AP Microeconomics FRQ Room

Analysis of Productive vs. Allocative Efficiency

Distinguish between productive efficiency and allocative efficiency using the production possibiliti

Comparative Advantage and Trade

Evaluate how comparative advantage leads to mutually beneficial trade between entities.

Comparative Advantage in Production Decisions

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

Consumer Choice and Budget Constraint

This question examines consumer choice within the framework of a budget constraint.

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 of a Public Policy

Apply cost-benefit analysis to evaluate a public infrastructure decision.

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

Diminishing Marginal Utility and Returns

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

Economic Growth and Efficiency

Examine the concepts of economic growth, productive efficiency, and allocative efficiency in relatio

Economic Growth via the Production Possibilities Curve

This question examines economic growth through shifts in the Production Possibilities Curve (PPC).

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

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

Factors of Production and Resource Allocation

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

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

FRQ 18: Technological Change and Shifts in the PPC

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

Graphical Analysis of Economic Growth and Shifting PPC

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

Graphical Analysis of Market Shifts due to Resource Scarcity

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

Integrative Analysis: Economic Concepts in Business Decision-Making

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

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 in Production Decisions

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

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 Decision-Making

A consumer derives utility from two goods: Food and Clothing. The marginal utilities for the first t

Microeconomics vs. Macroeconomics Decision-Making

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

Microeconomics vs. Macroeconomics: Analyzing Economic Perspectives

Compare and contrast microeconomics and macroeconomics, and analyze how each field addresses economi

Optimal Consumer Choice Under Budget Constraints

A consumer is deciding how to allocate a $$120$$ budget between Good M and Good N. The marginal util

Optimal Consumption and Marginal Utility Analysis

A consumer has a budget of $$100$$ to spend on Good X and Good Y. The price of Good X is $$10$$ and

Positive vs. Normative Economics

This question explores the differences between positive and normative economic analysis.

Price Elasticity of Demand Calculation

This question tests your ability to compute and interpret both own-price elasticity and cross-price

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve (PPC) and Opportunity Costs

This question requires you to illustrate a production possibilities curve and calculate opportunity

Production Possibilities Curve Analysis

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

Resource Allocation and Economic Systems Comparison

Analyze different economic systems and how they answer the three fundamental economic questions rega

Resource Allocation in a Mixed Economic System

Evaluate how a mixed economic system handles resource allocation compared to purely market or centra

Resource Allocation in Mixed Economic Systems

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

Scarcity and Opportunity Cost Analysis

This question asks you to explain basic economic concepts such as scarcity, opportunity cost, and tr

Scarcity and Opportunity Cost Analysis

Discuss the concept of scarcity as a fundamental economic problem and explain how it forces choices

Scarcity and Opportunity Cost in Resource Allocation

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

Scarcity and Opportunity Costs

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

Shifts in the PPC and Economic Growth

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

Technological Change and the PPC

Discuss the impact of technological change on an economy's Production Possibilities Curve (PPC).

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 Government Policy Decision

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

Analyzing Demand Shifts in a Local Market

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

Analyzing Diminishing Marginal Utility and Demand

This question explores the concept of diminishing marginal utility and its relationship to the downw

Analyzing Shifters of Supply: Resource Costs and Technology

A market faces two opposing supply shocks: an increase in resource costs and a simultaneous technolo

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

Crop Switching: Supply Decision in Agriculture Markets

A farmer produces both Crop A and Crop B. When the price of Crop B rises relative to Crop A, the far

Cross Price Elasticity and Market Competition

Investigate the relationship between two goods using cross-price elasticity of demand.

Cross Price Elasticity: Identifying Substitutes and Complements

In a certain market, the quantity demanded of Good A changes when the price of Good B alters. Analyz

Cross Price Elasticity: Substitutes vs. Complements

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

Cross-Price and Income Elasticity of Demand Analysis

A market survey reveals that when the price of tea increases by 10%, the quantity demanded for coffe

Deadweight Loss in a Quota-Constrained Market

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

Domestic Market Outcomes under Tariff Policy

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

Double Shifts in Supply and Demand

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

Double Shifts in Supply and Demand

This question investigates scenarios in which both supply and demand shift simultaneously and the ch

Double Shifts: Simultaneous Changes in Supply and Demand

Examine the market outcome when both supply and demand shift simultaneously. Answer the following pa

Effects of a Price Floor in the Furniture Market

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

Effects of Supply-Side Taxes and Subsidies on Market Equilibrium

This question examines how government interventions in the form of taxes and subsidies affect market

Elasticity of Supply: Short-run vs Long-run Analysis

A study in the widget market provides the following data: At a price of $$25$$, the quantity supplie

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

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

FRQ 7: Calculating Income Elasticity of Demand

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

FRQ 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 12: Impact of a Per Unit Tax on Consumer and Producer Surplus in the Soft Drink Market

In a soft drink market, the initial equilibrium is at a price of $2 per unit and a quantity of 1000

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: Strategic Interaction Analysis in a Duopoly Using a Payoff Matrix

Consider two competing firms in a duopoly market facing the following payoff matrix for their pricin

FRQ 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 19: Analyzing Short Run vs. Long Run Supply Elasticity

A producer’s supply of a good is observed over two time periods. In the short run, a price increase

FRQ 19: Effects of Import Quotas in International Trade

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

Graphical Analysis of Price Floors and Surpluses

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

Impact of a Government-Imposed Price Floor

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

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 Technological Innovation on Supply

This question examines the impact of technological innovation on the supply curve and how it affects

Impacts of a Price Ceiling in the Dairy Market

The dairy market has an equilibrium price of $4 per gallon with 300 gallons sold. The government set

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 Market Adjustment in Competitive Markets

Analyze the long-run adjustments in a competitive market as firms enter or exit. Answer the followin

Market Disequilibrium and Adjustment Mechanisms

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

Market Effects of Advertising

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

Market Equilibrium, Consumer and Producer Surplus

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

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

Price Elasticity of Supply Analysis

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

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

Simultaneous Shifts in Supply and Demand: Indeterminate Outcomes

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

Substitute and Complement Effects

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

Supply Chain Dynamics: Effects of a Change in the Number of Sellers

In a market with the initial demand curve $$P = 60 - Q$$ and initial supply curve $$P = 20 + Q$$, an

Supply Shift: Impact of Technology on Production

A technological innovation reduces production costs for suppliers in the market for Product Y. Analy

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

Adjustment to Increased Capital Rental Rate

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

Calculation of Short-run Production Costs

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

Comprehensive Perfect Competition Market Analysis

A perfectly competitive market consists of 5 identical firms, each having a cost function $$TC(Q) =

Dairy Production and Manure Pollution

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

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

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

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 7: Accounting vs. Economic Profit Analysis

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

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 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 11: Cost Minimization in the Long Run

Long-run cost minimization requires firms to choose the combination of inputs that minimizes the tot

FRQ 11: Short Run versus Long Run Decision Analysis

A firm’s short-run total cost function is given by $$TC_{SR}(Q) = 100 + 5*sqrt(Q)$$, while its long-

FRQ 12: Graphical Interpretation – Shifts in Cost Curves

Cost curves may shift due to changes in input prices, technology, or other external factors. Part A

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 14: Cost Minimization in the Long Run

Consider a firm seeking to minimize its long-run costs. A graph showing the firm's LRATC curve is pr

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 17: Strategic Interactions Using a Payoff Matrix

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

FRQ 20: Cost Function Evolution and Scaling Decisions

A firm’s cost function is given by $$TC(Q) = 200 + 3*Q + 0.5*Q^2$$ and it operates in a perfectly co

Graphing Cost Curves and Determining Shutdown Point

A firm’s short-run cost structure is represented by several cost curves. Based on the provided graph

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

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

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

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

Profit Calculation and Cost Curve Graph Analysis

The table below shows a firm’s output levels along with corresponding total revenue and total cost v

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

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 Cost Curves Comparative Analysis

A firm has several short-run average total cost (ATC) curves corresponding to different plant sizes.

Short‐Run Shutdown Decision

A firm faces a fixed cost of $150 and a variable cost function given by $$VC(Q) = 5*Q + 0.5*Q^2$$. T

Steel Production and Industrial Pollution

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

Water Consumption and River Pollution

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

Barriers to Entry and Market Structure Dynamics

Discuss the role of barriers to entry in shaping market structures. Use real-world examples where ap

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 Structures and Natural Monopoly Dynamics

Natural monopolies operate on the declining portion of their Average Total Cost (ATC) curve. Analyze

Entry and Exit in Monopolistic Competition

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

Examining Production in a Software Solutions Firm

A software solutions firm operates in an imperfectly competitive market. The firm has a fixed cost o

FRQ 2: Price Discrimination in a Monopoly

A monopolist has the ability to segment the market and practice third‐degree price discrimination be

FRQ 3: Oligopoly Game Theory Analysis

Two firms in an oligopolistic industry are considering whether to collude or compete. Their decision

FRQ 7: Monopoly Deadweight Loss Analysis

A monopolist faces the market demand function $$P = 120 - 2*Q$$ and has a constant marginal cost of

FRQ 9: Price Cap Regulation in a Natural Monopoly

A natural monopoly has a total cost function $$TC = 200 + 20*Q$$ and faces the demand function $$P =

FRQ 10: Third-Degree Price Discrimination in Monopolies

A monopolist serves two separate markets where demand conditions differ. In Market A, the demand fun

FRQ 11: Cost Analysis in Monopolistic Competition

A firm in a monopolistically competitive market faces a fixed cost of $$F = 100$$ and a constant var

FRQ 13: Entry Deterrence Strategies in Oligopoly

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

FRQ 15: Stackelberg Leadership in Oligopoly

In an oligopolistic market, one firm acts as a leader while the other acts as a follower. The firms’

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 an Oligopolistic Market

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

Government Intervention in Luxury Smartphone Accessories Market

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

Graphical Analysis of Allocative and Productive Efficiency in Monopolies

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

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

Marginal Returns in a Craft Brewery

A craft brewery operates in an imperfectly competitive market. It has a fixed cost of $350, pays a w

Market Structure Analysis in Imperfect Competition

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

Negative Externalities and Regulatory Challenges in the Shipping Industry

A shipping company operating within an oligopolistic market is responsible for significant negative

Negative Externality in a Local Manufacturing Firm

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

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

Rising Input Costs in a Natural Monopoly

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

Strategic Interaction in Oligopoly

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

Subsidies in an Imperfectly Competitive Market

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

Tax and Advertising in a Monopolistically Competitive Market

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

Taxation 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,

Air Pollution from Cement Production

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

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 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

This question assesses the application of the least cost rule in a firm’s decision to choose between

Application of the Least Cost Rule in Factor Markets

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

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

Assessing the Derived Demand for Labor in Various Industries

This question requires you to compare how differences in production processes affect the derived dem

Budget Constraints and Factor Markets

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

Calculating Marginal Factor Cost

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

Calculating Marginal Revenue Product from Production Data

A firm’s hiring decision is based on the marginal revenue product (MRP) of labor. Using given produc

Calculation of Marginal Revenue Product and Marginal Factor Cost

This question involves analyzing a firm’s employment decision by calculating the marginal product of

Changes in Derived Demand due to Technological Advances

This question examines the impact of technological improvements on the derived demand for labor. A f

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 Labor and Capital Markets

A firm must decide between hiring additional labor or investing in capital. Consider that product de

Comparative Analysis: Perfect Competition vs. Monopsony in Factor Markets

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

Comparative Factor Pricing: Changes in Input Prices

A firm employs both labor and capital. Initially, the prices are $$P_L = 10$$ and $$P_K = 20$$, with

Comparative Statics: Impact of Training Subsidies on Labor Demand

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

Comparing Perfect Competition and Monopsonistic Factor Markets

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

Comparing Subsidies and Price Controls in Labor Markets

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

Derived Demand and Marginal Revenue Product

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

Derived Demand and Marginal Revenue Product in Factor Markets

A firm’s demand for labor is derived from the demand for its product, and the marginal revenue produ

Derived Demand for Capital Analysis

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

Determinants of Labor Supply

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

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 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

Efficiency Loss in Factor Markets due to Per-Worker Tax

In a competitive labor market, the initial equilibrium is at a wage of $$w = 18$$ with 150 workers e

Enhanced Productivity Through Training

A firm initiates a training program which successfully increases the marginal product of labor. Befo

Equilibrium in Perfectly Competitive Factor Markets

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

Externalities in Food Production: Pesticide Use

A large-scale farm uses pesticides that result in runoff, which negatively impacts neighboring commu

Factor Endowments and Comparative Advantage in International Trade

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

Globalization and Factor Market Adjustments

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

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

Impact of Government Intervention on Labor Supply

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

Impact of Minimum Wage in a Monopsonistic Labor Market

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

Impact of Trade Liberalization on the Derived Demand for Labor in Local Manufacturing

Following trade liberalization, a local manufacturing sector faces reduced product demand, which in

Labor Supply Elasticity and Wage Changes

This question tests your understanding of labor supply elasticity and its implications when wages ch

Least-Cost Combination and Factor Price Ratio Analysis

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

Marginal Factor Cost Explanation

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

Marginal Productivity Analysis

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

Marginal Revenue Product Calculation

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

Monopolistic Competition in Factor Markets

Analyze the behavior of factor markets under conditions of monopolistic competition and discuss the

Monopsonistic Labor Market Analysis

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

Multi-Factor Market Payoff and Equilibrium Analysis

This question integrates strategic interactions with factor market decisions by examining a payoff m

Multi-Input Factor Market Analysis with Budget Constraint

A firm uses both labor and capital with production functions characterized by $$MPL = 15 - 0.3*L$$ a

Negative Externalities in Tech Manufacturing

A semiconductor manufacturing plant generates hazardous waste that contaminates local water supplies

Negative Externality in Hospitality Industry

A hotel chain’s expansion in a residential area causes increased congestion and noise, which imposes

Overextraction of Water Resources for Agriculture

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

Production Function Analysis and Cost Measures

A firm uses labor to produce output. A portion of its production and cost data is provided below. An

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 and Hiring Decisions in Competitive Factor Markets

A firm in a competitive labor market determines its number of hires by equating its marginal revenue

Seasonal Variations in Labor Supply in the Retail Sector

During the holiday season, a retail firm experiences a temporary change in labor supply due to incre

Technological Change and Factor Market Adjustments

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

Wage Determination: A Case Study

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

Addressing Underinvestment in Education with Subsidies

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

Analyzing Negative Externalities and Corrective Tax

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

Antibiotic Overuse and External Costs: Addressing Resistance

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

Antitrust Policy and Market Efficiency in Monopolistic Competition

Discuss how market power in monopolistic competition can lead to inefficiency and how antitrust inte

Carbon Tax and Environmental Externalities

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

Comparing Per-Unit and Lump-Sum Taxes in Different Market Structures

This FRQ compares the effects of per-unit and lump-sum taxes on a firm operating in a monopolistic c

Congestion Externality in Urban Transportation

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

Correcting Negative Externalities in the Cigarette Market

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

Cost-Benefit Analysis in Regulatory Policy

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

Environmental Regulation and Firm Cost Structures

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

Evaluating Price Ceilings in the Rental Housing Market

Consider a rental housing market where the government imposes a price ceiling.

External Cost Assessment: Shifting Curves and Equilibrium

Assess the impact of a negative externality on market equilibrium and determine the corrective tax n

Externality from Pesticide Use in Agriculture

Farmers using pesticides may impose external costs on the environment, such as damage to neighboring

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 4: Market Inefficiency in Monopolistic Competition

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

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 15: Government Intervention to Address Pollution Externalities

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

FRQ 19: Government Subsidies and Public Goods Underinvestment

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

Government Intervention in a Monopolistic Market

A monopolistic firm is subject to government intervention in the form of a price ceiling. Analyze th

Graphical Analysis of Subsidies: Perfectly Competitive vs. Monopolistic Competition

Evaluate the impact of per-unit subsidies on market outcomes in both perfectly competitive and monop

Impact of a Price Ceiling on Market Efficiency

This FRQ examines how a price ceiling affects market equilibrium, consumer surplus, producer surplus

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

Long Run Effects of Government Subsidies on Market Structure

An industry receives government subsidies in the short run. Over time, these subsidies may alter mar

Market Dysfunction Due to Asymmetric Information: The 'Lemons' Problem

This FRQ examines how asymmetric information can lead to market failure, using the 'lemons' problem

Market Power and Antitrust Policies

Evaluate the role of market power in creating socially inefficient outcomes and analyze how antitrus

Market Power, Monopolies, and Antitrust Policy

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

Minimum Wage Effects: Labor Market Analysis

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

Positive Externalities and Subsidies Impact

Analyze how positive externalities lead to market underproduction and explain how government subsidi

Price Ceiling Effects in Monopolistic Competition

Investigate how a binding price ceiling might affect a firm operating under monopolistic competition

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

Regulating Natural Monopolies

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

Regulatory Measures and Pollution Spillovers

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

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

Understanding Public Goods and the Free Rider Problem

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