AP Microeconomics FRQ Room

Analyzing the Role of Positive and Normative Statements in Policy Debates

Evaluate how positive and normative statements influence policy debates and economic decision-making

Comparative Advantage and Trade

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

Comparative Advantage and Trade Decisions

Evaluate comparative advantage between two countries and discuss potential gains from trade based on

Complex Comparative Analysis: Positive vs. Normative and Ethical Considerations

Critically evaluate a policy proposal by distinguishing between positive and normative economic stat

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 Infrastructure Project

A city is considering investing in a new public transit system. The explicit cost of the project is

Economic Growth via the Production Possibilities Curve

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

Economic Models and Marginal Utility Functions

Evaluate the role of economic models in explaining consumer behavior, using a given marginal utility

Economic Systems: Market, Command, and Mixed Economies

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

Entrepreneurial Decision-Making: Factors of Production and Marginal Analysis

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

Evaluating Consumer and Producer Surplus

This question focuses on understanding and calculating consumer and producer surplus, and analyzing

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 Analysis

This question focuses on the factors of production and their impact on economic output and productiv

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 3: Cost-Benefit Analysis and Decision Making

This question evaluates your understanding of cost-benefit analysis and its importance for decision

FRQ 4: Comparative Advantage and Terms of Trade

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

FRQ 7: Comparing Microeconomics and Macroeconomics

This question compares the two primary branches of economics by examining their scope, focus, and re

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 12: Efficiency and Economic Growth via the PPC

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

Interpreting Costs in a Business Venture

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

Managerial Decision-Making and Opportunity Costs

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

Marginal Analysis and Diminishing Returns

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

Marginal Product and Diminishing Returns

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

Marginal Utility and Consumer Decision-Making

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

Market Externalities and Government Intervention

This question focuses on analyzing a market with a negative externality, calculating welfare losses,

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

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.

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve (PPC) Interpretation

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

Resource Allocation in a Mixed Economic System

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

Supply and Demand: Scarcity and Resource Allocation

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

Trade and Comparative Advantage in a Global Market

This question examines trade benefits driven by comparative advantage. Answer every part using the d

Comparative Analysis of Demand and Supply Elasticities

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

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 from Market Interventions

This question examines the concept of deadweight loss (DWL) due to market distortions. Answer the fo

Effects of Subsidies on Supply and Welfare

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

Elasticity of Demand Calculation

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

Elasticity of Supply and Total Revenue Impact

A firm observes that its quantity supplied changes as the market price shifts. Analyze how supply el

Environmental Impact in Car Manufacturing

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

Evaluating the Impact of Tariffs on Domestic Markets

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

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

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

FRQ 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 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 14: Long-Run Adjustments in Perfect Competition

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

FRQ 15: Effects of Changing Consumer Tastes on the Sneaker Market

A viral social media campaign has dramatically increased the popularity of a particular brand of sne

FRQ 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 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

Impact of a Price Ceiling during a Pandemic in the Fast Food Market

During a pandemic, a government imposes a price ceiling of $8 on fast food to protect consumers, low

Impact of a Price Floor on Market Outcomes

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

Impact of Price Ceilings on Markets

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

Impact of Technological Advancement on Supply

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

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

Income Effect on Demand for Normal and Inferior Goods

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

Income Elasticity and Good Classification

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

Industrial Pollution in the Chemical Market

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

International Trade: Tariffs and Quotas Impact

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

Manufacturing Emissions and Public Health

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

Market Analysis under a Price Ceiling in the Coffee Market

The government introduces a price ceiling of $2.50 on coffee, in a market with an original equilibri

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

Noise Pollution in the Outdoor Concert Market

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

Price Elasticity of Demand Analysis – Calculation and Interpretation

This FRQ assesses a firm's pricing strategy using elasticity measures. Answer the following parts us

Price Elasticity of Demand Calculations

This question requires you to calculate the price elasticity of demand using the midpoint formula, i

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

Price Elasticity vs. Income Elasticity Comparison

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

Short-run vs Long-run Supply Elasticity Analysis

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

Supply Shift: Impact of Technology on Production

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

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 Management in the Fast Food Industry

The fast food industry generates substantial waste, creating a negative externality for local commun

Accounting vs. Economic Profit Analysis

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

Air Travel and Noise Pollution

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

Automobile Emissions in Urban Areas

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

Break-even Analysis and Cost Function

Consider a firm with the cost function $$TC(Q) = 5*Q^2 + 100$$ and that sells its product at a price

Construction and Urban Dust Pollution

Construction activities in urban areas can cause dust pollution, which is a negative externality. An

Cost Curve Analysis and Graph Interpretation

A firm’s cost structure is illustrated in the graph provided. The graph displays the Marginal Cost (

Data Center Services and Energy Consumption Externality

Large data centers contribute to increased energy consumption, causing negative externalities that a

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

Fossil Fuel Energy Production and Pollution

Fossil fuel energy production has substantial negative externalities due to air pollution. Analyze t

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 Cost Analysis

Firm B operates in the short run and has a total cost function given by $$TC(Q) = 100 + 20*Q + 5*Q^2

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 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 6: Profit and Long-Run Equilibrium in Perfect Competition

In a perfectly competitive market, a firm has a total cost function given by $$TC(Q) = 100 + 5 * Q +

FRQ 6: Shutdown Analysis in Perfect Competition

A firm has fixed costs of $80 and a variable cost function given by $$VC(Q) = 4*Q + Q^2$$. The marke

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 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: Labor Productivity and Marginal Product Analysis

A technology firm employs software developers to fix bugs in its code. The following table shows the

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 13: Marginal Analysis and Profit Maximization

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

FRQ 17: Strategic Interactions Using a Payoff Matrix

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

Impact of Technological Change on Production and Costs

A firm adopts new technology that alters its production process. Below are two production tables: on

Long-Run Equilibrium and Normal Profit in Perfect Competition

Analyze how firms in a perfectly competitive market achieve long-run equilibrium with normal profit.

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 Marginal Product Relationship

A manufacturing firm has a marginal product of labor (MPL) given by the function $$MPL = 30 - 2*L$$

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

Marginal Product Calculation in Production

Compute the marginal product of labor (MPL) using the data provided and discuss the occurrence of di

Market Supply Determination from Firm‐Level Cost Functions

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

Multi-stage Production Decision Analysis

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

Multi-Stage Production Decision and Profit Maximization

A firm operates with a total cost function of $$TC(Q) = 5 + 10*Q + Q^2$$. Answer the following quest

Production Decisions Under Government Subsidies

A government subsidy of $$S = 2$$ per unit is provided to a firm whose original cost function is $$T

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 Types and Profit Maximization

A firm sells its product at $$50$$ per unit. In a given period, the firm incurs explicit costs of $$

Role of Implicit Costs in Economic Decision-Making

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

Short-Run 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 vs. Long-Run Strategic Decisions in Perfect Competition

A firm in a perfectly competitive market faces a short-run total cost function of $$TC = 200 + 10*Q

Telecommunications and Electromagnetic Pollution

The production of telecommunications equipment can generate electromagnetic pollution, a negative ex

Advertising and Strategic Interaction in Oligopoly

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

Analyzing Returns in Eco-Friendly Furniture

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

Assessing Cost Structures in Handmade Jewelry

A handmade jewelry business operates in an imperfectly competitive market. The firm has a fixed cost

Barriers to Entry and Market Structure Dynamics

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

Cartels and Collusive Behavior in Oligopoly

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

Comparative Efficiency in Monopolistic Competition vs. Monopoly

Compare the efficiency outcomes in a monopolistic competition market and a pure monopoly.

Cost Analysis in a Monopoly: Production Decisions Using MC and ATC

This question requires you to analyze a monopolist's cost structure, determine the profit-maximizing

Cost Analysis in Boutique Electronics

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

Cost and Revenue Analysis in Monopolistic Competition

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

Cost Curves and Inefficiencies in Imperfect Competition

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

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.

Environmental Tax in the Car Manufacturing Market

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

External Cost in the Pharmaceutical Market

A pharmaceutical company operating in an imperfectly competitive market generates negative externali

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 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 =

Game Theory and Collusion in an Oligopoly

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

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: Dominant Strategies and Nash Equilibrium

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

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 Tax in the Fitness Club Industry

The fitness club industry is experiencing rapid growth in a competitive market environment. The gove

Government Tax on Fast Food Items

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

Labor and Production at Gourmet Coffee

Gourmet Coffee operates in a market with imperfect competition. The business has a fixed cost of $15

Market Concentration and Collusion in Oligopolies

Market concentration in oligopolistic industries can lead to collusion. Analyze how high market conc

Market Structures and Innovation: Role of Economies of Scale

Analyze how economies of scale contribute to the formation of natural monopolies and discuss policy

Monopoly Profit Maximization and Deadweight Loss Analysis

In this question, you will analyze how a monopolist maximizes profit, the concepts of allocative and

Monopoly Regulation and Natural Monopoly Pricing

Consider a natural monopoly with high fixed costs that initially produces at the profit‐maximizing o

Natural Monopoly and Regulation

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

Natural Monopoly and Regulation

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

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

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 Strategies in Imperfectly Competitive Markets

This question focuses on price discrimination in monopoly settings. You will explain the differences

Production Analysis at Urban Prints

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

Short-run and Long-run Outcomes in Monopolistic Competition

A firm operating in a monopolistically competitive industry experiences short-run profits due to a d

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

Strategic Pricing in Price Discrimination Scenarios

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

Tax Effects in a Regional Housing Market

In a regional housing market characterized by elements of imperfect competition, the government impo

Tax Impact on Eco-Friendly Products Market

In the market for eco-friendly products, growing environmental concerns have prompted the government

Taxation and Innovation in Telecommunications

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

Taxation and Network Effects in the Video Game Consoles Market

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

The Role of Advertising in Monopolistic Competition

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

Adjustment in Factor Demand Due to a Product Demand Shock

A firm experiences a downward shock in product demand causing the product price to fall from $30 to

Air Pollution from Cement Production

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

Analysis of Monopsony: Wage Determination and Employment

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

Basic Factor Market Hiring Decision: MRP and Wage Comparison

A firm in a perfectly competitive labor market is evaluating its hiring decision. The marginal produ

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 of Perfect Competition and Monopsony in Labor Markets

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

Comparing Subsidies and Price Controls in Labor Markets

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

Cost Minimization and Factor Substitution in Production

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

Cost Minimization and the Least Cost Rule

A firm aims to minimize production costs while maintaining its output level by choosing the optimal

Derived Demand and Labor Hiring Decision in Perfect Competition

A firm, Timber Furniture Company, produces handcrafted furniture using labor as a key input. The mar

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 Calculation

A firm's marginal product of labor (MPL) is given by $$MPL(Q) = 100 - 2*Q$$ and its product sells at

Derived Demand for Labor: Analyzing MRP and Optimal Hiring

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

Derived Demand Impact from Product Market Conditions

A decline in product market prices can negatively affect the derived demand for labor. Suppose initi

Economies of Scale and Factor Demand

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

Effects of Changing Factor Prices on Cost Structure

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

Effects of Universal Basic Income on Labor Supply

A government introduces a universal basic income (UBI), which provides a fixed income to all citizen

Elasticity of Labor Supply

Using data provided on wage rates and labor supply, calculate the elasticity of labor supply and int

Enhanced Productivity Through Training

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

Evaluating Factor Markets Under Uncertainty

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

Evaluating Wage Differentiation in Skilled vs. Unskilled Labor Markets

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

Factor Market Dynamics in an Economic Downturn

Analyze how an economic downturn impacts factor markets, focusing on shifts in demand for labor and

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

Firm Size, Economies of Scale, and Factor Demand

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

Government Intervention in Factor Markets

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

Government Intervention in Labor Markets

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

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

Graphing the Effect of a Per-Worker Subsidy in the Labor Market

To promote employment, the government provides a per-worker subsidy of $5 to firms. Evaluate the imp

Impact of a Minimum Wage on the Labor Market: Price Floor Analysis

In a competitive labor market with an initial equilibrium wage of $15 and employment of 100 workers,

Impact of a Wage Subsidy on Factor Market Outcomes

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

Impact of Government Subsidy on Labor Market Dynamics

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

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 Trade Liberalization on the Derived Demand for Labor in Local Manufacturing

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

International Trade and Factor Demand

A firm that primarily served the domestic market begins exporting, increasing the overall demand for

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 Supply and Demand in Competitive Markets

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

Labour Supply Elasticity and Worker Response Analysis

Consider the following labor market data: | Wage ($) | Labor Supplied (workers) | |----------|------

Least Cost Input Mix Determination

A firm uses labor and capital to produce output with marginal products given by $$MPL = 40 - 2*L$$ a

Marginal Analysis and Short-run Hiring Decisions

A firm faces diminishing marginal returns with a marginal product of labor described by $$MPL(L) = 2

Marginal Factor Cost Determination in a Monopsony

A monopsonistic firm has a labor supply function given by $$w = 5 + 0.4*L$$. The firm must determine

Marginal Revenue Product Calculation

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

MC, ATC, and MR in Factor Markets

Consider a firm operating in a perfectly competitive labor market. The firm’s cost structure is repr

Minimum Wage Effects in Competitive and Monopsonistic Markets

Analyze the effects of imposing a binding minimum wage on employment in both competitive and monopso

Negative Externalities in Tech Manufacturing

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

Optimal Factor Combination under Budget Constraints

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

Overextraction of Water Resources for Agriculture

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

Profit Maximization under Technological Change

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

Returns to Scale and Labor Demand

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

Short-run vs. Long-run Factor Market Decisions

Analyze the differences between a firm's short-run and long-run cost structures and factor market de

Technological Change and Factor Demand

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

Understanding Factor Markets and Derived Demand

Define 'Factor Markets' and 'Derived Demand'. (a) Provide concise definitions for each term. (b) Ill

Allocative Efficiency and Deadweight Loss

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

Allocative Efficiency and Market Outcomes in a Competitive Market

Consider a market for Good X operating under perfect competition. Allocative efficiency is achieved

Analyzing Price Floors and Agricultural Surplus

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

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

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

Carbon Tax and Environmental Externalities

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

Comparing Price Control and Subsidy Interventions in the Coffee Market

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

Comparing Private and Social Costs in Externalities

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

Computing and Interpreting the Gini Coefficient

Discuss the Gini coefficient as a measure of income inequality. Explain how it is computed and inter

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

Dynamic Analysis of Externality Correction over Time

Over time, technological innovations can reduce the external cost associated with a negative externa

Economic Efficiency vs. Equity: Trade-Offs in Progressive Taxation

Progressive taxation is used to redistribute income and address inequality, but it may also lead to

Effects of Subsidies on Monopolistic Competition

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

Environmental Regulations and Emission Standards

Examine how environmental regulations can be used to correct market failures due to negative externa

Evaluating Non-Price Regulation: Impact on Market Outcomes

This FRQ evaluates the effect of non-price government regulations on market outcomes. A case study d

Evaluating Public Goods Provision: Efficiency and Government Intervention

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

Evaluating Regulation’s Impact on Market Structure

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

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 2: Evaluating Government Intervention for a Negative Externality

Examine a market for Widgets that exhibits a negative externality. In this scenario, the marginal pr

FRQ 4: Market Inefficiency in Monopolistic Competition

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

FRQ 17: Anti-Trust Policies and Market Efficiency

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

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

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

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

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, Monopolies, and Antitrust Policy

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

Minimum Wage Policy and Labor Market Equilibrium

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

Negative Externalities and Optimal Taxation

Explain how a negative externality can lead to market inefficiency and welfare loss. Analyze how a p

Negative Externality in Industrial Factory Emissions

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

Per Unit Tax in Perfect Competition vs. Monopolistic Market

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

Positive Externality in Renewable Energy Investment

Investment in renewable energy not only reduces fossil fuel use but also provides broad environmenta

Price Ceiling Impact on a Competitive Market

Consider a perfectly competitive market where the supply function is given by $$P = 25 + Q$$ and the

Promoting Positive Externalities with Subsidies

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

Public Goods and the Free-Rider Problem in National Defense

Public goods like national defense are often underprovided in free markets due to the free‐rider pro

Public 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

Social Efficiency and Market Outcomes Analysis

Analyze the concept of social efficiency in market outcomes from a perfectly competitive market pers

Social Efficiency in Labor Markets

Analyze the concept of social efficiency in the labor market by discussing how the equilibrium wage

Subsidies and Cost Structure in Perfect Competition

Consider a perfectly competitive firm with a total cost function: $$TC(Q) = 50 + 10*Q + 2*Q^2$$. The

Subsidizing Renewable Energy: Impact on Market Equilibrium

Focus on the renewable energy market, where demand is given by $$P = 150 - 2*Q$$ and supply is given

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

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

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