AP Microeconomics FRQ Room

Analyzing Shifts in Supply and Demand

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

Comprehensive Guide to Basic Economic Concepts

This guide provides a complete overview of the foundational economic concepts necessary for understa

Cost-Benefit Analysis in Decision-Making

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

Cost-Benefit Analysis in Investment Decisions

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

Cost-Benefit Analysis: Evaluating Investment Decisions

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

Cost-Benefit Analysis: Implicit and Explicit Costs

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

Economic Systems and Government Policy

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

Economic Systems and Resource Allocation

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

Factors of Production and Resource Allocation

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

FRQ 9: Consumer Choice and Marginal Analysis

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

FRQ 10: Evaluating Explicit vs. Implicit Costs in Business Decisions

This question examines how firms account for different types of costs in order to make informed busi

Graphical Analysis of Market Shifts due to Resource Scarcity

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

Impact of Economic Growth on Production Possibilities

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

Interpreting Costs in a Business Venture

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

Marginal Analysis and Diminishing Returns

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

Marginal Product and Diminishing Returns

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

Marginal Utility and Consumer Equilibrium

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

Micro vs. Macroeconomics Perspectives

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

Microeconomics vs. Macroeconomics Analysis

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

Opportunity Cost in Daily Decisions

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

Opportunity Cost Using PPC and Real-World Scenario

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

Opportunity Costs and Trade-offs in Consumer Choices

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

Positive and Normative Economic Analysis

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

Positive vs. Normative Economics Evaluation

Differentiate between positive and normative economics using theoretical definitions and practical e

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve (PPC) Analysis

Analyze the Production Possibilities Curve (PPC) and explain how it represents opportunity costs in

Scarcity and Decision Making

This question examines the basic economic concept of scarcity and the resulting need for choices. An

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

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

Technological Advancements and Economic Growth Analysis

Technological innovation can spur economic growth. Suppose a breakthrough in renewable energy techno

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

Analyzing Market Dynamics through Price Elasticities and Surplus Loss

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

Analyzing the Effects of a Consumption Tax

A per-unit consumption tax of $5 is imposed on suppliers in a market with the original supply curve

Consumer and Producer Surplus Analysis with Demand and Supply Shifts

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

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 Ceiling on Public Transit Fares

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

Effects of Subsidies on Market Supply and Producer Surplus

A government introduces a subsidy to domestic producers, reducing production costs. Analyze how this

Elasticity of Demand Calculation

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

Environmental Impact in Car Manufacturing

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

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 1: Demand Shifts Analysis in the Smartphone Market

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

FRQ 3: Determining Market Equilibrium, Consumer and Producer Surplus

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

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 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 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 13: Evaluating the Effects of Tariffs in the Steel Market

The United States imposes a tariff on imported steel. Answer the following: (a) Draw a supply and de

FRQ 14: Long-Run Adjustments in Perfect Competition

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

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: Impact of External Shocks on the Oil Market

A major technological discovery has significantly reduced the cost of extracting oil. Assume the ini

FRQ 17: Reservation Price and Producer Surplus

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

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

FRQ 20: Integrated Analysis in the Electric Vehicle Market

Electric vehicles (EVs) have been gaining popularity. Initially, the market demand is given by $$D:

Impact of Government-Imposed Price Floor in the Agricultural Market

A government has set a price floor for wheat at $3 per unit in an effort to support farmers. Prior t

Impact of Minimum Wage as a Price Floor in the Labor Market

In a competitive labor market for unskilled workers, the equilibrium wage is $12 per hour with 100,0

Impact of Technological Advancement on Supply

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

Income Effect on Demand for Normal and Inferior Goods

Analyze how changes in consumer income affect the demand for normal and inferior goods.

Income Elasticity and Good Classification

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

International Trade Impact: Tariffs and Market Outcomes

The government imposes a tariff on imported electronics. Analyze how this tariff affects the domesti

Manufacturing Emissions and Public Health

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

Market Disequilibrium and Adjustment Mechanisms

This question examines the concept of market disequilibrium and how markets adjust to eliminate shor

Market Equilibrium, Consumer and Producer Surplus

This question focuses on understanding market equilibrium and the calculation of consumer and produc

Market Shifts due to External Shocks

This question examines how external shocks, such as increases in raw material costs, shift the suppl

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 Demand Calculation

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

Supply Analysis and Shifters

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

Supply Elasticity and Producer Behavior

The following table shows data on the quantity supplied of a product at various prices: | Price ($)

Traffic Congestion in the Ride-Sharing Market

Ride-sharing services contribute to traffic congestion, which imposes additional social costs not bo

Urban Congestion from Ride-Hailing Services

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

Accounting vs. Economic Profit Analysis

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

Adjustment to Increased Capital Rental Rate

A firm uses both capital and labor in its production. The rental rate for capital increases from $10

Analyzing MC and AVC: A Graphical Perspective

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

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

Calculation of Short-run Production Costs

Examine short-run production costs for a firm using the provided data. Analyze fixed and variable co

Comparative Statics: Changes in Input Prices

A firm’s short-run total cost is given by $$TC = 30 + 6*Q + Q^2$$. Suppose a rise in the wage rate c

Competitive Market Long-Run Adjustments: Entry and Exit

Analyze how a perfectly competitive market adjusts in the long run through entry and exit of firms.

Comprehensive Profit Maximization under Perfect Competition

A firm in a perfectly competitive market faces the following conditions: its total cost function can

Cost Functions and Marginal Analysis and Optimal Production in Perfect Competition

A firm’s total cost function is given by $$TC(Q) = Q^2 + 10*Q + 100$$ and it faces a constant market

Deriving the Firm's Supply Curve from its MC Curve

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

Economic 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$

Ethanol Production and Land Use Externalities

Ethanol production can lead to land use externalities, leading to environmental degradation not refl

Fast Fashion and Environmental Degradation

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

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 1: Production Function and Diminishing Marginal Returns

Firm A uses labor as its variable input in production. The table below shows the output produced by

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 4: Profit Calculation and Types of Profit

Firm C produces 200 units of its product and sells each unit at a market price of $10. The firm incu

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 5: Short-Run Shutdown Decision Analysis

A firm faces a fixed cost of $500 and has a variable cost function given by $$VC(Q) = 4 * Q + Q^2$$.

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 9: Marginal Analysis and Optimal Output Determination

Consider a firm that has a total revenue function and a total cost function as follows: $$TR(Q) = 5

FRQ 9: Production Decisions Under a Shift in Demand

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

FRQ 13: Marginal Analysis and Profit Maximization

A firm has a total cost function represented by $$TC(Q) = 40 + 6*Q + 2*Q^2$$ and operates in a marke

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 17: Entry and Exit Decisions in Perfect Competition

A small farm operates in a perfectly competitive market with a total cost function given by $$TC(Q)

FRQ 17: Strategic Interactions Using a Payoff Matrix

Two firms in an industry face strategic choices regarding their production levels. The following pay

FRQ 19: Profit Analysis with Changing Market Prices

Market prices can have a large impact on a firm’s profitability. Part A: Describe how a change in t

FRQ 20: Long-Run Equilibrium in Perfect Competition

In the long run, competitive markets adjust so that firms earn zero economic profit, and only normal

Impact of Scale on Average Total Cost

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

Impact of Technological Improvement on the Production Function

A firm initially has a marginal product of labor given by $$MPL_{old} = 40 - 3*L$$. After adopting n

Industry Supply and Firm’s Cost Structure

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

Input Price Change Impact Analysis

A firm’s cost function is given by $$TC(Q) = 2*Q^2 + 50$$ when the rental rate of capital is $$r = 1

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

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, Average and Total Cost Analysis

For a firm with the total cost function $$TC(Q) = 20 + 4*Q + 3*Q^2$$, answer the following parts:

Production Efficiency and Factor Inputs

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

Production Function Analysis: Marginal Products and Diminishing Returns

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

Profit Maximization in Perfect Competition

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

Profit Maximization in Perfect Competition

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

Role of Implicit Costs in Economic Decision-Making

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

Short-Run Cost Analysis and Graphing Cost Curves

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

Water Consumption and River Pollution

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

Widget Manufacturing and Air Pollution

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

Advertising and Strategic Interaction in Oligopoly

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

Advertising Effects on Demand Elasticity in Monopolistic Competition

This question examines how advertising influences the price elasticity of demand in monopolistically

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

Calculating Output in a Price-Discriminating Monopoly

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

Cartels and Collusive Behavior in Oligopoly

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

Collusion and Cartel Formation in Oligopolistic Markets

This question explores how collusion and cartel formation can influence market outcomes in an oligop

Collusion and Profit Sharing in an Oligopoly Cartel

In an oligopolistic market, firms form a cartel to maximize joint profits by acting like a monopoly.

Consumer Surplus and Deadweight Loss in Imperfect Competition

Examine the welfare effects of market inefficiencies in imperfect competition.

Cost and Revenue Analysis in Monopolistic Competition

Analyze the cost and revenue structure of a firm in monopolistic competition.

Cost Structures in Monopolistic Competition

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

Demand and Pricing Strategies in Imperfect Markets

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

Economies of Scale as Barriers to Entry

Economies of scale can create significant barriers to entry in imperfectly competitive markets. Anal

Efficiency Analysis in Custom T-Shirts

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

FRQ 12: Repeated Game in Oligopoly Collusion

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

FRQ 13: Entry Deterrence Strategies in Oligopoly

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

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

Government Intervention in Natural Monopolies

Evaluate the need for government intervention in natural monopolies and its impact on pricing and ma

Government Price Controls and Subsidies in Monopolistic Competition

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

Government Tax on Fast Food Items

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

Impact of Price Discrimination under Per‐Unit Tax

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

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

Long-run Equilibrium in Monopolistic Competition

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

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 Adjustments in Monopolistic Competition

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

Market Entry and Demand Curve Adjustments in Monopolistic Competition

This question investigates how the entry of new firms affects the demand curve faced by an incumbent

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

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

Market Structure Analysis in Imperfect Competition

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

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

Oligopoly and Game Theory: Payoff Matrix Analysis

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

Price Discrimination in Monopolistic Markets

This question examines a firm's use of price discrimination in a monopolistic market. Assume the fir

Price Discrimination: Data Analysis and Calculations

Investigate the application of first-degree price discrimination using consumer data.

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

Production Costs in Innovative Apparels

Innovative Apparels operates in an imperfectly competitive market and uses skilled labor to produce

Profit Maximization in Virtual Reality Experiences

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

Strategic Behavior and Cartel Formation in Oligopolies

Firms in an oligopolistic market sometimes form cartels to maximize joint profits. Analyze the strat

Subsidies in an Imperfectly Competitive Market

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

Tax Effects on Organic Food Producers

Organic food producers operate in a niche market that exhibits characteristics of imperfect competit

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

Analyzing Derived Demand in Response to Changes in Final Product Markets

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

Analyzing the Effects of a Tax on Labor Employment

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

Analyzing the Impact of Capital Price Changes on Production Decisions

Examine how a change in the price of capital affects a firm’s production decisions and its optimal i

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

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

Capital-Labor Substitution and the Least Cost Rule

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

Changes in Factor Demand and Supply

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

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

Comparing Perfect Competition and Monopsonistic Factor Markets

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

Derived Demand and MRP Calculation

This question examines the concept of derived demand and the computation of marginal revenue product

Determinants of Labor Supply: Qualitative Analysis

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

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 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:

Effects of Technological Innovation on Factor Productivity

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

Effects of Unionization on Labor Costs and Employment

This question discusses how unionization affects labor markets, particularly through changes in marg

Equilibrium in Perfectly Competitive Factor Markets

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

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

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

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

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 Government Subsidy on Labor Market Dynamics

A government subsidy for worker training increases worker productivity, thereby affecting the derive

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 Factor Markets

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

Impact of Technological Change on Labor Demand

This question investigates the effects of technological change on labor demand and the resulting cha

Impact of Technology on Labor Demand

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

Industrial Production and Environmental Costs

A manufacturing plant producing electronic devices generates toxic waste that imposes a negative ext

Integrative Analysis: Factor Market Shifts and Firm Profitability

This integrative question examines how changes in technology, government policy, and input prices in

Labor Market Equilibrium with Derived Demand

This question focuses on deriving equilibrium wage and employment levels from labor supply and deriv

Labor Supply and Demand in Competitive Markets

Consider a competitive labor market. Analyze the market equilibrium and the effects of a binding min

Least Cost Input Combination Problem

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

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

Marginal Productivity Analysis

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

Monopsonistic Factor Market Analysis

This question focuses on analyzing labor market outcomes under a monopsonistic structure and compari

Monopsonistic Labor Market Analysis

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

Negative Externality in Fast Food Production

A fast food chain's production process generates excessive waste that contributes to local pollution

Negative Externality in Mining Operations

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

Output Substitution between Labor and Capital

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

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-Maximizing Labor in a Competitive Market

A firm in a perfectly competitive labor market is guided by the marginal revenue product (MRP) of la

Rapid Increase in Product Demand and Derived Labor Demand

A sudden surge in consumer demand for smartphones leads to an immediate increase in the derived dema

Returns to Scale and Labor Demand

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

Short-Run Factor Adjustments and Diminishing Marginal Returns

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

Skill-Biased Technological Change and Labor Market Outcomes

Recent technological advancements have increased the productivity of skilled workers relative to uns

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.

Analyzing Positive Externalities and Subsidy Policies

Examine a market where a positive externality exists, causing the marginal social benefit (MSB) to e

Analyzing Price Ceilings in Monopolistic Competition

In a monopolistically competitive market characterized by product differentiation and downward-slopi

Analyzing Price Floors and Agricultural Surplus

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

Analyzing the Impact of Subsidies on Equilibrium in a Monopolistically Competitive Market

This FRQ investigates the effect of a per-unit subsidy on equilibrium outcomes in a monopolistically

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

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

Congestion Externality in Urban Transportation

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

Cost-Benefit Analysis of an Environmental Regulation

A government regulation requires factories to install pollution filters at a cost of $$30$$ per unit

Effects of Subsidies on Monopolistic Competition

Government subsidies can influence firm behavior in monopolistic competition by altering cost struct

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 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 13: Minimum Wage in a Monopsony Labor Market

Analyze the effects of imposing a minimum wage in a monopsonistic labor market. Explain how it affec

FRQ 15: Government Intervention to Address Pollution Externalities

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

FRQ 17: Anti-Trust Policies and Market Efficiency

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

FRQ 18: Progressive Tax System and Its Effect on Income Distribution

Evaluate the effect of a progressive tax system on income distribution and overall societal welfare.

Government Intervention in External Markets: Case Study Analysis

A city faces significant air pollution from local manufacturing. In response, the government impleme

Government Policies and Their Impact on Income Distribution

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

Incorporating External Costs in Private Markets

A firm's production process imposes an external cost that is not reflected in its marginal private c

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

Market Power and Antitrust Regulation: A Comparative Analysis

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

Measuring Income Inequality: Lorenz Curve and Gini Coefficient

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

Measuring Income Inequality: The Lorenz Curve and Gini Coefficient

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

Minimum Wage Effects: Labor Market Analysis

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

Minimum Wage Laws in Monopsonistic Labor Markets

In a monopsonistic labor market, a single dominant employer has wage-setting power.

Non-price Regulation and Market Efficiency

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

Per Unit Tax in Perfect Competition vs. Monopolistic Market

Examine the effects of a per unit tax in both a perfectly competitive market and a monopolistic mark

Positive Externalities and Subsidy Policy

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

Price and Cross-Price Elasticity Analysis in Retail Markets

This FRQ assesses your ability to compute both own-price and cross-price elasticities and interpret

Public Goods and the Free Rider Problem

This FRQ focuses on the characteristics of public goods and the implications of the free rider probl

Public Health and Government Subsidy Analysis

Analyze the impact of a per unit subsidy on the market for vaccinations. The market is described by

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

Subsidy Impact Analysis in Markets with Positive Externalities

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

Tax Incidence in a Perfectly Competitive Market

A per-unit tax is imposed in a perfectly competitive market. Analyze the impact of this tax on marke

Taxation and Income Distribution: Progressive vs. Regressive Taxes

Different tax structures can have significant effects on income distribution.

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

Underprovision of Public Goods and Government Subsidies

Public goods are often underprovided in free markets due to the free rider problem. Answer the follo

Understanding Public Goods and the Free Rider Problem

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