AP Microeconomics FRQ Room

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 International Trade

This question focuses on comparative advantage and its role in international trade. Answer all parts

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 involves applying the marginal utility per dollar rule to determine the optimal consum

Consumer Choice Under Budget Constraints

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

Cost-Benefit Analysis in Investment Decisions

This question examines cost-benefit analysis in business decisions. Answer every part.

Economic Models and Marginal Utility Functions

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

Economic Systems and Resource Allocation

Analyze how different economic systems answer the three fundamental questions of economics (what to

Economic Systems: Market, Command, and Mixed Economies

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

Evaluating Consumer and Producer Surplus

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

Evaluating Efficiency in an Economy

An economy is operating on its Production Possibilities Frontier (PPC), yet evidence suggests that t

Factors of Production Analysis

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

FRQ 8: Opportunity Costs in Decision Making

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

FRQ 9: Consumer Choice and Marginal Analysis

This question focuses on understanding consumer choice through the lens of marginal utility and the

Impact of Scarcity on Innovation: A Case Study

Evaluate how scarcity of critical resources affects a firm's innovation and production strategies.

Labor vs. Capital: Analyzing Factors of Production

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

Marginal Costs in Production Decision

This question focuses on the concept of marginal cost and its role in production decision-making. (

Marginal Utility and Consumer Decision-Making

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

Microeconomics vs. Macroeconomics Decision-Making

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

Microeconomics vs. Macroeconomics Distinction

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

Opportunity Cost in Education vs. Work Decisions

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

Positive vs. Normative Economics

This question deals with distinguishing between positive and normative economics. Answer each part c

Price Controls and Market Efficiency

This question examines the effects of price controls on market efficiency, including deadweight loss

Production Function and Cost Measures

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

Resource Allocation and Economic Systems Comparison

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

Scarcity and Opportunity Cost Analysis

This question examines the concept of scarcity and the idea of opportunity cost in economic decision

Scarcity and Opportunity Costs

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

Supply and Demand and Scarcity

Analyze how the concept of scarcity affects market supply and demand and the resulting equilibrium i

Technological Change and the PPC

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

Trade-offs in Government Policy Decision

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

Analyzing a Price Ceiling in the Fast Food Market

In response to public pressure on food prices, a city imposes a price ceiling of $6 on fast food, wh

Analyzing Shifters of Supply: Resource Costs and Technology

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

Analyzing Shifts in Demand Due to Changes in Consumer Income

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

Analyzing the Effects of a Consumption Tax

A per-unit consumption tax of $5 is imposed on suppliers in a market with the original supply curve

Analyzing the Effects of Market Interventions Using Supply and Demand Functions

This question focuses on integrating supply and demand functions with market interventions to analyz

Cross Price Elasticity and Market Competition

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

Cross Price Elasticity: Substitutes vs. Complements

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

Cross-Price and Income Elasticity of Demand Analysis

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

Deadweight Loss in a Quota-Constrained Market

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

Determining Market Equilibrium from Demand and Supply Functions

Consider a market where the demand curve is given by $$P = 100 - Q$$ and the supply curve is $$P = 2

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 Textbook Market

A public university implements a price ceiling of $80 on textbooks to make them more affordable. Pre

Effects of Subsidies on Supply and Welfare

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

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

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

Emission Costs in Brewery Operations

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

FRQ 1: Demand Analysis for Digital Cameras

Consider the following data for the market for digital cameras. Answer the following parts: (a) Usin

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 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 5: Price Elasticity of Supply in the Electronics Market

A manufacturer observes that when the price of an electronic gadget increases from $200 to $240, the

FRQ 6: Market Intervention - Analysis of a Price Floor

Consider a market described by the demand function $$D: P = 150 - 2*Q$$ and the supply function $$S:

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 16: Strategic Interaction Analysis in a Duopoly Using a Payoff Matrix

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

FRQ 18: Variable Elasticity Across Price Ranges

Consider a good that exhibits different elasticities in separate price ranges. The following tables

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 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 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

Income Effect on Demand for Normal and Inferior Goods

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

Industrial Pollution in the Chemical Market

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

Interpreting Supply Shifts due to Changes in Input Costs

Analyze the impact of an increase in the cost of raw materials on the supply curve in a competitive

Manufacturing Emissions and Public Health

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

Market Effects of Advertising

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

Negative Externality in Industrial Fishing

Overfishing not only depletes fish stocks but also causes negative external impacts such as by-catch

Noise Externality in Restaurant Operations

A restaurant operating late at night generates noise that disturbs local residents, creating a negat

Pollution from Inter-City Bus Services

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

Price Elasticity vs. Income Elasticity Comparison

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

Substitutability in Demand: Price Changes of Related Goods

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

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

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

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.

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

Air Travel and Noise Pollution

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

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

Comparative Statics: Changes in Input Prices

A firm’s short-run total cost is given by $$TC = 30 + 6*Q + Q^2$$. Suppose a rise in the wage rate c

Cost Curve Comparison: Short Run vs. Long Run

A firm’s cost environment is depicted in the graph below, which shows several short-run Average Tota

Cost Functions and Marginal Analysis and Optimal Production in Perfect Competition

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

Cost Optimization with Fixed and Variable Inputs

A firm incurs a fixed cost of $$500$$ and experiences decreasing variable cost per unit as output in

Economic vs. Accounting Profit with Implicit Costs

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

Efficiency Losses from Government Price Floors

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

Ethanol Production and Land Use Externalities

Ethanol production can lead to land use externalities, leading to environmental degradation not refl

Fishing Industry and Overfishing Externalities

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

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: Long-Run Production Costs and Economies of Scale

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

FRQ 7: Accounting vs. Economic Profit Analysis

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

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

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

FRQ 9: Marginal Analysis and Optimal Output Determination

Consider a firm that has a total revenue function and a total cost function as follows: $$TR(Q) = 5

FRQ 10: Analysis of Diseconomies of Scale

A clothing manufacturer has collected data on its average total cost (ATC) at various levels of outp

FRQ 12: Graphical Interpretation – Shifts in Cost Curves

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

FRQ 13: Cost Structure and Profit Maximization in a Bakery

A bakery has a fixed cost of $300 and a variable cost function given by $$VC(Q) = 2 * Q + 0.5 * Q^2$

FRQ 14: Cost Minimization in the Long Run

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

FRQ 15: Impact of Increased Rental Rate on Production

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

FRQ 17: Entry and Exit Decisions in Perfect Competition

A small farm operates in a perfectly competitive market with a total cost function given by $$TC(Q)

FRQ 17: Strategic Interactions Using a Payoff Matrix

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

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

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_

Graph Analysis of Perfect Competition Market Supply and Demand

The following graph represents the market for Good X in a perfectly competitive market. Answer the

Graphing Production and Cost Curves

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

Industry-Wide Cost Minimization in Perfect Competition

Consider a representative firm in a perfectly competitive market with the total cost function given

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

Input Price Changes and Cost Curvature

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

Long-Run Entry and Exit Decisions in Perfect Competition

In a perfectly competitive market, firms can enter or exit based on profit conditions. Suppose a fir

Long‐Run Cost Behavior and Economies of Scale

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

Market Price Change and its Impact on Output and Shutdown

A sudden market event causes the market price to drop from $30 to $20. Analyze the impact of this ch

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

Perfect Competition Market Graph Analysis

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

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 Efficiency and Factor Inputs

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

Production Function Analysis: Marginal Products and Diminishing Returns

Discuss the concept of the production function and describe the relationship between inputs and outp

Profit Calculation and Determination

Using the provided revenue and cost data, calculate the firm's profits and distinguish between accou

Profit Maximization in Perfect Competition

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

Profitability Analysis with Changing Market Price

A firm in a perfectly competitive market has a cost function given by $$TC(Q) = Q^2 + 20*Q + 100$$.

Short-Run Cost Analysis and Graphing Cost Curves

A firm’s cost structure in the short run consists of fixed and variable costs. The firm has a fixed

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

Short-run Shutdown Decision Analysis

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

Short-run vs. Long-run Production Decisions

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

Short‐Run Shutdown Decision

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

Steel Production and Industrial Pollution

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

Technological Improvement and Production Efficiency

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

Technological Improvements and Cost Impact

A firm adopts a new technology that increases the marginal product of labor. (a) Explain how this

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 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

Cartels and Collusive Behavior in Oligopoly

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

Comparative Analysis of Industry Structures

Conduct a comparative analysis of monopoly, monopolistic competition, and oligopoly focusing on mark

Comparative Analysis: Price Makers and Price Takers

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

Cost Structures in Monopolistic Competition

Examine the implications of cost structures on firm behavior in monopolistic competition.

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

Environmental Externality in Energy Production

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

Examining Production in a Software Solutions Firm

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

Externality Impact in a Regional Utility Company

A regional utility company supplying electricity operates in an imperfectly competitive market and g

FRQ 2: Price Discrimination in a Monopoly

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

FRQ 3: Oligopoly Game Theory Analysis

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

FRQ 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 13: Entry Deterrence Strategies in Oligopoly

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

Government Intervention in Luxury Smartphone Accessories Market

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

Impacts of Price Wars in Oligopolistic Markets

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

International Externalities in the Steel Market

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

Legal and Economic Barriers to Market Entry

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

Long-Run Adjustments in Monopolistic Competition

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

Maintaining Monopoly Pricing Through Collusion

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

Marginal Revenue in Price Discrimination

Examine how marginal revenue is affected under price discrimination scenarios compared to single-pri

Market Adjustments in Monopolistic Competition

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

Market Dynamics in Monopolistic Competition

Describe the process by which monopolistic competition shifts from short-run profit to long-run norm

Market Entry and Demand Curve Adjustments in Monopolistic Competition

This question investigates how the entry of new firms affects the demand curve faced by an incumbent

Market Power and Pricing in a Monopoly

A monopolist who enjoys considerable market power sets its output by comparing marginal revenue (MR)

Market Structure and Innovation: Trade-offs in Product Variety

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

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: Pricing and Regulation

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

Negative Consumption Externality in the Fast Food Market

A popular fast food chain faces criticism for generating negative externalities due to increased tra

Oligopolistic Market Externality in the Airline Industry

In the airline industry, which is characterized by oligopolistic competition, each airline’s operati

Price Discrimination Analysis

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

Price Discrimination and Deadweight Loss

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

Price Discrimination in a Natural Monopoly

Analyze the concept of price discrimination in the context of a natural monopoly. Your answer should

Price Discrimination in Monopolistic Markets

This question examines a firm's use of price discrimination in a monopolistic market. Assume the fir

Price Discrimination Strategies in Imperfectly Competitive Markets

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

Price Elasticity and Price Discrimination Strategies

Analyze how variations in price elasticity of demand enable firms to engage in third-degree price di

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

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

Subsidies in an Imperfectly Competitive Market

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

Tax and Advertising in a Monopolistically Competitive Market

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

Tax Effects in a Monopolistically Competitive Differentiated Goods Market

Consider a market characterized by monopolistic competition where firms sell differentiated products

Taxation and Price Discrimination in the Software Industry

In the software industry, firms often practice price discrimination to capture consumer surplus. Sup

Taxation Impact in an Oligopolistic Market

In an oligopolistic market where only a few firms dominate, assume that the underlying market can be

Technology Hardware Market Externalities

A firm producing high-end technology hardware in an imperfectly competitive market causes negative e

Third-Degree Price Discrimination in the Airline Industry

A monopolist in the airline industry practices third-degree price discrimination by segmenting the m

Welfare Analysis in Imperfectly Competitive Markets

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

Analysis of MRP and MFC in Competitive and Monopsonistic Labor Markets

This question examines the relationship between marginal revenue product (MRP) and the marginal fact

Analysis of Productivity Changes on Factor Demand

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

Analyzing the Impact of Capital Price Changes on Production Decisions

Examine how a change in the price of capital affects a firm’s production decisions and its optimal i

Applying the Least Cost Rule in Factor Markets

A firm uses both labor and capital in its production process. The marginal product of labor (MPL) is

Calculating Marginal Factor Cost

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

Calculating Marginal Factor Cost in a Monopsony

This question requires you to calculate the marginal factor cost (MFC) in a monopsonistic labor mark

Comparative Analysis: Perfect Competition vs. Monopsony

A table below presents data for a competitive labor market and a monopsonistic market. | Scenario

Comparative Factor Pricing: Changes in Input Prices

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

Comparative Statics: Impact of Factor Price Changes

A firm uses both labor and capital in production. Analyze how changes in the rental rate of capital

Comparative Statics: Impact of Rising Capital Price on Input Choice

A rise in the price of capital forces a firm to re-evaluate its input combination. Analyze this effe

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 in Factor Markets

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

Derived Demand Calculation and Graphing

A competitive firm hires labor based on its marginal product. The marginal product of labor (MPL) is

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

Economies of Scale and Factor Demand

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

Effect of Product Market Shifts on Factor Demand

Changes in the final product market can influence the demand for factors of production. Explore how

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 Unionization on Labor Costs and Employment

This question discusses how unionization affects labor markets, particularly through changes in marg

Evaluating Wage Differentiation in Skilled vs. Unskilled Labor Markets

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

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 Shifts: Effects on Employment and Wages

This question evaluates the impact of an increase in labor supply, due to a rise in the number of qu

Factors Affecting Labor Supply and Demand

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

Government Intervention and Factor Market Outcomes

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

Graphical Analysis of Factor Market Equilibrium

A firm collects data on wages and employment to analyze its labor market. Using the provided data se

Graphical Analysis of Supply and Demand in Factor Markets

Refer to a provided graph of the labor market. Answer the following: (i) Identify and label the lab

Impact of Automation on Derived Demand for Labor

A manufacturing firm adopts automated technology, which reduces the need for labor. Prior to automat

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 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 Productivity Increases on Labor Demand

A firm experiences a technological innovation that increases worker productivity. Analyze the effect

Impact of Technological Change on Labor Demand

This question investigates the effects of technological change on labor demand and the resulting cha

Labor Market Equilibrium with Derived Demand

This question focuses on deriving equilibrium wage and employment levels from labor supply and deriv

Least Cost Input Combination

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

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

Long-Run Adjustments in Competitive Factor Markets

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

Long-Run Adjustments in Factor Markets

Firms can adjust all factors of production in the long run. This question examines the differences b

Market for Factor Inputs: Understanding Derived Demand

This question examines how firms derive the demand for factors such as labor based on the final prod

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

Minimum Wage Effects in Different Market Structures

Evaluate how an imposed minimum wage affects factor markets in both competitive and monopsonistic se

Monopsonistic Labor Market Analysis

A single large firm (a monopsonist) operates as the dominant buyer in the labor market. Its labor su

Multi-Input Factor Market Analysis with Budget Constraint

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

Negative Externality in Textile Production

A textile factory’s production process releases pollutants that impose additional costs on nearby re

Negative Spillover in Chemical Production

A chemical manufacturing firm produces industrial chemicals but emits harmful substances during prod

Output Substitution between Labor and Capital

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

Profit Maximisation in a Monopsonistic Labor Market

In a small town, a single large factory operates as the sole employer (a monopsonist) in the local l

Seasonal Variations in Labor Supply in the Retail Sector

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

Technological Change and Factor Market Adjustments

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

Wage Discrimination and Monopsony

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

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

Congestion Externality in Urban Transportation

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

Correcting Negative Externalities in the Cigarette Market

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

Correcting Negative Externalities Through Taxation

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

Determining Socially Efficient Output in a Market with Negative Externalities

This FRQ focuses on evaluating social efficiency in the presence of negative externalities. Consider

Effects of Subsidies on Monopolistic Competition

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

Evaluating Market Failure Through External Costs

Discuss a market failure arising from negative externalities, using a real-world example to support

Evaluating Public Goods Provision: Efficiency and Government Intervention

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

Evaluating the Efficacy of Anti-Poverty Programs in Reducing Inequality

A government has implemented various anti-poverty programs such as income transfers, scholarships, a

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 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

FRQ 17: Anti-Trust Policies and Market Efficiency

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

FRQ 20: Short-Run Effects of Taxes and Subsidies on Market Equilibrium

Compare and contrast the short-run effects of a per unit tax and a per unit subsidy on a competitive

Government Intervention in Insurance Markets with Asymmetric Information

Insurance markets often suffer from adverse selection due to asymmetric information. Analyze how gov

Market Failure due to Asymmetric Information

This FRQ explores how asymmetric information can lead to market failure. Consider the market for use

Market Failure from Asymmetric Information

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

Market Power and Antitrust Policies

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

Market Power, Monopolies, and Antitrust Policy

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

Minimum Wage Policy and Labor Market Equilibrium

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

Positive Externality in Vaccination Markets

Vaccination not only benefits the individual receiving the vaccine but also provides external benefi

Price Floors and Their Effects on Surpluses

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

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

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

This FRQ focuses on the characteristics of public goods and the implications of the free rider probl

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

Social Efficiency in Labor Markets

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

Subsidizing Urban Green Spaces: Addressing Positive Externalities

Urban green spaces provide benefits beyond individual enjoyment by improving air quality and communi

Tax Incidence in Monopolistic Competition

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