variable cost per unit as output in

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 Technological Improvements on Production and Costs

A firm invests in new technology that increases the marginal product of labor by 50% across all leve

Efficiency Losses from Government Price Floors

A government imposes a price floor in the market for Good Y, resulting in a surplus. (a) Draw a gr

Fishing Industry and Overfishing Externalities

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

FRQ 1: Production Function Analysis – Marginal Product

A firm’s production function relates the number of variable inputs (labor) to the total output produ

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 5: Economic Profit vs. Accounting Profit

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

FRQ 6: Long-Run Production Costs and Economies of Scale

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

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

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

FRQ 11: 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 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 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 15: Market Adjustments in Perfect Competition

A sudden economic shock has affected the market for Good X in a perfectly competitive industry. The

FRQ 15: The Role of Implicit Costs in Decision-Making

Firms must consider both explicit and implicit costs when evaluating profitability. Part A: Define

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 18: Industry Entry and Exit Decisions

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

FRQ 19: Graph Interpretation: Perfect Competition Market Graph

The attached graph illustrates the market for a product in a perfectly competitive industry. Answer

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

Impact of Technological Change on Production and Costs

A firm adopts new technology that alters its production process. Below are two production tables: on

Industry-Wide Cost Minimization in Perfect Competition

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

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

Long‐Run Cost Behavior and Economies of Scale

In the long run, all inputs are variable. Firms experience different cost behaviors as output increa

Marginal Cost and ATC Intersection Analysis

Explain why the marginal cost (MC) curve must intersect the average total cost (ATC) curve at its mi

Marginal Cost and Marginal Product Relationship

A manufacturing firm has a marginal product of labor (MPL) given by the function $$MPL = 30 - 2*L$$

Marginal Cost and Shutdown Decision

A firm’s total cost function is given by $$TC(Q) = Q^2 + 100$$. With this cost structure, answer the

Market Supply Determination from Firm‐Level Cost Functions

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

Paper Production and Deforestation Externalities

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

Production Function Analysis

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

Profit Types and Profit Maximization

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

Profitability Analysis with Changing Market Price

A firm in a perfectly competitive market has a cost function given by $$TC(Q) = Q^2 + 20*Q + 100$$.

Short-run Shutdown Decision Analysis

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

Barriers to Entry in Various Market Structures

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

Break-even and Shutdown Decisions in Imperfectly Competitive Firms

Analyze a firm's break-even and shutdown decisions given its cost structure in an imperfectly compet

Calculating Output in a Price-Discriminating Monopoly

Analyze a price-discriminating monopolist's decision-making process and calculate optimal outputs an

Comparing Profit Maximization in Monopoly vs. Perfect Competition

Contrast the profit-maximization strategies of a monopoly with those of a firm in a perfectly compet

Cost Evaluation for Craft Clothing Co.

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

Efficiency Analysis in Custom T-Shirts

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

Entry and Exit in Monopolistic Competition

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

Externality Impact in a Regional Utility Company

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

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

Game Theory in Oligopoly Markets

This question examines strategic interactions among firms in an oligopoly using game theory. Analyze

Game Theory in Oligopoly: Dominant Strategy and Nash Equilibrium

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

Government Intervention in Luxury Smartphone Accessories Market

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

Government Tax in the Fitness Club Industry

The fitness club industry is experiencing rapid growth in a competitive market environment. The gove

Graphical Analysis of Monopoly Pricing and Output

Analyze how a monopolist determines its output and price, and explain the resulting market inefficie

Impact of Price Floors in Monopolistic Competition

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

Impacts of a Price Floor in a Monopolistic Competition Market

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

Impacts of Price Wars in Oligopolistic Markets

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

Imperfect Competition and Differential Pricing Strategies

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

Labor and Production at Gourmet Coffee

Gourmet Coffee operates in a market with imperfect competition. The business has a fixed cost of $15

Long-run Equilibrium in Monopolistic Competition

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

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 Analysis at Deli Delights

Deli Delights, an innovative delicatessen, operates under imperfect competition. It faces a fixed co

Market Adjustments in Monopolistic Competition

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

Market Externality in the Agricultural Sector

A large agricultural firm uses heavy fertilizer application that results in runoff, causing water po

Market Structure Analysis in Imperfect Competition

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

Monopoly Profit Maximization and Price Discrimination Analysis

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

Negative Externality in the Soft Drink Market

A soft drink manufacturer in a monopolistically competitive market generates a negative externality

Oligopoly and Game Theory: Payoff Matrix Analysis

Examine the concepts of Nash equilibrium and dominant strategies in an oligopolistic market through

Price Discrimination in a Natural Monopoly

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

Price Discrimination Strategies in Imperfectly Competitive Markets

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

Price Discrimination with Externalities in the Telecommunications Market

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

Price Elasticity and Cross-Price Elasticity Analysis

This question assesses your ability to compute and interpret both own-price and cross-price elastici

Product Differentiation in Monopolistic Competition

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

Product Differentiation in Monopolistic Competition

Product differentiation is a key feature of monopolistic competition. Analyze how differentiation af

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 Analysis in Monopolistic Competition

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

Subsidies in an Imperfectly Competitive Market

In a market exhibiting characteristics of monopolistic competition, the government is considering im

Tax Effects in a Regional Housing Market

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

Taxation and Price Discrimination in the Software Industry

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

Taxation Impact in an Oligopolistic Market

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

Taxation in a Monopolistic Competition: High-End Restaurant Market

In a major city, the high-end restaurant market is an example of monopolistic competition. The gover

Technology Hardware Market Externalities

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

Analysis of Diminishing Marginal Returns

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

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 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 for Capital-Labor Substitution

A firm produces output using both labor and capital. It faces a wage rate of $20 per hour and a rent

Application of the Least Cost Rule in Factor Markets

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

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 in a Monopsony

This question requires you to calculate the marginal factor cost (MFC) in a monopsonistic labor mark

Capital-Labor Substitution in Response to Rising Wages

This question examines how a firm adjusts its mix of capital and labor inputs when faced with an inc

Comparative Analysis: Perfect Competition vs. Monopsony in Factor Markets

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

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 Rising Capital Price on Input Choice

A rise in the price of capital forces a firm to re-evaluate its input combination. Analyze this effe

Cost Minimization and Factor Substitution Using the Least Cost Rule

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

Derived Demand Calculation and Graphing

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

Determinants of Labor Supply

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

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 Binding Minimum Wage on Labor Market Dynamics

In a competitive labor market, the government imposes a binding minimum wage above the equilibrium w

Effects of Legal Interventions on Labor Market Costs

New safety regulations increase the cost of hiring labor for firms. Answer the following:

Effects of Technological Innovation on Factor Productivity

A firm adopts new technology that increases its marginal product of labor. Initially, $$MPL(L) = 15

Equilibrium in Perfectly Competitive Factor Markets

Consider a competitive labor market where firms hire workers until $$MRP = MFC$$. The table below pr

Factor Market Dynamics in an Economic Downturn

Analyze how an economic downturn impacts factor markets, focusing on shifts in demand for labor and

Factor Market Equilibrium under Demand and Supply Shifts

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

Factor 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

Government Intervention in Factor Markets

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

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

Graphical Analysis of Factor Market Equilibrium

A firm collects data on wages and employment to analyze its labor market. Using the provided data se

Graphical Analysis of Supply and Demand in Factor Markets

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

Impact of a Minimum Wage on the Labor Market: Price Floor Analysis

In a competitive labor market with an initial equilibrium wage of $15 and employment of 100 workers,

Impact of Government Intervention on Labor Supply

This question explores how government policies, such as a minimum wage, affect the labor supply in a

Impact of Minimum Wage in a Monopsonistic Labor Market

This question examines the effects of imposing a binding minimum wage in a monopsonistic labor marke

Impact of Technological Change on Factor Markets

A technological improvement increases the marginal product of labor (MP) by 25% across all levels of

Impact of Wage Change on Factor Substitution

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

Industrial Overheating: Factory Emissions

A factory’s inefficient cooling process results in overheated emissions that degrade air quality in

Influence of Immigration on the Factor Market

This question considers the effects of increased immigration on the labor supply and overall market

Least Cost Input Combination and the Least Cost Rule

Firms choose the combination of inputs that minimizes production costs. Using the least cost rule, a

Least Cost Input Combination Problem

A firm must choose between labor and capital to minimize costs. Use the least cost rule to determine

Long-Run Adjustments in Competitive Factor Markets

This question requires analysis of the adjustments in a perfectly competitive factor market as new f

Long-Run Adjustments in Factor Markets

Firms can adjust all factors of production in the long run. This question examines the differences b

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

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 Productivity Analysis

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

Marginal Revenue Product Calculation

A manufacturing firm produces gadgets and employs workers whose productivity is shown in the table b

Monopsonistic Labor Market Analysis

Consider a monopsonistic firm operating in the labor market. The table below shows data on the numbe

Monopsonistic Labor Market Analysis

Examine the characteristics of a monopsonistic labor market and determine the profit-maximizing hiri

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

Negative Externality in Automobile Manufacturing

In the automobile manufacturing industry, production processes emit pollutants that impose cost on s

Negative Externality in Oil Refining

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

Negative Externality in Textile Production

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

Negative Spillover in Chemical Production

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

Noise Pollution in Residential Construction

Construction firms in a residential area generate significant noise, creating a negative externality

Off-Farm Employment and Farm Labor Supply

Analyze how off-farm employment opportunities impact the labor supply available to the agricultural

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 under Technological Change

This question explores how technological change affects a firm’s production decisions, specifically

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

Strategic Interaction in Hiring: Duopoly Payoff Matrix in Factor Bidding

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

Technological 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 Market Adjustments

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

Wage Differentials and Human Capital

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

Wage Discrimination and Monopsony

This question examines the concept of wage discrimination within monopsonistic labor markets and its

Comparing Subsidy and Tax Approaches to Externality Correction

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

Computing and Interpreting the Gini Coefficient

Discuss the Gini coefficient as a measure of income inequality. Explain how it is computed and inter

Correcting Externality in a Monopolistic Market

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

Correcting Monopoly Externalities Through Taxation

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

Determining Socially Efficient Output in a Market with Negative Externalities

This FRQ focuses on evaluating social efficiency in the presence of negative externalities. Consider

Economic Efficiency vs. Equity: Trade-Offs in Progressive Taxation

Progressive taxation is used to redistribute income and address inequality, but it may also lead to

Effects of a Per-Unit Tax in a Competitive Market

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

Environmental Regulation and Firm Cost Structures

A non-price regulation aimed at protecting the environment increases a firm’s costs. Analyze how thi

Evaluating Market Failure Through External Costs

Discuss a market failure arising from negative externalities, using a real-world example to support

Evaluating the Efficacy of Anti-Poverty Programs in Reducing Inequality

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

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

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

FRQ 4: Market Inefficiency in Monopolistic Competition

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

Government Intervention: Taxation, and Price Ceilings

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

Interpreting the Lorenz Curve and Gini Coefficient for Income Inequality

A country’s income distribution is depicted by the Lorenz curve in the accompanying graph. Answer th

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

Market Power, Monopolies, and Antitrust Policy

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

Negative Externalities and Optimal Taxation

Explain how a negative externality can lead to market inefficiency and welfare loss. Analyze how a p

Negative Externality in Water Pollution from Irrigation

Excessive fertilizer use in irrigation can lead to water pollution, a negative externality affecting

Positive Externality in Vaccination Markets

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

Production Function and Cost Analysis in a Competitive Market

Consider a firm operating in a perfectly competitive market with a fixed cost F = $50 and a wage per

Promoting Positive Externalities with Subsidies

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

Public Transfers and Labor Market Incentives

Examine how public transfer programs influence labor market outcomes and incentives.

Public vs. Private Goods and the Free Rider Problem

Differentiate between public and private goods and explore the inefficiencies caused by the free rid

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

Regulating Natural Monopolies

Natural monopolies often require government regulation to prevent excessive pricing. Analyze how gov

Regulatory Intervention versus Taxation in Externality Reduction

In some markets, governments can adopt different interventions to address negative externalities. Co

Regulatory Measures and Pollution Spillovers

Industrial pollution can generate spillover effects that harm nearby communities. Consider the follo

Role of Information Disclosure in Externality Adjustment

In some markets, asymmetric information can exacerbate externalities by obscuring the true social co

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

The Dynamics of Income Distribution: Lorenz Curve Analysis

Examine how the Lorenz curve represents income distribution and inequality. Explain what deviations

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

Understanding Public Goods and the Free Rider Problem

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