AP Microeconomics FRQ Room

Advanced Cross-Price Elasticity: Substitutes vs. Complements

Analyze the relationship between two goods by computing the cross-price elasticity of demand.

Comparative Advantage and Trade

Analyze the roles of absolute advantage and comparative advantage in determining trade patterns betw

Comparative Advantage and Trade Decision

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

Comparative Advantage in a Domestic Market

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

Cost-Benefit Analysis

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

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

Economic Systems and Resource Allocation

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

Economic Systems: Market, Command, and Mixed Economies

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

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.

FRQ 2: Production Possibilities Curve (PPC) Analysis

This question focuses on analyzing the Production Possibilities Curve as a means to illustrate oppor

FRQ 4: Comparative Advantage and Terms of Trade

This question explores the concepts of absolute advantage, comparative advantage, and how terms of t

FRQ 8: Opportunity Costs in Decision Making

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

FRQ 14: Government Intervention in Mixed Economies

This question examines how governments can intervene in a mixed economic system to improve resource

FRQ 15: Policy Decision Trade-Offs and Cost-Benefit Analysis

This question focuses on how policymakers use cost-benefit analysis to evaluate trade-offs in public

Graphical Analysis of Demand Elasticity

Interpret a graphical representation of demand for Product Z and analyze consumer responsiveness to

Implicit vs. Explicit Costs in Business Decision-Making

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

Managerial Decision-Making and Opportunity Costs

This question explores the role of opportunity cost in managerial decision-making. (a) Define oppor

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 and Consumer Choice

Evaluate how consumers maximize utility using marginal analysis and the optimal consumption rule.

Marginal Analysis in Consumer Choice

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

Marginal Analysis in Production Decisions

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

Marginal Product and Diminishing Returns

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

Micro vs. Macroeconomics Perspectives

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

Micro vs. Macroeconomics: Scope and Analysis

Economic analysis is conducted at both microeconomic and macroeconomic levels. Using the example of

Microeconomics vs. Macroeconomics Distinction

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

Opportunity Cost and Strategic Business Decisions

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

Opportunity Cost in Daily Decisions

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

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

Price Controls and Subsidies: Impact on Market Equilibrium

Consider the market for a necessary medication where the initial equilibrium is determined by the de

Production Possibilities Curve (PPC) Analysis

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

Resource Allocation and Decision-Making Across Economic Systems

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

Scarcity and Decision-Making Across Contexts

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

Scarcity and Household Budget Allocation

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

Scarcity and Public Policy: Analyzing Trade-offs in Government Spending

Discuss how scarcity necessitates trade-offs in public policy decisions, using the allocation of gov

Technological Advancements and Economic Growth Analysis

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

Time Allocation and Opportunity Costs

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

Analyzing Shifts in Demand Due to Changes in Consumer Income

This question focuses on how changes in consumer income affect the demand curve and how normal versu

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

Calculating Price Elasticity of Demand from Data

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

Consumer and Producer Surplus Analysis with Demand and Supply Shifts

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

Cross Price Elasticity: Substitutes vs. Complements

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

Deadweight Loss in a Quota-Constrained Market

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

Demand Elasticity and Total Revenue Dynamics

Using provided data, analyze the impact of a price change on quantity demanded and total revenue in

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

Elasticity of Demand Calculation

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

FRQ 1: Demand Shifts Analysis in the Smartphone Market

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

FRQ 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 8: Analyzing Simultaneous Shifts in Demand and Supply

Consider the market for electric scooters. Due to technological improvements, the supply curve shift

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

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

FRQ 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 19: Effects of Import Quotas in International Trade

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

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 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 Price Ceilings on Markets

This question focuses on the effects of price ceilings. Answer the following: (a) Define what a pri

Impact of Price Floors on Markets

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

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.

Industrial Pollution in the Chemical Market

A chemical plant produces products in a competitive market, but its production process emits polluta

Interpreting a Price Elasticity Study

A price study for a consumer product shows that when the price decreases from $50 to $40, the quanti

Law of Demand: Effects of Price Change on Quantity Demanded

A market study finds that when the price of smartphones increases from $$\$500$$ to $$\$600$$, the q

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 Impact of Rent Controls on Housing

In a housing market, the original equilibrium is at $1,200 with 800 houses rented. Rent controls cap

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

Noise Pollution in the Outdoor Concert Market

Outdoor concerts generate noise that negatively affects nearby residents. In this market, the equili

Pollution from Inter-City Bus Services

In the inter-city bus market, increased bus frequency leads to added traffic congestion and pollutio

Price Elasticity of Supply Analysis

Evaluate the price elasticity of supply given a firm's output response to a change in price.

Price Elasticity vs. Income Elasticity Comparison

This question requires you to compare and contrast price elasticity of demand and income elasticity

Producer Surplus and Consumer Surplus Calculation

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

Short-run vs Long-run Supply Elasticity Analysis

Differentiate between short-run and long-run supply elasticities and illustrate these differences wi

Substitutability in Demand: Price Changes of Related Goods

Consider a scenario where an increase in the price of tea results in changes in the demand for coffe

Substitute and Complement Effects

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

Supply Analysis and Shifters

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

Tax Incidence and Deadweight Loss in a Competitive Market

Consider a market with demand $$P = 90 - Q$$ and supply $$P = 30 + Q$$. A tax of $$\$10$$ per unit i

Waste Disposal in Pharmaceutical Production

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

Air Travel and Noise Pollution

Air travel contributes to noise pollution which represents a negative externality affecting communit

Analysis of Diminishing Marginal Returns in the Short Run

Consider a firm with a short-run production function given by $$Q = 50 + 20*L - L^2$$, where L repre

Automobile Emissions in Urban Areas

Urban areas are facing high levels of air pollution due to automobile emissions. Consider the market

Bottled Water Production and Plastic Waste

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

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

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

Dairy Production and Manure Pollution

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

Derivation of Cost Functions

A firm's total cost is composed of fixed and variable costs. Derive the total cost function and anal

Economies and Diseconomies of Scale Analysis

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

Efficiency Losses from Government Price Floors

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

Electronics Manufacturing and E-Waste

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

Entry and Exit in Perfect Competition (Long-run Analysis)

Consider a market where firms operate under perfect competition. The representative firm's total cos

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

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 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 and Economies of Scale

In the long run, all inputs are variable and firms experience economies and diseconomies of scale. C

FRQ 3: Profit Maximization in a Competitive Market

Consider a competitive firm with a total cost function given by $$TC(Q) = 0.5*Q^2 + 50$$ Part A: D

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

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

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

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

FRQ 8: Impact of New Technology on Production and Costs

A manufacturing firm introduces new machinery that increases the marginal product of labor (MPL) fro

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 11: Short-Run vs. Long-Run Production Decisions

A firm operates with a total cost function given by $$TC(Q) = 50 + 6 * Q + 0.5 * Q^2$$. Due to a dro

FRQ 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: Impact of Increased Rental Rate on Production

A firm that utilizes both labor and capital to produce goods faces an increase in the rental rate of

FRQ 15: Market Adjustments in Perfect Competition

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

FRQ 16: Combined Production and Cost Decision in a Competitive Market

Consider a firm with the production function $$Q = 3*L^{0.5}$$. The firm faces a fixed cost of $100

FRQ 17: Marginal Cost and Revenue in Competitive Firms

In a perfectly competitive market, a firm’s output decision is determined by comparing marginal cost

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

Government Intervention: Per‐Unit Tax and Deadweight Loss

A competitive market for Good X is initially in equilibrium at a price $$P_0 = 8$$ and quantity $$Q_

Graphing Production and Cost Curves

A firm’s cost curves are presented in the graph provided. Analyze the diagram and answer the followi

Impact of Factor Input Changes on the Production Function

A firm produces output using both capital and labor. The table below provides data for different com

Input Costs and Rental Rate Impacts on Production Decisions

A firm uses two inputs, capital (K) and labor (L), with a production function given by $$Q = 2*K + 3

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 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

Marginal Cost and Shutdown Decision

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

Production Efficiency and Factor Inputs

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

Production Function Analysis

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

Profit Calculation: Accounting vs Economic Profit

A firm reports total revenue of $1,000 and explicit costs of $600. If the opportunity cost of the fi

Profit Maximization in a Competitive Firm

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

Profit Maximization in Perfect Competition

A firm operating in a perfectly competitive market has a total cost function of $$TC(Q) = Q^2 + 20*Q

Profit Maximization in Perfect Competition

Consider a firm operating in a perfectly competitive market with the cost function $$TC(Q) = 2*Q^2 +

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 Production Decisions

An electronics manufacturer experiences an unexpected surge in demand. Initially, some inputs are fi

Shutdown Rule in the Short Run

A firm operating in a competitive market faces a market price of $10. Its cost structure yields an A

Steel Production and Industrial Pollution

The production of steel in an industrial market generates pollution that imposes additional external

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 Expenditure and Market Demand Shifts

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

Collusion and Cartel Formation in Oligopolistic Markets

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

Comparing Profit Maximization in Monopoly vs. Perfect Competition

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

Cost Analysis in Boutique Electronics

A boutique electronics firm operates under imperfect competition. The firm has a fixed cost of $900,

Cost Curves and Inefficiencies in Imperfect Competition

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

Cost Evaluation for Craft Clothing Co.

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

Determining Diminishing Returns in Tech Gadgets

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

Dominant Strategy and Nash Equilibrium in Oligopoly

Analyze a strategic decision scenario in an oligopolistic market using game theory.

FRQ 12: Repeated Game in Oligopoly Collusion

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

Game Theory in Oligopolies: Prisoner's Dilemma

Analyze the Prisoner’s Dilemma in the context of duopolistic competition and its implications for co

Government Intervention in an Oligopolistic Market

In an oligopolistic market operating under collusion, the government intervenes by imposing a price

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 Regulation of a Natural Monopoly Market

A water utility company operates as a natural monopoly due to high fixed costs and economies of scal

Government Tax on Fast Food Items

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

Input-Output Analysis in an Organic Farm

An organic farm operates in an imperfectly competitive market. The farm has a fixed cost of $500, pa

International Externalities in the Steel Market

An international steel producer, operating in an imperfectly competitive market, generates considera

Maintaining Monopoly Pricing Through Collusion

This question examines mechanisms by which firms in a monopolistic setting might collude to sustain

Market Adjustments in Monopolistic Competition

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

Market Structure Analysis in Imperfect Competition

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

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

Natural Monopoly and Regulation

Discuss the characteristics of a natural monopoly and evaluate the impact of government regulation o

Negative Environmental Externality in the Textile Industry

A textile firm in an imperfectly competitive market produces fabrics but generates negative external

Negative Externality in Chemical Production

A chemical production firm in an imperfectly competitive market incurs negative externalities due to

Oligopoly and Game Theory: Payoff Matrix Analysis

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

Optimizing Input Use in Digital Printing

Digital Print Co. operates in an imperfectly competitive market where it produces digital prints. Th

Price Discrimination and Deadweight Loss

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

Price Discrimination: Data Analysis and Calculations

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

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

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

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

Regulatory Impact on Monopolistic Pricing Strategies

A monopoly faces public and regulatory pressure to reduce its profit-driven price. A government-impo

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

Strategic Behavior and Cartel Formation in Oligopolies

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

Strategic Pricing in Price Discrimination Scenarios

Evaluate a firm's strategic pricing decisions when engaging in price discrimination across different

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 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

Working with Marginal Costs in a Startup Cafe

A startup cafe operates in an imperfectly competitive market. The cafe incurs a fixed cost of $200,

Adjustments to Rising Labor Costs: Firm's Response

Investigate how a firm adjusts its hiring decision in response to an increase in wages in a competit

Analysis of Productivity Changes on Factor Demand

This question examines the effect of increased labor productivity on the firm’s derived demand for l

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 Diminishing Marginal Returns and Factor Demand

Firms often experience diminishing marginal returns as more of a variable input is employed. Explain

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

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

Changes in Factor Demand: Product Market Shifts

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

Comparative Analysis of Perfect Competition and Monopsony in Labor Markets

Consider two labor market scenarios. In a perfectly competitive market, the equilibrium wage is $$w

Comparative Statics: Impact of Training Subsidies on Labor Demand

This question examines the effect of training subsidies on labor demand through comparative statics

Comparing Monopsony and Competitive Labor Markets

This question investigates the differences in hiring decisions between a competitive and a monopsoni

Derived Demand and Marginal Revenue Product

A firm operates in a perfectly competitive product market where the product sells at $20 per unit. T

Derived Demand for Capital Analysis

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

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

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

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 Changing Factor Prices on Cost Structure

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

Evaluating Wage Differentiation in Skilled vs. Unskilled Labor Markets

This question analyzes the employment of skilled and unskilled labor using their respective marginal

Externalities in Agriculture: Overuse of Fertilizers

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

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

Factors Affecting Labor Supply and Demand

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

Firm Size, Economies of Scale, and Factor Demand

Large firms experiencing economies of scale may demand factors of production differently compared to

Government Intervention and Factor Market Outcomes

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

Government Intervention in Factor Markets

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

Government Intervention: Tax on Hiring in Labor Markets

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

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 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 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 Productivity and Derived Demand

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

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

Influence of Immigration on the Factor Market

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

Labor Demand Response

A firm’s initial marginal product of labor is 25 units and its product sells for $10 each. A new sof

Labor Market Equilibrium and Elasticities

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

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 and the Least Cost Rule

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

Manufacturing and Community Health

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

Marginal Factor Cost and Hiring Decisions in Monopsony

In a monopsonistic labor market, a firm faces the wage function $$w = 100 + 2*L$$ and its marginal r

Marginal Factor Cost Explanation

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

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

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

Negative Externality in Automobile Manufacturing

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

Negative Externality in Retail Sector

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

Optimal Use of Labor and Capital

A firm produces gadgets using both labor and capital. The marginal product of labor (MPL) is 20 and

Output Substitution between Labor and Capital

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

Overextraction of Water Resources for Agriculture

In a region with intensive agriculture, water is extracted from a common source. This overextraction

Profit Maximization in Perfectly Competitive Factor Markets

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

Profit Maximization under Technological Change

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

Profit-Maximizing Behavior in Hiring Based on MRP = Wage

A firm operating in a perfectly competitive labor market consults the following table to decide its

Technological Change and Derived Labor Demand

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

Technological Change and Factor Demand

A technological innovation increases labor productivity in a manufacturing firm. Analyze the impact

Addressing Underinvestment in Education with Subsidies

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

Analyzing Price Ceilings in Monopolistic Competition

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

Carbon Tax and Environmental Externalities

This FRQ analyzes how a carbon tax can correct the market failure from negative environmental extern

Comparative Analysis of Government Interventions in Externality Markets

A manufacturing process creates a significant negative externality due to waste emissions. The gover

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

Determining Elasticities and Their Policy Implications in Retail Markets

This FRQ requires the calculation of own-price and cross-price elasticities for retail products and

Effects of Subsidies on Monopolistic Competition

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

Evaluating Public Goods Provision: Efficiency and Government Intervention

Discuss the challenges associated with the provision of public goods and how government intervention

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 1: Graphing the Impact of a Per Unit Tax on Market Efficiency

Analyze the impact of a per unit tax on a competitive market for Good X. In this problem, you will d

FRQ 9: Progressive Taxation and Income Inequality

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

FRQ 11: Comparing Taxation and Subsidies for Negative Externalities

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

FRQ 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.

Inequality and Income Redistribution Policy

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

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 Failure in Imperfect Competition Due to Market Power

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

Negative Externality in Automobile Fuel Production

Consider the market for automobile fuel. In this market, firms face a private marginal cost (MPC) bu

Negative Externality in Industrial Factory Emissions

An industrial factory produces goods while emitting pollutants into the air, resulting in a negative

Price Ceiling in a Monopolistically Competitive Market

A monopolistically competitive firm is subject to a government-imposed price ceiling. Analyze how th

Price Floors and Their Effects on Surpluses

Examine the impact of implementing a price floor in a perfectly competitive market. Discuss how it a

Progressive Taxation and Income Redistribution

Examine the effects of implementing progressive taxation on income distribution and inequality.

Public Goods Provision and the Free-Rider Problem

This FRQ explores why public goods are underprovided in a free market and the role of the free-rider

Subsidies to Correct Positive Externalities in Agriculture

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

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

Tax Incidence in Monopolistic Competition

This FRQ evaluates the effects of a per unit tax on a monopolistically competitive firm. Consider a

The Effects of a Price Floor in the Labor Market

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

Understanding Public Goods and the Free Rider Problem

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