AP Microeconomics FRQ Room

Advanced Cross-Price Elasticity: Substitutes vs. Complements

Analyze the relationship between two goods by computing the cross-price elasticity of demand.

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 in International Trade

Two countries, Country X and Country Y, produce only two goods: automobiles and computers. In one ho

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 in Decision-Making

This question focuses on cost-benefit analysis by distinguishing between explicit and implicit costs

Economic Models and Marginal Utility Functions

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

Evaluating the Impact of Governmental Subsidies

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

Factors of Production Analysis

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

FRQ 2: Production Possibilities Curve (PPC) Analysis

This question focuses on analyzing the Production Possibilities Curve as a means to illustrate oppor

FRQ 3: Cost-Benefit Analysis and Decision Making

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

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

FRQ 10: Evaluating Explicit vs. Implicit Costs in Business Decisions

This question examines how firms account for different types of costs in order to make informed busi

FRQ 11: Profit Maximization in Competitive Markets

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

FRQ 16: Optimal Consumption and Marginal Utility Analysis

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

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

Impact of Scarcity on Innovation: A Case Study

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

Managerial Decision-Making and Opportunity Costs

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

Marginal Cost Analysis and Production Decisions

This question focuses on marginal cost analysis and its crucial role in a firm's production decision

Marginal Costs in Production Decision

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

Marginal Product and Diminishing Returns

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

Market Equilibrium and Surplus Analysis

This question addresses market equilibrium and the calculation of consumer and producer surplus, fol

Microeconomics vs. Macroeconomics Analysis

This question focuses on differentiating microeconomics and macroeconomics and their applications.

Opportunity Cost and Strategic Business Decisions

This question requires you to analyze opportunity cost in the context of strategic business decision

Opportunity Cost and Trade-offs in Policy Decisions

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

Optimal Consumption Bundles Through Marginal Utility Per Dollar Analysis

Assess how consumers determine their optimal consumption bundles by equalizing marginal utility per

Optimal Consumption Rule and Marginal Utility per Dollar

This question explores the application of the optimal consumption rule in consumer choice. Answer al

Positive vs. Normative Economics

Examine the differences between positive and normative economics and apply these concepts to real-wo

Price Elasticity of Demand Calculation

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

Production Possibilities Curve (PPC) and Economic Growth

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

Resource Allocation in a Mixed Economic System

This question explores resource allocation in a mixed economic system where both market forces and g

Resource Allocation in Mixed Economic Systems

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

Resource Scarcity and Market Outcomes

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

Scarcity and Opportunity Cost Analysis

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

Supply and Demand: Scarcity and Resource Allocation

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

Technological Change and the PPC

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

Trade and Comparative Advantage in a Global Market

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

Trade-Offs and Opportunity Cost in Production Decisions

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

Analyzing Shifters of Supply: Resource Costs and Technology

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

Changes in Consumer Preferences and Demand Shifts

Examine how changes in consumer tastes influence market demand.

Comparative Statics: Demand Increase

For a market with an initial demand curve $$P = 80 - 2Q$$ and supply curve $$P = 20 + Q$$, a rise in

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

Cross Price Elasticity: Identifying Substitutes and Complements

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

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 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

Evaluation of a Price Floor in the Smartphone Market

In the competitive smartphone market, the equilibrium is at $400 for 10,000 smartphones sold monthly

FRQ 1: Demand Analysis for Digital Cameras

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

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 4: Price Elasticity of Supply in a Local Bakery

A local bakery adjusts its production based on price changes. The following data represents the quan

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 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 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 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

Graphical Analysis of Price Floors and Surpluses

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

Impact of 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

International Trade Impact: Tariffs and Market Outcomes

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

International Trade: Tariffs and Quotas Impact

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

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

Market Disequilibrium: Shortages and Surpluses

Examine situations of market disequilibrium and the self-correcting mechanisms of supply and demand.

Market Equilibrium, Consumer and Producer Surplus

Analyze market equilibrium and welfare analysis in a widget market.

Market Impact of a Price Floor

The government imposes a price floor in the market for corn that is set above the equilibrium price.

Market Impact of Rent Controls on Housing

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

Price Elasticity of Demand Calculations

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

Short-run vs Long-run Supply Elasticity Analysis

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

Simultaneous Shifts in Supply and Demand: Indeterminate Outcomes

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

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 Analysis and Market Response

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

Supply Analysis and Shifters

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

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

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

Taxation Impact on Market Equilibrium

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

Wastewater Contamination in Textile Production

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

Competitive Market Long-Run Adjustments: Entry and Exit

Analyze how a perfectly competitive market adjusts in the long run through entry and exit of firms.

Cost Curve Analysis and Graph Interpretation

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

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$

Effects of Technological Improvements on Production and Costs

A firm invests in new technology that increases the marginal product of labor by 50% across all leve

Estimating Average and Marginal Costs from a Cost Function

Given the total cost function $$TC(Q)= 5 + 2*Q + Q^2$$, (a) Derive the expressions for average tota

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 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 8: Market Supply and Firm Production Decisions

Two firms operate in a competitive market where the market price is $30. Their total cost functions

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 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 13: Short-Run Shutdown Analysis

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

FRQ 15: Market Adjustments in Perfect Competition

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

FRQ 16: Comparative Analysis of Fixed and Variable Inputs

A restaurant uses a fixed input (a head chef) and variable inputs (waitstaff) to produce meals. The

FRQ 19: Graph Interpretation: Perfect Competition Market Graph

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

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 Average and Marginal Cost Curves

Construct a diagram that includes the Average Total Cost (ATC), Average Variable Cost (AVC), and Mar

Industry-Wide Cost Minimization in Perfect Competition

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

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 Average Cost Curve and Economies of Scale Analysis

A firm’s long-run average total cost (LRATC) is represented by the following curve. Use the graph an

Long-Run Production Costs and Economies of Scale

A firm’s long-run average total cost (LRATC) data is provided in the table below. Use this informati

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 Product Calculation in Production

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

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

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 Function Analysis and Diminishing Returns

A manufacturing firm produces widgets using labor as its only variable input. The production functio

Profit Calculation and Cost Curve Graph Analysis

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

Profit Maximization in Perfect Competition

Consider a firm operating in a perfectly competitive market with the cost function $$TC(Q) = 2*Q^2 +

Short-Run Decision and the Shutdown Rule

A firm has a cost function $$TC(Q) = 3*Q^2 + 50$$, where fixed costs are $$50$$. The market price ha

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 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

Allocative Efficiency Analysis in Market Structures

Compare and evaluate allocative efficiency in perfectly competitive and monopolistic markets.

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 Structure Dynamics

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

Barriers to Entry in Various Market Structures

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

Break-even and Shutdown Decisions in Imperfectly Competitive Firms

Analyze a firm's break-even and shutdown decisions given its cost structure in an imperfectly compet

Calculating Price Elasticity in a Monopoly

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

Cartels and Collusive Behavior in Oligopoly

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

Collusion and Cartel Behavior in Oligopolies

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

Collusion and Profit Sharing in an Oligopoly Cartel

In an oligopolistic market, firms form a cartel to maximize joint profits by acting like a monopoly.

Comparative Efficiency in Monopolistic Competition vs. Monopoly

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

Comparing Profit Maximization in Monopoly vs. Perfect Competition

Contrast the profit-maximization strategies of a monopoly with those of a firm in a perfectly compet

Cost 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 Curves and Inefficiencies in Imperfect Competition

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

Cost Structures and Natural Monopoly Dynamics

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

Determining Diminishing Returns in Tech Gadgets

Tech Gadgets Inc. produces electronic devices in a market with some degree of imperfect competition.

Economies of Scale as Barriers to Entry

Economies of scale can create significant barriers to entry in imperfectly competitive markets. Anal

Elasticity and Marginal Revenue in Monopoly Pricing

This question links the concepts of price elasticity of demand and marginal revenue (MR) in monopoly

Entry and Exit in Monopolistic Competition

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

Environmental Tax in the Car Manufacturing Market

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

FRQ 2: Price Discrimination in a Monopoly

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

FRQ 11: Cost Analysis in Monopolistic Competition

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

FRQ 14: Price Elasticity Analysis in Differentiated Markets

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

Graphical Analysis of Monopoly Pricing and Output

Analyze how a monopolist determines its output and price, and explain the resulting market inefficie

Impacts of a Price Floor in a Monopolistic Competition Market

A government imposes a price floor in a monopolistically competitive market. Initially, the market i

Marginal Returns in a Craft Brewery

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

Market Adjustments in Monopolistic Competition

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

Market Structure Analysis in Imperfect Competition

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

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 Price Discrimination Analysis

Consider a monopolist with the following market conditions: Demand function $$P = 100 - 2*Q$$, and M

Monopoly Profit Maximization and Regulation

This question requires analysis of a monopoly firm's profit-maximizing decisions and the impact of g

Nash Equilibrium Analysis in an Oligopolistic Market

This question explores the concept of Nash equilibrium within an oligopolistic market using a payoff

Natural Monopoly and Government Regulation

Analyze a natural monopoly scenario where significant economies of scale exist, leading to one-firm

Natural Monopoly and Regulation

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

Negative Externality in the Soft Drink Market

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

Oligopolistic Market Externality in the Airline Industry

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

Oligopoly and Game Theory: Payoff Matrix Analysis

Examine the concepts of Nash equilibrium and dominant strategies in an oligopolistic market through

Price Discrimination Strategies in Imperfectly Competitive Markets

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

Price Discrimination with Externalities in the Telecommunications Market

A large telecommunications firm that practices price discrimination also imposes negative externalit

Price Discrimination: Data Analysis and Calculations

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

Price Elasticity and Price Discrimination Strategies

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

Regulatory Impacts on Monopoly: A Price Ceiling Analysis

Evaluate the effects of imposing a price ceiling on a monopoly and its resulting impact on market ou

Rising Input Costs in a Natural Monopoly

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

Shutdown Decisions in Imperfectly Competitive Firms

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

Subsidies in an Imperfectly Competitive Market

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

Tax Effects in a Regional Housing Market

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

Taxation Impact in an Oligopolistic Market

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

Welfare Analysis in Imperfectly Competitive Markets

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

Working with Marginal Costs in a Startup Cafe

A startup cafe operates in an imperfectly competitive market. The cafe incurs a fixed cost of $200,

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 a Minimum Wage Impact in a Competitive Labor Market

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

Analyzing the Impact of Training Subsidies on Labor Supply

This question explores how a government training subsidy, aimed at increasing worker skills, affects

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

Assessing the Derived Demand for Labor in Various Industries

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

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

Budget Constraints and Factor Markets

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

Calculating Marginal Factor Cost

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

Changes in Factor Demand and Supply

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

Comparative Analysis of Labor and Capital Markets

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

Comparative Analysis: Perfect Competition vs. Monopsony in Factor Markets

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

Comparative Statics: Impact of Factor Price Changes

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

Comparing Factor Market Outcomes: Monopsony versus Perfect Competition

Consider two distinct labor markets: one that operates under perfect competition and one that is cha

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

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

Determinants of Labor Supply

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

Determining Labor Market Equilibrium from Supply and Demand Equations

The labor market is represented by the following equations: Supply: $$w = 10 + 0.2*L$$ Demand: $$w =

Dynamic Factor Demand under Seasonal Demand Shifts

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

Economies of Scale and Cost Analysis

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

Effects of a Government Subsidy on Factor Market Equilibrium

In a competitive market for skilled labor, the government introduces a subsidy of $3 per hour for ea

Effects of Binding Minimum Wage on Labor Market Dynamics

In a competitive labor market, the government imposes a binding minimum wage above the equilibrium w

Efficiency Analysis in Factor Markets with Subsidies

The government introduces a per-worker subsidy to stimulate employment in a slow-growing sector. Ana

Factor Endowments and Comparative Advantage in International Trade

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

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

Impact of an Influx of Migrant Workers on Labor Supply

A local economy experiences an influx of migrant workers, causing a shift in the labor supply curve.

Impact of Minimum Wage on Competitive Factor Markets

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

Impact of Technological Change on Labor Demand

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

Impact of Technological Change on Labor Productivity and Derived Demand

A manufacturing firm experiences a technological innovation that increases worker productivity. Init

International Trade and Factor Demand

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

Labor Demand Adjustments in an Agricultural Context

This question explores how external factors (e.g., weather conditions) affect labor demand in an agr

Labor Market Equilibrium and Elasticities

This question evaluates your understanding of labor market equilibrium and elasticity measures.

Least Cost Input Combination

A firm uses labor (L) and capital (K) in production. The marginal product of labor (MPL) is 10 units

Least Cost Input Combination

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

Long-Run Adjustments in Competitive Factor Markets

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

Negative Externality in Fast Food Production

A fast food chain's production process generates excessive waste that contributes to local pollution

Negative Externality in Textile Production

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

Optimal Factor Combination under Budget Constraints

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

Profit Maximisation in a Monopsonistic Labor Market

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

Profit Maximization and Hiring Decisions in Competitive Factor Markets

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

Profit-Maximizing Labor in a Competitive Market

A firm in a perfectly competitive labor market is guided by the marginal revenue product (MRP) of la

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

Wage Differentials and Human Capital

Examine the factors contributing to wage differentials between skilled and unskilled labor, and anal

Wage Rigidity, Unemployment, and Factor Markets

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

Allocation of Resources and Social Welfare in a Perfectly Competitive Market

Consider a small market for apples with the demand function $$P = 20 - 0.5*Q$$ and the supply functi

Analyzing Negative Externalities and Corrective Tax

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

Antibiotic Overuse and External Costs: Addressing Resistance

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

Carbon Tax and Environmental Externalities

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

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

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

Congestion Externality in Urban Transportation

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

Cost-Benefit Analysis in Regulatory Policy

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

Effects of Price Floors on Market Efficiency

Analyze the impact of imposing a price floor in a perfectly competitive market.

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 Deadweight Loss and Tax Incidence

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

Evaluating Income Redistribution: Taxes and Transfers

Government policies aimed at income redistribution often use taxes and transfers to reduce inequalit

Evaluating Price Ceilings in the Rental Housing Market

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

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 Wage Subsidies versus Minimum Wages

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

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 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.

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

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

Healthcare Market Externalities and Policy Intervention

Analyze how negative externalities in the healthcare market, such as under-vaccination, can lead to

Impacts of Non-Price Regulation on Manufacturing Costs

A manufacturing industry faces new non-price regulations, such as stricter emission standards. Answe

Internalizing Externalities Through the Coase Theorem

Discuss the Coase Theorem as an alternative to government intervention in addressing externalities.

Internalizing Positive Externalities via Subsidies

In a market with positive externalities, the private marginal benefit (MB) is lower than the social

Market Power and Price Discrimination

A firm with significant market power employs price discrimination strategies in different consumer s

Measuring Income Inequality: Lorenz Curve and Gini Coefficient

Income inequality is a significant issue in many economies. Analyze how income distribution is measu

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 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

Positive Externality in Renewable Energy Investment

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

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 in the Rental Market

A city implements a binding price ceiling on rental housing to ensure affordability. Analyze the mar

Public Goods and the Free Rider Problem

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

Public Health and Government Subsidy Analysis

Analyze the impact of a per unit subsidy on the market for vaccinations. The market is described by

Regulatory Intervention versus Taxation in Externality Reduction

In some markets, governments can adopt different interventions to address negative externalities. Co

Regulatory Measures and Pollution Spillovers

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

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

Urban Air Pollution and Market Failure

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