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 Decision

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

Comprehensive Guide to Basic Economic Concepts

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

Consumer Choice Under Budget Constraints

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

Cost-Benefit Analysis

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

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 Initiative

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

Economic Growth and Efficiency

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

Economic Systems and Resource Allocation

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

Economic Systems and Resource Allocation

This question asks you to compare different economic systems and analyze how each allocates resource

Evaluating Government Price Controls in Housing Markets

A city implements a rent control policy that sets the maximum monthly rent for apartments at $$1,000

Factors of Production Analysis

Examine the role of the four factors of production in an economy. Discuss how each factor contribute

Factors of Production and Economic Efficiency

Discuss the role and interaction of the factors of production. Analyze how each factor contributes t

Factors of Production and Economic Growth

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

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 13: Market Failures – Externalities and Public Goods

This question explores market failures by examining negative externalities and the provision of publ

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.

Labor vs. Capital: Analyzing Factors of Production

Evaluate the efficiency of resource allocation by comparing the use of labor and capital in producti

Marginal Analysis and Consumer Choice

This question tests your understanding of marginal utility and the principle of diminishing marginal

Marginal Analysis in Consumer Choice

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

Marginal Analysis in Consumer Choice

Discuss the role of marginal analysis in consumer decision-making, focusing on the concept of dimini

Marginal Analysis in Production Decisions

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

Microeconomics vs. Macroeconomics

This question requires you to differentiate between microeconomics and macroeconomics, and to provid

Normative vs. Positive Economic Statements

This question examines the distinction between normative and positive economic analysis. (a) Explai

Opportunity Cost and Trade-offs in Policy Decisions

This question investigates the concepts of opportunity cost and trade-offs in government policy deci

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 Rule and Budget Allocation

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

Production Function and Cost Measures

This question tests your ability to interpret a production function and calculate various cost measu

Production Possibilities Curve (PPC) and Economic Growth

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

Resource Scarcity and Market Outcomes

A key input in electronics manufacturing, such as rare earth metals, experiences global scarcity due

Scarcity and Decision Making

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

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

Time Allocation and Opportunity Costs

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

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.

Trade-offs in Resource Allocation Decisions

A small business owner must decide between investing in new technology, expected to increase product

Analyzing Shifters of Supply: Resource Costs and Technology

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

Basic Demand Analysis

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

Calculating Deadweight Loss from Taxation

Analyze the inefficiency created by a per-unit tax in a market by calculating the deadweight loss.

Comparative Analysis of Demand and Supply Elasticities

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

Consumer and Producer Surplus Analysis with Demand and Supply Shifts

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

Deadweight Loss in a Quota-Constrained Market

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

Double Shifts in Supply and Demand

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

Double Shifts in Supply and Demand

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

Effect of a Price Ceiling and Import Quota

Discuss the outcomes of government intervention in the housing market through a price ceiling and an

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 a Price Ceiling in the Gasoline Market

In an effort to make gasoline more affordable, a government imposes a price ceiling at $2.80 per gal

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

Elasticity of Supply Calculation

This question requires you to calculate the price elasticity of supply and discuss the factors influ

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 2: Supply Analysis and Shifts in the Smartphone Market

Consider the following supply schedule for smartphones. Answer the following parts: (a) Plot the sup

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 8: Impact of Technological Innovation on Supply and Market Equilibrium

A firm operating in a competitive market experiences a technological breakthrough that reduces its p

FRQ 12: Double Shift Scenario in a Market

Suppose a new health study increases the demand for a nutritious beverage, shifting the demand curve

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: Impact of External Shocks on the Oil Market

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

FRQ 17: Graphical Interpretation of Market Equilibrium Changes in a New Product Market

A new product enters the market with the following demand and supply functions: $$D_0: P = 200 - 0.5

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 20: Integrated Analysis in the Electric Vehicle Market

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

Impact of 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 Government-Imposed Price Ceiling in the Residential Rental Market

A government has imposed a price ceiling in the residential rental market aimed to keep rents afford

Impact of Price Floors on Markets

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

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

Income Elasticity and Good Classification

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

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 Equilibrium and Surplus

Consider the market for good X described by the equations: $$Q_d = 100 - 2*P$$ and $$Q_s = 20 + 3*P$

Market Equilibrium, Consumer and Producer Surplus

Analyze market equilibrium and welfare analysis in a widget market.

Market Impact of Rent Controls on Housing

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

Minimum Wage as a Price Floor in the Labor Market

The government sets a minimum wage above the current equilibrium wage in the labor market. Analyze t

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

Short-run vs Long-run Supply Elasticity Analysis

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

Supply Analysis and Shifters

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

Supply Shocks: Effects of a Technological Improvement

A technological advancement reduces production costs in an industry. The initial supply and demand c

Taxation Impact on Market Equilibrium

This question examines the impact of an excise tax on market equilibrium. Answer the following: (a)

Technological Improvements and the Supply Curve

Assess how improvements in technology affect the supply curve in a competitive market.

Traffic Congestion in the Ride-Sharing Market

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

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

Water Contamination from Agricultural Pesticide Use

Excessive use of pesticides in agriculture can contaminate water supplies, imposing a negative exter

Accounting vs. Economic Profit Analysis

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

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 Break‐Even and Shutdown Points

Define and contrast the break‐even point and the shutdown point for a firm in a competitive market.

Analyzing the Production Function and Marginal Returns

A firm produces widgets using labor as its only variable input. The table below shows the labor inpu

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

Calculating the Shutdown Point

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

Comprehensive Perfect Competition Market Analysis

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

Cost Functions and Marginal Analysis and Optimal Production in Perfect Competition

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

Cost 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 Minimization in the Long Run

Firms aim to minimize costs in the long run by choosing the optimal scale of production. (a) Define

Data Center Services and Energy Consumption Externality

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

Derivation of Cost Functions

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

Economic and Accounting Profit Calculation

A firm has the following financial data for a given period as shown in the table below. Use this dat

Economic vs. Accounting Profit with Implicit Costs

A firm reports revenue of $$1200$$, explicit costs of $$900$$, and incurs an implicit cost of $$200$

Effect of a Per-Unit Subsidy on Production and Deadweight Loss

A government introduces a per-unit subsidy of $3 for a firm operating in a competitive market. The f

Fishing Industry and Overfishing Externalities

The fishing industry often suffers from overfishing, which can be viewed as a negative externality a

FRQ 1: Production Function and Diminishing Marginal Returns Analysis

A company uses labor as its only variable input in the production process. The table below shows the

FRQ 2: Short-Run Production Cost Analysis

A firm operates in the short run with a fixed cost (FC) of $200. Its variable cost (VC) function is

FRQ 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 14: Impact of Price Controls on Competitive Firms

Government-imposed price controls can affect both consumer and producer surplus in a market. Part A

FRQ 15: The Role of Implicit Costs in Decision-Making

Firms must consider both explicit and implicit costs when evaluating profitability. Part A: Define

FRQ 18: Analyzing Returns to Scale

Understanding returns to scale is essential in analyzing long-run production. Part A: Differentiate

FRQ 19: Impact of Increased Wage on Production and Costs

A fast-food chain originally had a variable cost function of $$VC(Q) = 2 * Q + 0.1 * Q^2$$. Due to a

FRQ 19: Profit Analysis with Changing Market Prices

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

Government Intervention: Per‐Unit Tax and Deadweight Loss

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

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

Integration of Production Decisions and Market Outcomes

A firm operating in a perfectly competitive market has a production function given by $$Q = L^{0.5}$

Labor Productivity and Optimal Hiring Decisions

A firm records the following production data for varying levels of labor input. Use this data to ana

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 Market Exit Decision

In a perfectly competitive market, a firm has an average total cost (ATC) of $$40$$ per unit while t

Long‐Run Cost Behavior and Economies of Scale

In the long run, all inputs are variable. Firms experience different cost behaviors as output increa

Managerial Decision-Making: Cost Minimization

Analyze how managerial decisions in the short run lead to cost minimization when some inputs are fix

Marginal Analysis and Optimal Output

A competitive firm faces a market price of $15 per unit. Its total cost function is given by $$TC(Q)

Marginal Cost and ATC Intersection Analysis

Explain why the marginal cost (MC) curve must intersect the average total cost (ATC) curve at its mi

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, 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:

Paper Production and Deforestation Externalities

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

Production Function Analysis

This question examines the production function and marginal product concepts. Consider the table pro

Profit Maximization in Perfect Competition

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

Short-Run Production Cost Analysis

Consider a firm operating in the short-run with cost data as shown. The fixed cost (FC) is constant

Short-Run Production Cost Analysis: Bakery Cost Curves

A small bakery has fixed costs of $$FC = 50$$ and hires workers at a wage rate of $$w = 15$$ per wor

Water Consumption and River Pollution

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

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 Dynamics in Imperfect Competition

Discuss the role of barriers to entry in imperfectly competitive markets and analyze their impact on

Calculating Price Elasticity in a Monopoly

Determine the price elasticity of demand for a monopolist and discuss its implications for pricing d

Comparative Analysis of Allocative Efficiency in Market Structures

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

Comparative Efficiency in Monopolistic Competition vs. Monopoly

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

Cost Analysis in Boutique Electronics

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

Cost Curves and Inefficiencies in Imperfect Competition

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

Cost Evaluation for Craft Clothing Co.

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

Cross-Price Elasticity in Imperfect Competition

This question focuses on the concept of cross-price elasticity and its implications for related good

Effects of Tax in the Fashion Apparel Market

The fashion apparel market, characterized by product differentiation and imperfect competition, face

Environmental Externality in Energy Production

An energy firm in an imperfectly competitive market generates negative externalities through polluti

FRQ 5: Advertising Effects on Demand Elasticity in Monopolistic Competition

A monopolistically competitive firm launches an advertising campaign aimed at reducing the price ela

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 14: Price Elasticity Analysis in Differentiated Markets

A firm operating in a monopolistically competitive market notices changes in consumer responsiveness

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

Government Intervention in Monopoly Markets

Analyze the effects of government-imposed price controls on monopolistic markets.

Government Regulation of a Natural Monopoly

A natural monopoly is subject to government regulation that forces it to set price equal to its aver

Government Regulation of a Natural Monopoly Market

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

Impact of Advertising on Demand Elasticity in Monopolistic Competition

Firms in monopolistic competition often use advertising to differentiate their products and decrease

Impact of Price Discrimination under Per‐Unit Tax

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

Labor and Production at Gourmet Coffee

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

Long-Run Adjustments in Monopolistic Competition

In monopolistic competition, firms initially earn economic profits but eventually, market entry erod

Long-run Equilibrium in Monopolistic Competition

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

Market Structures and Innovation: Role of Economies of Scale

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

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

Oligopoly and Strategic Pricing

Examine the strategic pricing decisions in an oligopoly, taking into account interdependent firm beh

Price Discrimination Analysis

Analyze the concept of price discrimination and its impact on market outcomes.

Price Discrimination: Data Analysis and Calculations

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

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

Strategic Interaction in Oligopoly

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

Technological Change and Market Structure in Imperfect Competition

Analyze the impact of technological advancements on the cost structure and entry dynamics in imperfe

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

Adjustments to Rising Labor Costs: Firm's Response

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

Analysis of Per-Unit Tax in a Competitive Labor Market

Consider a competitive market for labor in which firms hire workers where the marginal revenue produ

Analyzing Derived Demand for Labor in a Competitive Market

A firm hires workers in a perfectly competitive labor market. Derived from the demand for its final

Analyzing Diminishing Marginal Returns and Factor Demand

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

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

Capital-Labor Substitution and the Least Cost Rule

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

Capital-Labor Substitution in Response to Rising Wages

This question examines how a firm adjusts its mix of capital and labor inputs when faced with an inc

Changes in Factor Demand and Supply

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

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 Statics: Factor Price Increases and Labor Demand

Assume that a firm's demand for labor is derived from its product market. Analyze how an increase in

Comparing 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 Analysis and Factor Input Decisions

A firm produces output using the production function $$Q = L^{0.5} * K^{0.5}$$, where L is labor and

Cost Minimization and the Least Cost Rule

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

Deriving Marginal Revenue Product from a Production Function

A firm’s production function is given by $$Q = L^{0.5} * K^{0.5}$$. With capital fixed at K = 100 an

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 Demand and Supply Shifts

A new government policy increases the minimum wage, while at the same time an innovation boosts work

Factor Markets Under Imperfect Competition: Monopsony Case Study

Examine a monopsonistic labor market and derive the equilibrium conditions. Compare your findings wi

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: Minimum Wage in the Labor Market

Suppose the government imposes a binding minimum wage in a competitive labor market that is above th

Impact of Derived Demand Shock from Increased Product Price

A smartphone manufacturer experiences an increase in the final product price from $$P = 400$$ to $$P

Impact of Immigration on Domestic Labor Supply

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

Impact of Increased Productivity on Labor Demand

A technological breakthrough increases worker productivity in an industry. Analyze the effect of thi

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 in a Monopsonistic Labor Market

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

Impact of Minimum Wage on Competitive Factor Markets

Government intervention in factor markets, such as setting a minimum wage, can alter market outcomes

Industrial Overheating: Factory Emissions

A factory’s inefficient cooling process results in overheated emissions that degrade air quality in

Industrial Production and Environmental Costs

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

Influence of Immigration on the Factor Market

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

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

Labor Demand Response

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

Least Cost Input Combination and the Least Cost Rule

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

Least Cost Input Combination Problem

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

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 Factor Cost and Hiring Decisions in Monopsony

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

Market Failure and Underemployment in Factor Markets

This question explores the concept of market failure in factor markets, using the example of underem

Monopsonistic Labor Market Analysis

Consider a monopsonistic firm operating in the labor market. The table below shows data on the numbe

Negative Externality in Automobile Manufacturing

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

Optimal Factor Combination under Budget Constraints

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

Output Substitution between Labor and Capital

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

Profit Maximization and Hiring Decisions in Competitive Factor Markets

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

Profit Maximization in Factor Markets: Equating MRP and MFC

A firm in a perfectly competitive labor market uses labor as an input. Its production function yield

Short-run vs. Long-run Factor Decisions

This question explores the differences between short-run and long-run factor employment decisions, f

Technological Change and Derived Labor Demand

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

Wage Discrimination and Monopsony

This question examines the concept of wage discrimination within monopsonistic labor markets and its

Wage Rigidity, Unemployment, and Factor Markets

Wage rigidity, arising from long-term contracts and minimum wage laws, can lead to unemployment in t

Addressing Underinvestment in Education with Subsidies

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

Allocative Efficiency and Market Outcomes in a Competitive Market

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

Analyzing Deadweight Loss in Imperfect Markets

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

Analyzing Price Ceilings in Monopolistic Competition

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

Antibiotic Overuse and External Costs: Addressing Resistance

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

Comparing Lump-Sum Taxes and Per Unit Taxes

A firm faces two different types of taxes: a lump-sum tax and a per unit tax.

Comparing 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

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

Effects of a Per-Unit Tax in a Competitive Market

This FRQ examines the impact of a per-unit tax on a competitive market. Consider how the imposition

Environmental Regulations and Emission Standards

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

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

FRQ 3: Correcting a Positive Externality with a Subsidy in the Education Market

In the market for education services, positive externalities result in underproduction relative to t

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 14: Government Intervention in R&D Markets

The market for research and development (R&D) exhibits positive externalities, often resulting in un

FRQ 16: Taxation in Competitive vs. Monopolistic Markets

Compare the effects of a per unit tax on a perfectly competitive market with those on a monopolistic

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

Market power can lead to inefficient market outcomes. Analyze how antitrust policies can improve mar

Market Power and Antitrust Policies

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

Minimum Wage Effects in the Labor Market

Evaluate the impact of imposing a minimum wage above the market equilibrium on the labor market.

Minimum Wage Effects: Labor Market Analysis

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

Minimum Wage Policy in Labor Markets

A minimum wage policy acts as a price floor in the labor market. Analyze its impact on employment an

Negative Externalities and Tax Policy

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

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 Research and Development Investment

Investment in research and development (R&D) projects often yields benefits that spill over to socie

Price and Cross-Price Elasticity Analysis in Retail Markets

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

Price Ceiling Effects in Monopolistic Competition

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

Price Ceiling in a Monopolistically Competitive Market

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

Production Function and Cost Analysis in a Competitive Market

Consider a firm operating in a perfectly competitive market with a fixed cost F = $50 and a wage per

Progressive Taxation and Income Redistribution

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

Public Goods and the Free Rider Problem

Public goods, characterized by non-excludability and non-rivalry, are often underprovided in free ma

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 Transfers and Labor Market Incentives

Examine how public transfer programs influence labor market outcomes and incentives.

Quantifying Deadweight Loss from a Per-Unit Tax in a Competitive Market

Consider a perfectly competitive market with the following functions: Demand: $$P = 100 - 2*Q$$ and

Role of Information Disclosure in Externality Adjustment

In some markets, asymmetric information can exacerbate externalities by obscuring the true social co

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 Monopolistic Competition

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

Taxation Effects on a Firm's Cost Structure: Per-Unit vs. Lump-Sum Tax

A firm operating in a perfectly competitive market faces typical cost curves. Government policy is c

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