AP Microeconomics FRQ Room

Analysis of Productive vs. Allocative Efficiency

Distinguish between productive efficiency and allocative efficiency using the production possibiliti

Analyzing Shifts in Supply and Demand

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

Comparative Advantage in a Domestic Market

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

Comparative Advantage in Production Decisions

Discuss the concept of comparative advantage and how it influences specialization in production.

Cost-Benefit Analysis in Investment Decisions

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

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

Diminishing Marginal Utility and Returns

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

Economic Systems and Resource Allocation

Compare different economic systems in terms of how they allocate resources and address the three fun

Economic Systems and Resource Allocation

Analyze different economic systems and their approaches to resource allocation.

Economic Systems: Market, Command, and Mixed Economies

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

Entrepreneurial Decision-Making: Factors of Production and Marginal Analysis

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

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 Government Price Controls in Housing Markets

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

Evaluating the Impact of Governmental Subsidies

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

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 Resource Allocation

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

Factors of Production: Their Roles in the Economy

This question explores the factors of production and their importance. Be sure to answer all parts.

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 16: Optimal Consumption and Marginal Utility Analysis

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

FRQ 18: Technological Change and Shifts in the PPC

This question investigates how technological advancements impact the production possibilities of an

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

Implicit vs. Explicit Costs in Business Decision-Making

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

Marginal Analysis in Consumer Choice

This question tests your understanding of marginal utility and consumer choice decisions. Answer eac

Marginal Cost Analysis and Production Decisions

This question focuses on marginal cost analysis and its crucial role in a firm's production decision

Marginal Utility and Consumer Equilibrium

Analyze how consumers achieve equilibrium by maximizing utility through the optimal allocation of th

Normative vs. Positive Economic Statements

This question examines the distinction between normative and positive economic analysis. (a) Explai

Opportunity Cost in Daily Decisions

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

Opportunity Cost in Education vs. Work Decisions

Evaluate the concept of opportunity cost in the context of choosing between full-time work and highe

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

Production Function and Cost Measures

This question tests your ability to interpret a production function and calculate various cost measu

Resource Allocation and Decision-Making Across Economic Systems

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

Resource Allocation Efficiency

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

Resource Allocation in Mixed Economic Systems

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

Scarcity and Decision-Making Across Contexts

Scarcity is a fundamental economic problem that forces both individuals and governments to make trad

Scarcity and Opportunity Costs

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

Supply and Demand and Scarcity

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

Supply and Demand: Scarcity and Resource Allocation

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

Analysis of Market Disequilibrium: Shortage and Surplus

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

Analyzing Demand Shifts in a Local Market

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

Analyzing Income Elasticity and Market Demand Changes

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

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

Changes in Consumer Preferences and Demand Shifts

Examine how changes in consumer tastes influence market demand.

Comparative Analysis of Demand and Supply Elasticities

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

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

Deadweight Loss in a Quota-Constrained Market

A government imposes an import quota on a particular good, reducing the quantity traded from its equ

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

Effects of Subsidies on Supply and Welfare

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

Elasticity of Demand Calculation

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

Elasticity of Supply Calculation

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

Environmental Impact in Car Manufacturing

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

Evaluating the Impact of Tariffs on Domestic Markets

A domestic market for imported cars has a demand given by $$P = 50 - 0.5Q$$ and a world supply that

Evaluation of a Price Floor in the Smartphone Market

In the competitive smartphone market, the equilibrium is at $400 for 10,000 smartphones sold monthly

FRQ 1: Demand Analysis for Digital Cameras

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

FRQ 2: Supply Analysis and Shifts in the Smartphone Market

Consider the following supply schedule for smartphones. Answer the following parts: (a) Plot the sup

FRQ 2: Supply Response in the Automotive Tire Market

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

FRQ 3: Price Elasticity of Demand for Organic Produce

A local organic produce market observes changes in the quantity demanded of organic apples as the pr

FRQ 4: Calculating Price Elasticity of Demand and its Impact on Total Revenue

A local restaurant charges $10 for a specific dish and sells 100 plates per day. After reducing the

FRQ 6: Cross Price Elasticity of Demand for Coffee and Tea

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

FRQ 6: Market Intervention - Analysis of a Price Floor

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

FRQ 7: Calculating Income Elasticity of Demand

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

FRQ 12: Double Shift Scenario in a Market

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

FRQ 13: 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 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 18: Variable Elasticity Across Price Ranges

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

FRQ 19: Effects of Import Quotas in International Trade

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

FRQ 20: Impact of Advertising on Market Equilibrium and Surpluses

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

Government Intervention: Price Ceilings and Their Consequences

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

Hazardous Waste in Electronics Manufacturing

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

Impact of a Price Floor on Market Outcomes

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

Impact of Price Floors on Markets

This question examines the effects of price floors on market outcomes. Answer the following: (a) De

International Trade: Tariffs and Quotas Impact

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

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

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$

Minimum Wage as a Price Floor in the Labor Market

The government sets a minimum wage above the current equilibrium wage in the labor market. Analyze t

Negative Externality in Industrial Fishing

Overfishing not only depletes fish stocks but also causes negative external impacts such as by-catch

Price Elasticity of Supply: Practical Applications

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

Producer Surplus and Consumer Surplus Calculation

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

Substitute and Complement Effects

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

Taxation Impact on Market Equilibrium

This question examines the impact of an excise tax on market equilibrium. Answer the following: (a)

Understanding the Role of Substitutes and Complements in Market Demand

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

Waste Disposal in Pharmaceutical Production

A pharmaceutical company produces surplus medications that eventually become waste, leading to envir

Water Contamination from Agricultural Pesticide Use

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

Analyzing Diminishing Marginal Returns with Production Data

A firm’s production data is provided in the table below. Analyze the data to answer questions on dim

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

Economic vs. Accounting Profit with Implicit Costs

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

Electronics Manufacturing and E-Waste

The manufacturing of electronic products is associated with e-waste, a negative externality that imp

Fast Fashion and Environmental Degradation

A fast fashion apparel market is experiencing negative externalities due to environmental degradatio

Fixed and Variable Input Decisions in the Short Run

A firm operates with a fixed capital of 10 units while labor is variable. The production data is pro

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 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 5: Profit Maximization in Perfect Competition

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

FRQ 9: Graphical Analysis of Cost and Revenue

Refer to the provided graph of Firm A’s cost and revenue curves. Using the graph below, answer the f

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 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

Long-Run Market Exit Decision

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

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 Revenue and Marginal Cost Dynamics

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

Market Supply Determination from Firm‐Level Cost Functions

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

Mining and Environmental Degradation

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

Production Efficiency and Factor Inputs

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

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 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 Perfect Competition

A competitive firm faces a market price of $$30$$ per unit. Its marginal cost (MC) function is given

Short-run Production Costs Analysis

A firm operating in the short run has a total cost (TC) function given by $$TC(Q) = 100 + 20*Q + 2*Q

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 Shutdown Decision in Perfect Competition

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

Advertising Expenditure and Market Demand Shifts

Examine how advertising expenditures affect the demand curve and market equilibrium in a monopolisti

Analyzing Returns in Eco-Friendly Furniture

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

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

Calculating Price Elasticity in a Monopoly

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

Comparing Pricing Strategies across Market Structures

Different market structures lead to distinct pricing strategies and efficiency outcomes. Answer the

Cost Curves and Inefficiencies in Imperfect Competition

Explore the role of cost curves in determining output decisions and the resulting inefficiencies in

Cost Structures in Organic Juice Co.

Organic Juice Co. operates in an imperfectly competitive market and produces organic juice. The firm

Demand and Pricing Strategies in Imperfect Markets

Analyze how demand elasticity affects pricing strategies in imperfectly competitive markets.

Elasticity and Marginal Revenue in Monopoly Pricing

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

Environmental Externality in Energy Production

An energy firm in an imperfectly competitive market generates negative externalities through polluti

Environmental Tax in the Car Manufacturing Market

To combat environmental pollution, the government has imposed a $3 per‐unit environmental tax on car

FRQ 16: Comparative Market Structure Analysis

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

Game Theory in Oligopoly Markets

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

Game Theory in Oligopoly: Dominant Strategies and Nash Equilibrium

Consider an oligopolistic market where Firms A and B have the following payoff matrix (values repres

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 Discrimination under Per‐Unit Tax

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

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

Marginal Analysis at Deli Delights

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

Marginal Revenue in Price Discrimination

Examine how marginal revenue is affected under price discrimination scenarios compared to single-pri

Market Externality in the Craft Brewery Industry

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

Monopoly Profit Maximization and Price Discrimination Analysis

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

Natural Monopoly and Government Regulation

Analyze a natural monopoly scenario where significant economies of scale exist, leading to one-firm

Negative Externality in a Local Manufacturing Firm

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

Negative Externality in a Tech Startup Environment

A rapidly growing tech startup operates in an imperfectly competitive market and faces a negative ex

Price Discrimination and Deadweight Loss

A monopolist that charges a single uniform price faces deadweight loss due to higher pricing. Now su

Production Analysis at Urban Prints

Urban Prints is a small printing business operating in an imperfectly competitive market. The firm h

Production Function Evaluation in a Mobile App Firm

A mobile app development firm operates in an imperfectly competitive market. The firm has a fixed co

Profit Maximization in Virtual Reality Experiences

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

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

Rising Input Costs in a Natural Monopoly

A natural monopoly experiences an increase in input costs causing its average total cost (ATC) curve

Taxation and Innovation in Telecommunications

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

Taxation and Network Effects in the Video Game Consoles Market

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

Taxation 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

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

Technological Change and Market Structure in Imperfect Competition

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

Technology Hardware Market Externalities

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

Analysis of Derived Demand Curve Shifts

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

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

Applying the Least Cost Rule in Factor Markets

A firm uses both labor and capital in its production process. The marginal product of labor (MPL) is

Calculating Marginal Factor Cost

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

Changes in Factor Demand and Supply

This question evaluates your understanding of the factors that shift the demand and supply in labor

Comparative Factor Markets in Different Industries

Different industries experience variations in the derived demand for labor based on product market c

Comparing Subsidies and Price Controls in Labor Markets

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

Cost Minimization and Factor Substitution in Production

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

Derived Demand Analysis

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

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

Derived Demand for Capital Analysis

Consider a firm that rents capital for production. The marginal product of capital is given by $$MPK

Derived Demand for Labor

Examine the concept of derived demand for labor by deriving the Marginal Revenue Product (MRP) funct

Derived Demand for Labor: Analyzing MRP and Optimal Hiring

This question examines a firm's derived labor demand based on its marginal revenue product (MRP) fun

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 Labor Market Equilibrium from Supply and Demand Equations

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

Disruption in Labor Supply Due to a Natural Disaster

A sudden natural disaster disrupts the local labor market, leading to a temporary leftward shift in

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

Effect of Product Market Shifts on Factor Demand

Changes in the final product market can influence the demand for factors of production. Explore how

Effects of a Government Subsidy on Factor Market Equilibrium

In a competitive market for skilled labor, the government introduces a subsidy of $3 per hour for ea

Effects of Changing Factor Prices on Cost Structure

A firm operating in a perfectly competitive labor market faces a constant wage rate. Suppose the wag

Effects of Demographic Changes on Labor Supply

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

Effects of Exogenous Wage Changes on Employment

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

Effects of Legal Interventions on Labor Market Costs

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

Equilibrium in Perfectly Competitive Factor Markets

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

Factor Endowments and Comparative Advantage in International Trade

This question links factor markets to international trade by analyzing national differences in facto

Factor Market Equilibrium and Derived Demand Analysis

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

Factor Markets Under Imperfect Competition: Monopsony Case Study

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

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

Factor Supply: Impact on Wage Equilibrium

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

Globalization and Factor Market Adjustments

Discuss the impact of globalization on domestic factor markets, with a focus on labor demand and wag

Government Intervention in Labor Markets

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

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 a Wage Subsidy on Factor Market Outcomes

The government introduces a wage subsidy for low-income workers, effectively reducing the cost of la

Impact of Government Policy on Factor Supply

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

Impact of 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

Influence of Immigration on the Factor Market

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

Least-Cost Combination and Factor Price Ratio Analysis

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

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 Derived Demand Calculation

A firm's marginal product of labor is given by $$MPL = 50 - 0.5*Q$$, its product sells at a price of

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

Market Failure and Underemployment in Factor Markets

This question explores the concept of market failure in factor markets, using the example of underem

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

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

Monopsonistic Labor Market Analysis

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

Negative Externality in Urban Transportation

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

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

Optimal Factor Combination under Budget Constraints

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

Output Substitution between Labor and Capital

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

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 in Factor Markets: Equating MRP and MFC

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

Profit Maximization in Perfectly Competitive Factor Markets

This question addresses how firms in perfectly competitive factor markets maximize profits by equati

Profit Maximization in Perfectly Competitive Factor Markets

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

Returns to Scale and Labor Demand

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

Temporary Surge in Derived Demand for Labor

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

Wage Determination: A Case Study

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

Water Consumption in Beverage Industry

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

Analyzing Income Inequality: Lorenz Curve and Gini Coefficient

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

Analyzing Price Controls: Price Ceiling and Price Floor Cases

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

Analyzing Price Floors and Agricultural Surplus

A government sets a price floor in the agricultural market for corn to support farmers.

Antibiotic Overuse and External Costs: Addressing Resistance

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

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

Comparing Lump-Sum Taxes and Per Unit Taxes

A firm faces two different types of taxes: a lump-sum tax and a per unit tax.

Comparing Price Control and Subsidy Interventions in the Coffee Market

In the coffee market, a binding price ceiling is imposed to protect consumers from high prices. Alte

Comparing Private and Social Costs in Externalities

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

Comparing Subsidy and Tax Approaches to Externality Correction

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

Correcting Negative Externalities Through Taxation

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

Environmental Regulation and Firm Cost Structures

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

Evaluating Deadweight Loss and Tax Incidence

A market experiences a per unit tax that distorts the equilibrium and creates deadweight loss.

Evaluating Income Redistribution: Taxes and Transfers

Government policies aimed at income redistribution often use taxes and transfers to reduce inequalit

Evaluating Regulation’s Impact on Market Structure

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

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 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 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 7: Efficiency Effects of Subsidies in a Market with Positive Externalities

Consider a market with positive externalities, where private markets underproduce relative to the so

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 17: Anti-Trust Policies and Market Efficiency

Analyze how anti-trust policies can improve market efficiency by reducing market power.

Government Intervention: Taxation, and Price Ceilings

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

Government Regulation in Response to Negative Externalities: Pollution Control

This FRQ examines how government regulation, such as a per-unit tax, can address negative externalit

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

Healthcare Market Externalities and Policy Intervention

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

Impact of Lump Sum vs. Per Unit Taxes on Firms

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

Impact of Technological Improvements on External Costs

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

Internalizing Positive Externalities via Subsidies

In a market with positive externalities, the private marginal benefit (MB) is lower than the social

Market Failure due to Asymmetric Information

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

Market Failure in Imperfect Competition Due to Market Power

This FRQ analyzes how monopolistic market power leads to allocative inefficiency and deadweight loss

Minimum Wage Effects in the Labor Market

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

Minimum Wage Effects: Labor Market Analysis

Analyze the impact of a government-imposed minimum wage (a price floor in the labor market) using th

Minimum Wage Policy and Labor Market Equilibrium

Analyze the effects of imposing a minimum wage above the market equilibrium on the labor market. Con

Positive Externality in Research and Development Investment

Investment in research and development (R&D) projects often yields benefits that spill over to socie

Promoting Positive Externalities with Subsidies

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

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 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

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

Subsidies to Correct Positive Externalities in Agriculture

Consider an agricultural market where organic farming generates positive externalities (e.g., enviro

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