AP Microeconomics FRQ Room

Analysis of Implicit vs. Explicit Costs in Business Decisions

Discuss the differences between implicit and explicit costs in a business context and how they facto

Analyzing Shifts in Supply and Demand

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

Comparative Advantage and Trade Benefits

This question examines the concepts of absolute advantage and comparative advantage and their role i

Consumer Choice Under Budget Constraints

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

Cost-Benefit Analysis of a Public Policy Initiative

Perform a cost-benefit analysis for a proposed public infrastructure project, identifying explicit a

Economic Growth via Technological Advancement

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

Evaluating the Impact of Governmental Subsidies

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

Evaluating Trade-Offs in Personal Decision Making

Examine how individuals face trade-offs and opportunity costs when making personal decisions, such a

Factors of Production and Economic Growth

This question explores the four factors of production and how changes in these factors can influence

FRQ 1: Scarcity and Opportunity Cost

This question examines the fundamental economic concepts of scarcity and opportunity cost, and asks

FRQ 5: Factors of Production – Analysis of Resource Allocation

This question addresses the four factors of production and the role they play in resource allocation

FRQ 8: Opportunity Costs in Decision Making

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

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

FRQ 11: Profit Maximization in Competitive Markets

This question involves applying the principles of profit maximization in a perfectly competitive mar

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 16: Optimal Consumption and Marginal Utility Analysis

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

FRQ 18: Technological Change and Shifts in the PPC

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

FRQ 19: Trade-offs Between Consumer Goods and Capital Goods

This question examines the trade-offs an economy faces when deciding between the production of consu

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

Implicit vs. Explicit Costs in Business Decision-Making

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

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 Consumer Choice

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

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

Market Equilibrium and the Impact of Taxes

This question examines market equilibrium and the effects of a per-unit tax on Good X. Answer all pa

Micro vs. Macroeconomics Perspectives

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

Microeconomics vs. Macroeconomics Decision-Making

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

Opportunity Cost in Education vs. Work Decisions

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

Opportunity Costs and Trade-offs in Consumer Choices

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

Optimal Consumption Rule and Budget Allocation

Analyze consumer choice by applying the optimal consumption rule to determine efficient budget alloc

Positive vs. Normative Economics

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

Positive vs. Normative Economics Analysis

Analyze the difference between positive and normative economics and evaluate their roles in economic

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 explain how it represents opportunity costs in

Production Possibilities Curve (PPC) and Economic Growth

This question focuses on the Production Possibilities Curve (PPC) as a tool to illustrate trade-offs

Production Possibilities Curve (PPC) Interpretation

Analyze a production possibilities curve (PPC) to demonstrate understanding of efficient resource al

Specialization, Comparative Advantage and Terms of Trade

This question analyzes the benefits of specialization along with the concepts of comparative advanta

Supply and Demand: Scarcity and Resource Allocation

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

Technological Advancements and Economic Growth Analysis

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

The Role of Implicit and Explicit Costs

This question explores the distinctions between implicit and explicit costs, and how these costs inf

Trade-Offs and Opportunity Cost in Production Decisions

Discuss how production decisions involve trade-offs and the calculation of opportunity costs.

Trade-offs Between Productive Efficiency and Allocative Efficiency

Evaluate how trade-offs between productive and allocative efficiencies can influence economic policy

Trade-offs in Government Policy Decision

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

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 Taxation and Elasticity in Market Outcomes

Assess the incidence of a per-unit tax in a market with elastic demand and inelastic supply.

Basic Demand Analysis

This question examines the law of demand and the factors that cause the demand curve to slope downwa

Basic Demand Analysis and Shifts

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

Changes in Consumer Preferences and Market Equilibrium

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

Cross Price Elasticity and Market Competition

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

Effects of a Price Ceiling in the Essential Medicines Market

To ensure affordability of essential medicines, the government imposes a price ceiling at $35 in a m

Effects of Subsidies on Supply and Welfare

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

Emission Costs in Brewery Operations

A brewery’s production process emits volatile organic compounds, leading to an environmental externa

Evaluating the Impact of Tariffs on Domestic Markets

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

FRQ 5: Consumer and Producer Surplus Calculation

Consider a market where the demand function is $$D: P = 200 - 2*Q$$ and the supply function is $$S:

FRQ 8: Analyzing Simultaneous Shifts in Demand and Supply

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

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 15: Short-Run vs Long-Run Supply Elasticities

Consider a market where the production of a commodity is difficult to adjust in the short-run but ea

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 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 20: Impact of Advertising on Market Equilibrium and Surpluses

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

Government Intervention: Price Ceilings and Their Consequences

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

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

Implications of a Price Floor in the Electronic Goods Market

In the market for electronic goods, equilibrium occurs at $350 for 2,000 units. A price floor is set

International Trade Impact: Tariffs and Market Outcomes

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

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 Disequilibrium and Adjustment Mechanisms

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

Market Disequilibrium: Analyzing Shortages and Surpluses

Discuss market disequilibrium by analyzing shortages and surpluses. Answer the following parts.

Market Effects of Advertising

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

Price Elasticity of Supply and Its Implications

This question explores the concept of price elasticity of supply. You are asked to calculate it usin

Price Elasticity of Supply: Practical Applications

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

Supply Analysis and Market Response

This question examines the basic concept of supply, the effects of technological change on productio

Supply Elasticity and Producer Behavior

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

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

Wastewater Contamination in Textile Production

Textile manufacturing can generate wastewater that contaminates local water bodies. In this market,

Accounting vs. Economic Profit Analysis

A restaurant owner operates in a competitive market and, over a month, earns a total revenue of $200

Adjustment to Increased Capital Rental Rate

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

Analysis of Long-Run Production Costs

Discuss the long-run production cost structure of a firm, focusing on the concepts of economies of s

Analyzing MC and AVC: A Graphical Perspective

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

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

Calculating the Shutdown Point

Determine the shutdown point for a firm based on its variable cost structure using mathematical anal

Cost Functions and Marginal Cost Curve Calculation

A firm’s total cost function is given by $$TC(Q) = 5*Q + 3*Q^2 + 40$$. Analyze the cost structure ba

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

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

Economies and Diseconomies of Scale Analysis

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

Fast Fashion and Environmental Degradation

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

Fixed and Variable Input Decisions in the Short Run

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

FRQ 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 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 4: Profit Maximization: Equating Marginal Revenue and Marginal Cost

A firm operates in a market where it is a price taker. The firm’s marginal cost (MC) function is giv

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 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 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 13: Short-Run Shutdown Analysis

A firm's decision in the short run depends on its ability to cover variable costs. Part A: Define t

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 15: Market Adjustments in Perfect Competition

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

FRQ 19: Graph Interpretation: Perfect Competition Market Graph

The attached graph illustrates the market for a product in a perfectly competitive industry. Answer

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: 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

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

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_

Input Price Changes and Cost Curvature

Analyze the impact of an increase in input prices on a firm's cost curves.

Labor Input and Production Function Analysis

A firm’s production function is given by $$Q = 10*(L)^{0.5}*K^{0.5}$$. In the short run, capital (K)

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:

Market Supply Determination from Firm‐Level Cost Functions

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

Mining and Environmental Degradation

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

Multi-stage Production Decision Analysis

A firm operates with capital fixed in the short run and uses labor as a variable input. The followin

Paper Production and Deforestation Externalities

Paper production can contribute to deforestation, an externality that is not reflected in the firm’s

Perfect Competition Market Graph Analysis

In a perfectly competitive market, many small firms operate as price takers. Answer the following pa

Production Efficiency and Factor Inputs

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

Production Function Analysis and Diminishing Marginal Returns

A firm uses labor as its only variable input. The table below shows the firm’s labor input (L) and t

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

Short-run Shutdown Decision Analysis

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

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

Technological Improvement and Production Efficiency

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

Trade‐Offs Between Fixed and Variable Inputs

A firm that has been operating in the short run (with at least one fixed input) decides to shift to

Widget Manufacturing and Air Pollution

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

Analyzing Efficiency Costs of Monopoly Market Power

Market power in a monopoly often leads to efficiency losses. Evaluate these losses by analyzing allo

Barriers to Entry and Market Outcomes

Analyze the impact of barriers to entry on market structure and firm behavior in imperfectly competi

Barriers to Entry in Various Market Structures

The degree of barriers to entry distinguishes market structures. Using the table provided, answer th

Calculating Output in a Price-Discriminating Monopoly

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

Collusion and Cartel Behavior in Oligopolies

Examine the reasons behind cartel formation and the challenges such groups face in maintaining collu

Collusion and Cartel Formation in Oligopolistic Markets

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

Comparative Analysis of Allocative Efficiency in Market Structures

Allocative efficiency occurs when price equals marginal cost. Compare how perfectly competitive, mon

Comparative Analysis: Price Makers and Price Takers

Compare the roles and outcomes of price makers versus price takers in different market structures.

Cost and Revenue Analysis in Monopolistic Competition

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

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.

Effect of Input Cost Changes on Production in a Monopoly

This question explores how an increase in input costs affects a monopolist's marginal cost (MC) curv

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 2: Price Discrimination in a Monopoly

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

FRQ 8: Regulatory Intervention in Monopolies

A monopolist operates in a market where the demand function is given by $$P = 150 - Q$$ and the marg

FRQ 17: Sustainability of Collusion in Oligopolies

Firms in an oligopoly may attempt to collude to maximize joint profits. However, sustaining collusio

Game Theory and Collusion in an Oligopoly

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

Game Theory in Oligopoly: Dominant Strategy and Nash Equilibrium

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

Government Intervention in Natural Monopolies

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

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

Impacts of Price Wars in Oligopolistic Markets

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

Legal and Economic Barriers to Market Entry

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

Marginal Analysis at Deli Delights

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

Market Externality in the Agricultural Sector

A large agricultural firm uses heavy fertilizer application that results in runoff, causing water po

Market Structure and Innovation: Trade-offs in Product Variety

Different market structures influence the incentives for innovation and product diversity. Analyze t

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

Examine the characteristics of a natural monopoly and the regulatory measures used to address its in

Natural Monopoly: Pricing and Regulation

Analyze the formation and pricing behavior of natural monopolies and the effect of government regula

Negative Externality in the Soft Drink Market

A soft drink manufacturer in a monopolistically competitive market generates a negative externality

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 Competition with a Negative Externality

A firm in a monopolistically competitive market practices price discrimination while generating a mi

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.

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

Shutdown Decisions in Imperfectly Competitive Firms

This question examines the concept of the shutdown point in the short run, using cost data to determ

Strategic Interaction in Oligopoly

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

The Role of Advertising in Monopolistic Competition

Discuss the influence of advertising on market demand and firm profitability in monopolistic competi

Third-Degree Price Discrimination and Welfare Effects

A monopolist can practice third-degree price discrimination by segmenting the market into two groups

Welfare Analysis in Imperfectly Competitive Markets

Analyze the welfare implications of market power in imperfectly competitive markets, with a focus on

Analysis of Monopsony: Wage Determination and Employment

In a monopsonistic labor market, a single employer has the power to set wages. Consider the followin

Analyzing a Minimum Wage Impact in a Competitive Labor Market

Consider a competitive labor market for retail workers where the equilibrium wage is $10 per hour. T

Analyzing Diminishing Marginal Returns and Factor Demand

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

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

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

Calculation of Marginal Revenue Product and Marginal Factor Cost

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

Comparative Statics: Impact of Training Subsidies on Labor Demand

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

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 for Labor

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

Determinants of Labor Supply

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

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

Dynamic Factor Demand under Seasonal Demand Shifts

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

Economies of Scale and Cost Analysis

Evaluate whether a firm is experiencing economies of scale by analyzing its cost data.

Economies of Scale and Factor Demand

This question explores how economies of scale, which reduce average production costs as output incre

Effects of Demographic Changes on Labor Supply

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

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

Evaluating Factor Markets Under Uncertainty

This question examines how uncertainty regarding future product demand affects a firm's hiring decis

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

Factor Market Equilibrium under a Binding Wage Subsidy

This question examines the impact of a government wage subsidy on the equilibrium in the labor marke

Factor Supply: Impact on Wage Equilibrium

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

Factors Affecting Labor Supply and Demand

List and describe three determinants of labor demand and three determinants of labor supply. (a) For

Government Intervention and Factor Market Outcomes

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

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 Immigration on Domestic Labor Supply

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

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 Minimum Wage on Factor Markets

In a competitive labor market, assume the initial equilibrium is at a wage of $12 with 200 workers e

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

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

Influence of Immigration on the Factor Market

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

Input Substitution Under Changing Relative Factor Prices

This question examines how changes in relative prices affect the firm's input mix for cost minimizat

Interpreting Factor Demand Shifts Due to Product Price Changes

A firm experiences a decline in the market price of its final product from $50 to $40 while the marg

Introduction to Factor Markets: Basics and Equilibrium

Discuss and illustrate key concepts in factor markets including factor markets themselves, derived d

Least Cost Input Combination

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

Long-Run Adjustments in Competitive Factor Markets

This question requires analysis of the adjustments in a perfectly competitive factor market as new f

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

Monopsonistic Labor Market Analysis

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

Monopsony vs Competitive Market Wage Differentiation

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

Multi-Factor Market Payoff and Equilibrium Analysis

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

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

Negative Externality in Oil Refining

An oil refinery produces oil but its refining process emits pollutants that impose additional costs

Negative Externality in Retail Sector

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

Profit Maximization in Multi-Factor Production

A smartphone manufacturing company has the production function $$Q = L^{0.5} * K^{0.5}$$. The sellin

Regression Analysis of Labor Demand

This question analyzes the quantitative relationship between labor demand and wage rates using regre

Technological Change and Factor Market Adjustments

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

Technological Change and Its Impact on Factor Demand

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

Allocative Efficiency and Deadweight Loss

Using a market for Good X, analyze the conditions for social efficiency and identify any inefficienc

Analyzing Deadweight Loss in Imperfect Markets

Deadweight loss (DWL) measures the inefficiency created by market distortions. Analyze how DWL arise

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

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

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

Correcting Negative Externalities in the Cigarette Market

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

Correcting Negative Externalities Through Taxation

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

Correcting Negative Externalities with a Per-Unit Tax

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

Evaluating Deadweight Loss and Tax Incidence

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

Evaluating Wage Subsidies versus Minimum Wages

Consider two policies aimed at improving labor market outcomes: a minimum wage and a wage subsidy. A

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 5: Comparison of Per Unit Tax and Lump Sum Tax

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

FRQ 8: Government Regulation and Non-Price Interventions

Discuss how non-price regulations, such as environmental or safety standards, can be used by the gov

FRQ 10: Government Intervention in Public Goods Markets

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

FRQ 11: Comparing Taxation and Subsidies for Negative Externalities

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

FRQ 17: Anti-Trust Policies and Market Efficiency

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

Government Intervention and Market Power: Effects on Consumer Choice

A dominant firm in an imperfectly competitive market is charging high prices, reducing consumer choi

Government Regulation in Response to Negative Externalities: Pollution Control

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

Graphical Analysis of Social Welfare in a Competitive Market with External Costs

This FRQ requires analysis of social welfare in a competitive market where a negative externality ca

Incorporating External Costs in Private Markets

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

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 from Asymmetric Information

Asymmetric information can lead to market failure in various industries. Answer the following:

Minimum Wage Laws in Monopsonistic Labor Markets

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

Negative Externalities and Tax Policy

This FRQ analyzes the inefficient market outcome caused by a negative externality and evaluates how

Negative Externality in Industrial Factory Emissions

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

Price Floors and Their Effects on Surpluses

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

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

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 Structures and Income Inequality

Compare how different tax structures (progressive, proportional, and regressive) impact income distr

The Impact of Minimum Wage Laws on Employment and Inequality

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

Urban Air Pollution and Market Failure

Urban air pollution is a significant negative externality resulting from high levels of industrial a