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 Trade-offs Using Production Possibilities and Opportunity Cost

This question requires you to analyze trade-offs using a production possibilities frontier (PPF) and

Comparative Advantage and Trade

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

Comparative Advantage and Trade Decision

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

Comparative Advantage in International Trade

Two countries, Country X and Country Y, produce only two goods: automobiles and computers. In one ho

Consumer Choice Under Budget Constraints

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

Cost-Benefit Analysis

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

Cost-Benefit Analysis: Implicit and Explicit Costs

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

Economic Growth via Technological Advancement

Discuss how technological innovation can drive economic growth and alter the production possibilitie

Economic Systems and Government Policy

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

Economic Systems and Resource Allocation

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

Evaluating Consumer and Producer Surplus

This question focuses on understanding and calculating consumer and producer surplus, and analyzing

Evaluating Entrepreneurial Investment Decisions Amid Scarcity

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

Evaluating Government Price Controls in Housing Markets

A city implements a rent control policy that sets the maximum monthly rent for apartments at $$1,000

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

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 16: Optimal Consumption and Marginal Utility Analysis

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

FRQ 20: Competitive Market Analysis – Cost Curves and Zero Economic Profit

This question integrates multiple concepts by examining a firm's decision-making process in a perfec

Graphical Analysis of Economic Growth and Shifting PPC

This question requires a detailed graphical analysis of economic growth through shifts in the produc

Integrative Analysis: Economic Concepts in Business Decision-Making

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

Marginal Analysis and Consumer Choice

Using marginal analysis, examine how a consumer maximizes utility given a limited budget.

Marginal Analysis and Consumer Choice

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

Marginal Analysis in Consumer Choice

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

Microeconomics vs. Macroeconomics Decision-Making

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

Microeconomics vs. Macroeconomics: Scope and Focus

This question addresses the differences between microeconomics and macroeconomics. Answer each part

Opportunity Cost Using PPC and Real-World Scenario

Utilize a Production Possibilities Curve (PPC) to analyze opportunity costs and the impact of techno

Positive Analysis Using Economic Data

This question is designed to assess your ability to use positive economic analysis based on empirica

Positive and Normative Economic Analysis

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

Positive vs. Normative Economics

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

Price Controls and Market Efficiency

This question examines the effects of price controls on market efficiency, including deadweight loss

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve Analysis

An economy operates at full employment with a Production Possibilities Curve (PPC) that represents t

Scarcity and Opportunity Cost Analysis

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

Shifts in the PPC and Economic Growth

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

Supply and Demand: Scarcity and Resource Allocation

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

Trade-offs and Opportunity Costs in Time Management

Analyze the concept of opportunity cost and trade-offs in the context of allocating a non-monetary r

Trade-offs in Resource Allocation Decisions

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

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

Basic Demand Analysis and Shifts

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

Calculating Price Elasticity of Demand from Data

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

Changes in Consumer Preferences and Market Equilibrium

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

Consumer and Producer Surplus Changes with a Demand Shift

This question assesses your ability to analyze welfare changes when there is a shift in demand. Answ

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: Substitutes vs. Complements

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

Deadweight Loss from Market Interventions

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

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

Domestic Market Outcomes under Tariff Policy

Evaluate the impact of an import tariff on a domestic market.

Double Shifts in Supply and Demand

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

Effects of a Price Ceiling in the Textbook Market

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

Effects of a Price Ceiling on Market Outcomes

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

Effects of a Price Floor in the Furniture Market

A government sets a price floor of $250 on furniture in a market currently in equilibrium at $200 wi

Effects of Subsidies on Supply and Welfare

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

Environmental Externality in Apparel Production

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

FRQ 3: Determining Market Equilibrium, Consumer and Producer Surplus

A market is characterized by the following data: | Price ($) | Quantity Demanded | Quantity Supplied

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 7: Calculating Income Elasticity of Demand

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

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 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 11: Income Elasticity of Demand for Organic Vegetables

A study on organic vegetables shows that when consumer income rises by 10%, the quantity demanded in

FRQ 15: Effects of Changing Consumer Tastes on the Sneaker Market

A viral social media campaign has dramatically increased the popularity of a particular brand of sne

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 18: Price Elasticity of Demand and its Impact on Total Revenue at a Restaurant

A restaurant lowers the price of a signature dish from $20 to $15, resulting in an increase in quant

Government Intervention: Price Ceilings and Their Consequences

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

International Trade Policies: Tariffs and Quotas Impact on Domestic Markets

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

International Trade: Tariffs and Quotas Impact

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

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

Monopolist Output, Revenue, and Price Discrimination

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

Negative Externality in Widget Production

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

Price Elasticity of Supply: Practical Applications

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

Simultaneous Shifts in Supply and Demand: Indeterminate Outcomes

Initially, a market is in equilibrium at $$P=40$$ and $$Q=80$$. Due to external factors, demand incr

Supply Decrease Due to Rising Resource Costs

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

Urban Congestion from Ride-Hailing Services

Ride-hailing services in a busy city contribute to increased traffic congestion and pollution. The e

Waste Management in the Fast Food Industry

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

Bottled Water Production and Plastic Waste

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

Break-even Analysis and Cost Function

Consider a firm with the cost function $$TC(Q) = 5*Q^2 + 100$$ and that sells its product at a price

Cost Minimization in the Long Run

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

Dairy Production and Manure Pollution

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

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

Effects of Scale on Long-Run Production Costs

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

Entry and Exit 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

FRQ 1: Production Function and Diminishing Marginal Returns Analysis

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

FRQ 2: Short-Run Production Cost Analysis

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

FRQ 3: 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 4: Entry and Exit Decisions – Short Run vs. Long Run

A firm faces a daily fixed cost of $100 and variable costs of $5 per unit produced. Part A: Explain

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: 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: Accounting vs. Economic Profit Analysis

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

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 12: Impact of Technological Change on Production Function

A firm introduces a new technology that alters its production function. The table below shows output

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 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 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

Graph Analysis of Perfect Competition Market Supply and Demand

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

Integration of Production Decisions and Market Outcomes

A firm operating in a perfectly competitive market has a production function given by $$Q = L^{0.5}$

Labor Cost Decisions in a Competitive Market

A firm uses labor as its only variable input. The production data is given in the table below. The w

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 Production Costs and Scale Economies

A firm’s long-run average total cost (LRATC) data over various output levels is shown in the table b

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

Production Function Analysis: Marginal Products and Diminishing Returns

Discuss the concept of the production function and describe the relationship between inputs and outp

Profit Types and Profit Maximization

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

Short-Run 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 Analysis

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

Short-Run Shutdown Decision Analysis

A firm’s average variable cost (AVC) is given by $$AVC(Q) = 4 + \frac{20}{Q}$$ for Q ≥ 1. The curren

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

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

Technological Improvement and Production Efficiency

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

Technological Improvements and Cost Impact

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

Water Consumption and River Pollution

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

Advertising and Strategic Interaction in Oligopoly

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

Calculating Price Elasticity in a Monopoly

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

Comparative Analysis of Industry Structures

Conduct a comparative analysis of monopoly, monopolistic competition, and oligopoly focusing on mark

Comparative Efficiency in Monopolistic Competition vs. Monopoly

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

FRQ 13: Entry Deterrence Strategies in Oligopoly

An incumbent firm in an oligopolistic market seeks to deter potential entrants using strategic prici

FRQ 14: Price Elasticity Analysis in Differentiated Markets

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

Game Theory and Collusion in an Oligopoly

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

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: Dominant Strategy and Nash Equilibrium

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

Government Intervention in Monopoly Markets

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

Government Tax in the Fitness Club Industry

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

Government Tax on Fast Food Items

Fast food markets operate under competitive conditions despite some imperfect information. A governm

Graphical Analysis of Allocative and Productive Efficiency in Monopolies

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

Impact of a Per-Unit Subsidy in Monopolistic Competition

In a monopolistically competitive market, the government introduces a per‐unit subsidy to boost prod

Impacts of Price Wars in Oligopolistic Markets

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

Legal and Economic Barriers to Market Entry

Discuss the various legal and economic barriers to entry in imperfectly competitive markets and thei

Long-run Equilibrium in Monopolistic Competition

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

Market Dynamics in Monopolistic Competition

Describe the process by which monopolistic competition shifts from short-run profit to long-run norm

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

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

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 and Deadweight Loss Analysis

In this question, you will analyze how a monopolist maximizes profit, the concepts of allocative and

Monopoly Regulation and Natural Monopoly Pricing

Consider a natural monopoly with high fixed costs that initially produces at the profit‐maximizing o

Oligopoly and Strategic Pricing

Examine the strategic pricing decisions in an oligopoly, taking into account interdependent firm beh

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

Price Leadership in Oligopoly

Explore the concept of price leadership in an oligopolistic market and its implications for market o

Product Differentiation in Monopolistic Competition

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

Strategic Interaction in Oligopoly

Two firms in an oligopolistic market must choose between two strategies: 'High' and 'Low' pricing. T

Subsidies in an Imperfectly Competitive Market

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

Tax and Advertising in a Monopolistically Competitive Market

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

Taxation and Price Discrimination in the Software Industry

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

Taxation in a Market with Economies of Scale: High-Tech Gadgets

High-tech gadgets are produced in a market where economies of scale are present, and the competitive

Technology Hardware Market Externalities

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

Air Pollution from Cement Production

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

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 for Labor in a Competitive Market

A firm hires workers in a perfectly competitive labor market. Derived from the demand for its final

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

Budget Constraints and Factor Markets

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

Capital-Labor Substitution and the Least Cost Rule

Using a production function and the least cost rule, determine the optimal input combination under c

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 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

Comparing Subsidies and Price Controls in Labor Markets

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

Derived Demand Analysis

A coffee shop uses coffee beans as an input to produce coffee beverages. Because the demand for coff

Derived Demand and Labor Hiring Decision in Perfect Competition

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

Derived Demand and Marginal Revenue Product Calculation

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

Deriving Marginal Revenue Product from a Production Function

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

Determining Profit Maximizing Labor Using Production Data

A firm uses production data to decide how many workers to hire. Using this data, determine the profi

Diminishing Marginal Returns and Hiring Decisions

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

Dynamic Factor Demand under Seasonal Demand Shifts

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

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 Universal Basic Income on Labor Supply

A government introduces a universal basic income (UBI), which provides a fixed income to all citizen

Equilibrium in Perfectly Competitive Factor Markets

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

Externalities in Agriculture: Overuse of Fertilizers

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

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 and Derived Demand Analysis

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

Factor Market Equilibrium under Demand and Supply Shifts

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

Factor 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 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

Government Intervention in Labor Markets

Evaluate the impact of government intervention in labor markets through subsidies and analyze their

Government Intervention: Minimum Wage in the Labor Market

Suppose the government imposes a binding minimum wage in a competitive labor market that is above th

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 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 Automation on Derived Demand for Labor

A manufacturing firm adopts automated technology, which reduces the need for labor. Prior to automat

Impact of Immigration on Domestic Labor Supply

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

Impact of Increased Productivity on Labor Demand

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

Impact of Input Price Change on Factor Demand

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

Impact of Productivity Increases on Labor Demand

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

Impact of Technological Change on Labor Productivity and Derived Demand

A manufacturing firm experiences a technological innovation that increases worker productivity. Init

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 Technology on Labor Demand

A firm adopts new technology that increases labor productivity. Analyze the effects of this technolo

Industrial Overheating: Factory Emissions

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

Labor Demand Adjustments in an Agricultural Context

This question explores how external factors (e.g., weather conditions) affect labor demand in an agr

Labor Market Equilibrium and Elasticities

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

Labor Supply and MFC Analysis in a Monopsony

In a monopsonistic labor market, the labor supply curve is given by $$w = 10 + 0.5*L$$ and the margi

Labour Supply Elasticity and Worker Response Analysis

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

Least Cost Input Combination

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

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 Rule and Factor Choice

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

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 Factor Cost and Hiring Decisions in Labor Markets

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

Minimum Wage Effects in Different Market Structures

Evaluate how an imposed minimum wage affects factor markets in both competitive and monopsonistic se

Monopsonistic Labor Market Analysis

This question analyzes the characteristics of a monopsonistic labor market, where a single employer

Monopsonistic Labor Market Analysis

A single large firm (a monopsonist) operates as the dominant buyer in the labor market. Its labor su

Monopsonistic Labor Market Analysis

Consider a monopsonistic labor market where a single employer faces an upward-sloping labor supply a

Monopsony vs Competitive Market Wage Differentiation

Compare the outcomes of a monopsonistic labor market with those of a perfectly competitive labor mar

Negative Externality in Retail Sector

A new shopping mall development leads to increased traffic congestion and local air pollution, repre

Noise Pollution in Residential Construction

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

Optimal Factor Combination under Budget Constraints

A firm produces output using labor and capital according to the production function $$Q = 2*L^{0.4}*

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

Strategic Interaction in Hiring: Duopoly Payoff Matrix in Factor Bidding

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

Technological Change and Derived Labor Demand

This question assesses the impact of technological improvements on the derived demand for labor.

Technological Change and Its Impact on Factor Demand

Consider the impact of a technological improvement that increases the marginal product of labor. Ana

Understanding Factor Markets and Derived Demand

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

Wage Determination: A Case Study

In a small town, a manufacturing plant is the primary employer. Initially, the plant pays workers $1

Welfare Implications of Monopsonistic Labor Markets

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

Addressing Underinvestment in Education with Subsidies

Education generates positive externalities leading to underinvestment in the absence of government i

Allocation of Resources and Social Welfare in a Perfectly Competitive Market

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

Analyzing Negative Externalities and Corrective Tax

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

Comparing Private and Social Costs in Externalities

Examine the difference between private cost (MPC) and social cost (MSC) in the presence of externali

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 in the Cigarette Market

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

Correcting Negative Externalities with a Per-Unit Tax

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

Cost-Benefit Analysis in Regulatory Policy

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

Determining Socially Efficient Output in a Market with Negative Externalities

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

Efficiency versus Equity: The Role of Government in Reducing Income Inequality

Discuss the trade-offs between efficiency and equity in income redistribution policies. Analyze how

Evaluating Non-Price Regulation: Impact on Market Outcomes

This FRQ evaluates the effect of non-price government regulations on market outcomes. A case study d

Evaluating Regulation’s Impact on Market Structure

Examine how non-price regulations, such as environmental standards, can impact market outcomes in a

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 2: Evaluating Government Intervention for a Negative Externality

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

FRQ 4: Market Inefficiency in Monopolistic Competition

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

FRQ 5: Comparison of Per Unit Tax and Lump Sum Tax

Analyze the differences between a per unit tax and a lump sum tax in a perfectly competitive market.

FRQ 10: Government Intervention in Public Goods Markets

Public goods are often under-provided due to the free rider problem. Analyze the role of government

FRQ 11: Comparing Taxation and Subsidies for Negative Externalities

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

FRQ 19: Government Subsidies and Public Goods Underinvestment

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

Graphical Analysis of 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

Internalizing Externalities Through the Coase Theorem

Discuss the Coase Theorem as an alternative to government intervention in addressing externalities.

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 Equilibrium Adjustments: Entry and Exit in a Competitive Market

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

Market Failure due to Asymmetric Information

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

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 Policy in Labor Markets

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

Positive Externalities and Subsidy Policy

This FRQ examines how positive externalities lead to underproduction in a market, and it evaluates t

Positive Externality in Renewable Energy Investment

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

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

Regulatory Intervention versus Taxation in Externality Reduction

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

Short-Run Versus Long-Run Effects of Government Intervention

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

Tax Burden Distribution in a Competitive Market

Analyze how the burden of a per-unit tax is distributed between buyers and sellers in a competitive

The Impact of Minimum Wage Laws on Employment and Inequality

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

Understanding Public Goods and the Free Rider Problem

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