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 in a Domestic Market

This question examines the concepts of absolute advantage and comparative advantage within a domesti

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

Cost-Benefit Analysis in Investment Decisions

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

Cost-Benefit Analysis of a Public Infrastructure Project

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

Cost-Benefit Analysis: Evaluating Investment Decisions

This question examines the steps involved in cost-benefit analysis and its application to investment

Economic Growth via Technological Advancement

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

Economic Models and Marginal Utility Functions

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

Economic Systems and Government Policy

This question explores how different economic systems allocate resources and the impact of governmen

Economic Systems and Resource Allocation

This question examines the differences among economic systems and their methods of resource allocati

Factors of Production: Their Roles in the Economy

This question explores the factors of production and their importance. Be sure to answer all parts.

FRQ 2: Production Possibilities Curve (PPC) Analysis

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

FRQ 4: Comparative Advantage and Terms of Trade

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

FRQ 9: Consumer Choice and Marginal Analysis

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

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.

Marginal Analysis and Diminishing Returns

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

Marginal Analysis in Consumer Choice

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

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

Marginal Utility and Consumer Decision-Making

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

Market Equilibrium and the Impact of Taxes

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

Micro vs. Macroeconomics: Scope and Analysis

Economic analysis is conducted at both microeconomic and macroeconomic levels. Using the example of

Microeconomics vs. Macroeconomics: Scope and Focus

This question addresses the differences between microeconomics and macroeconomics. Answer each part

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

Price Elasticity of Demand and Revenue Implications

This question examines price elasticity of demand and its effects on total revenue using empirical d

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve Analysis

This question assesses your ability to interpret and analyze a Production Possibilities Curve (PPC).

Production Possibilities Curve and Economic Growth

Analyze the Production Possibilities Curve (PPC) and discuss how economic growth is represented by a

Resource Allocation Efficiency

This question explores the concepts of productive and allocative efficiency as they relate to resour

Resource Scarcity and Market Outcomes

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

Scarcity and Public Policy: Analyzing Trade-offs in Government Spending

Discuss how scarcity necessitates trade-offs in public policy decisions, using the allocation of gov

Shifts in the PPC and Economic Growth

Analyze how economic growth, driven by factors like technological improvement, affects the productio

Technological Advancements and Economic Growth Analysis

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

The Role of Implicit and Explicit Costs

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

Trade-Offs and Opportunity Cost in Production Decisions

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

Trade-offs 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 Between Productive Efficiency and Allocative Efficiency

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

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

Basic Demand Analysis

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

Basic Demand Analysis and Shifts

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

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

Demand Elasticity and Total Revenue Dynamics

Using provided data, analyze the impact of a price change on quantity demanded and total revenue in

Double Shifts in Supply and Demand

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

Effects of Subsidies on Supply and Welfare

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

Elasticity of Supply and Total Revenue Impact

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

Elasticity of Supply Calculation

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

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 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 12: Double Shift Scenario in a Market

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

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 19: Analyzing Short Run vs. Long Run Supply Elasticity

A producer’s supply of a good is observed over two time periods. In the short run, a price increase

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 Minimum Wage as a Price Floor in the Labor Market

In a competitive labor market for unskilled workers, the equilibrium wage is $12 per hour with 100,0

Impact of Price Ceilings on Markets

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

Impact of Price Floors on Markets

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

Impact of Technological Innovation on Supply

This question examines the impact of technological innovation on the supply curve and how it affects

Impacts of a Price Ceiling in the Dairy Market

The dairy market has an equilibrium price of $4 per gallon with 300 gallons sold. The government set

Implications of a Price Floor in the Athletic Shoes Market

A price floor of $70 is set in the athletic shoes market where the equilibrium price is $60 with 600

Income Elasticity and Good Classification

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

International Trade: Impact of Tariffs and Quotas on Domestic Markets

Analyze the effects of imposing a tariff on imported goods in a domestic market.

Interpreting a Price Elasticity Study

A price study for a consumer product shows that when the price decreases from $50 to $40, the quanti

Law of Diminishing Marginal Utility and the Demand Curve

Discuss how the law of diminishing marginal utility contributes to the downward-sloping nature of th

Market Disequilibrium and Adjustment Mechanisms

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

Market Disequilibrium: Analyzing Shortages and Surpluses

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

Market Effects of Advertising

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

Market Equilibrium and Welfare Analysis

This question involves calculating market equilibrium and evaluating consumer and producer surplus a

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

Noise Pollution in the Outdoor Concert Market

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

Price Elasticity of Demand Calculations

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

Price Elasticity of Supply Analysis

Evaluate the price elasticity of supply given a firm's output response to a change in price.

Producer Surplus and Consumer Surplus Calculation

In a market characterized by the demand curve $$P = 100 - Q$$ and the supply curve $$P = 20 + 0.5Q$$

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

Tax Incidence and Deadweight Loss in a Competitive Market

Consider a market with demand $$P = 90 - Q$$ and supply $$P = 30 + Q$$. A tax of $$\$10$$ per unit i

Waste Disposal in Pharmaceutical Production

A pharmaceutical company produces surplus medications that eventually become waste, leading to envir

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

Calculating the Shutdown Point

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

Chemical Manufacturing with Health Risks

Chemical manufacturers in a certain market generate harmful emissions that negatively affect public

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 3: Profit Maximization in a Competitive Market

Consider a competitive firm with a total cost function given by $$TC(Q) = 0.5*Q^2 + 50$$ Part A: D

FRQ 5: Profit Maximization in Perfect Competition

Firm D faces a market price of $20 and has a total cost function given by $$TC(Q) = 50 + 2*Q^2$$. Us

FRQ 6: Shutdown Analysis in Perfect Competition

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

FRQ 7: Accounting vs. Economic Profit Analysis

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

FRQ 9: Graphical Analysis of Cost and Revenue

Refer to the provided graph of Firm A’s cost and revenue curves. Using the graph below, answer the f

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 14: Cost Minimization in the Long Run

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

FRQ 15: Market Adjustments in Perfect Competition

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

FRQ 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 18: Analyzing Returns to Scale

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

FRQ 20: Long-Run Equilibrium in Perfect Competition

In the long run, competitive markets adjust so that firms earn zero economic profit, and only normal

Government Intervention: Per‐Unit Tax and Deadweight Loss

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

Labor Cost Decisions in a Competitive Market

A firm uses labor as its only variable input. The production data is given in the table below. The w

Labor Input and Production Function Analysis

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

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.

Marginal Revenue and Marginal Cost Dynamics

In a perfectly competitive market, profit maximization occurs when marginal revenue (MR) equals marg

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

Production Decisions Under Government Subsidies

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

Production Function Analysis

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

Profit Calculation and Determination

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

Profit Maximization in a Competitive Firm

A perfectly competitive firm has a total cost function given by $$TC(Q) = 20 + 4*Q + Q^2$$ and faces

Profit Types and Profit Maximization

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

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 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

Telecommunications and Electromagnetic Pollution

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

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

Barriers to Entry in Various Market Structures

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

Comparative Analysis of Allocative Efficiency in Market Structures

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

Cost Analysis in Boutique Electronics

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

Efficiency Analysis in Custom T-Shirts

Custom T-Shirts operates in a niche market with imperfect competition. The firm has a fixed cost of

Examining Production in a Software Solutions Firm

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

FRQ 17: Sustainability of Collusion in Oligopolies

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

Game Theory in Oligopoly Markets

This question examines strategic interactions among firms in an oligopoly using game theory. Analyze

Government Intervention in an Oligopolistic Market

In an oligopolistic market operating under collusion, the government intervenes by imposing a price

Government Intervention in Monopoly Markets

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

Impact of a Per-Unit Subsidy in Monopolistic Competition

In a monopolistically competitive market, the government introduces a per‐unit subsidy to boost prod

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 Floors in Monopolistic Competition

This question focuses on the effects of imposing a price floor in a monopolistically competitive mar

Impacts of Price Wars in Oligopolistic Markets

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

Interdependence in Oligopolistic Markets and the Kinked Demand Curve

Firms in oligopolistic markets are interdependent. Using the kinked demand curve model, analyze how

Labor and Production at Gourmet Coffee

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

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 Entry in Monopolistic Competition: Short-Run vs. Long-Run Equilibrium

In monopolistic competition, firms earn economic profits in the short run, which attract new entrant

Market Externality in the Craft Brewery Industry

A local craft brewery in an imperfectly competitive market faces negative externalities due to incre

Market Structure Analysis in Imperfect Competition

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

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

Monopoly Profit Maximization and Price Discrimination Analysis

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

Natural Monopoly and Regulation

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

Oligopoly and Game Theory: Payoff Matrix Analysis

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

Oligopoly and Game Theory: Payoff Matrix Analysis

This question focuses on oligopolistic markets and the application of game theory. You will analyze

Optimizing Input Use in Digital Printing

Digital Print Co. operates in an imperfectly competitive market where it produces digital prints. Th

Price Discrimination with Externalities in the Telecommunications Market

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

Production Analysis at Urban Prints

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

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

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

Shutdown Decisions in Imperfectly Competitive Firms

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

Tax Effects in a Monopolistically Competitive Differentiated Goods Market

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

Taxation Impact in an Oligopolistic Market

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

Air Pollution from Cement Production

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

Analysis of Diminishing Marginal Returns

Using production data, analyze diminishing marginal returns and discuss its implications on producti

Analysis of Monopsony: Wage Determination and Employment

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

Analysis of MRP and MFC in Wage Determination

A firm employs labor where the marginal revenue product (MRP) is given by $$MRP = 100 - 5*L$$ and th

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

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 Diminishing Marginal Returns and Factor Demand

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

Analyzing the Effects of a Tax on Labor Employment

A government tax on each worker hired increases the costs for firms. Analyze the impact of such a ta

Application of the Least Cost Rule in Factor Markets

A firm uses both labor and capital as inputs in its production process. It faces the following data:

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

Changes in Derived Demand due to Technological Advances

This question examines the impact of technological improvements on the derived demand for labor. A f

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 Perfect Competition and Monopsony in Labor Markets

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

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 Monopsony and Competitive Labor Markets

This question investigates the differences in hiring decisions between a competitive and a monopsoni

Derived Demand Analysis

A coffee shop uses coffee beans as an input to produce coffee beverages. Because the demand for coff

Derived Demand and Marginal Revenue Product Calculation

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

Derived Demand Calculation and Graphing

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

Derived Demand for Capital Analysis

Consider a firm that rents capital for production. The marginal product of capital is given by $$MPK

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 =

Diminishing Marginal Returns and Hiring Decisions

A firm experiences diminishing marginal returns to labor as more workers are employed. (a) Explain t

Effect of Wage Changes on Labor Hiring Decisions

This question focuses on how changes in the wage rate affect the hiring decisions of a firm operatin

Efficiency Analysis in Factor Markets with Subsidies

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

Efficiency Loss in Factor Markets due to Per-Worker Tax

In a competitive labor market, the initial equilibrium is at a wage of $$w = 18$$ with 150 workers e

Evaluating Factor Markets Under Uncertainty

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

Factor Market Equilibrium and Derived Demand Analysis

Consider a perfectly competitive labor market in which firms base their hiring decisions on the marg

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

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 Supply and Demand in Factor Markets

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

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

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

Impact of 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 Factor Markets

A technological improvement increases the marginal product of labor (MP) by 25% across all levels of

Impact of Technological Change on Labor Demand

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

Impact of Technological Change on Labor Productivity and Derived Demand

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

Introduction to Factor Markets: Basics and Equilibrium

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

Labor Market Equilibrium and Elasticities

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

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

Long-Run Adjustments in Factor Markets

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

Manufacturing and Community Health

A local manufacturing plant produces goods but its production generates hazardous waste that adverse

Marginal Factor Cost and Derived Demand Calculation

A firm's marginal product of labor is given by $$MPL = 50 - 0.5*Q$$, its product sells at a price of

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

Marginal Factor Cost Explanation

Define marginal factor cost (MFC) and explain its role in firms’ hiring decisions in a perfectly com

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

Monopsonistic Labor Market Analysis

Examine the characteristics of a monopsonistic labor market and determine the profit-maximizing hiri

Monopsonistic Labor Market Analysis

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

Monopsony vs Competitive Market Wage Differentiation

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

Negative Externality in Mining Operations

A mining firm’s extraction activities generate dust and noise that reduce nearby property values, ge

Negative Externality in Oil Refining

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

Negative Externality in Renewable Energy Production

A biofuel production facility, while generating renewable energy, leads to deforestation and loss of

Negative Externality in Retail Sector

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

Negative Externality in Urban Transportation

In a major city, increased private car usage leads to higher air pollution and congestion, creating

Negative Spillover in Chemical Production

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

Optimal Use of Labor and Capital

A firm produces gadgets using both labor and capital. The marginal product of labor (MPL) is 20 and

Profit Maximization in Multi-Factor Production

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

Profit Maximizing Behavior in Perfectly Competitive Factor Markets

A firm operating in a perfectly competitive labor market faces a constant wage rate of $20 per hour.

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 Decisions

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

Understanding Factor Markets and Derived Demand

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

Allocative Efficiency and Deadweight Loss

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

Analyzing Income Inequality: Lorenz Curve and Gini Coefficient

Income inequality in an economy can be assessed using tools like the Lorenz curve and the Gini coeff

Analyzing Negative Externalities and Corrective Tax

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

Comparing Lump-sum Taxes and Per Unit Taxes

Compare and contrast the economic impacts of lump-sum taxes versus per unit taxes in a competitive m

Comparing Per-Unit Tax and Lump-Sum Tax Effects

A firm in a perfectly competitive market is considering two types of taxes: a per-unit tax and a lum

Congestion Externality in Urban Transportation

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

Deadweight Loss Correction in Manufacturing with Externality

A manufacturing plant produces goods while causing a negative externality in the form of noise pollu

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 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

Externality from Pesticide Use in Agriculture

Farmers using pesticides may impose external costs on the environment, such as damage to neighboring

FRQ 4: Market Inefficiency in Monopolistic Competition

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

FRQ 9: Progressive Taxation and Income Inequality

Discuss how progressive taxation can reduce income inequality in an economy. Use graphical analysis

FRQ 10: Government Intervention in Public Goods Markets

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

FRQ 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 a Monopolistic Market

A monopolistic firm is subject to government intervention in the form of a price ceiling. Analyze th

Government Regulation in Response to Negative Externalities: Pollution Control

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

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

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

Healthcare Market Externalities and Policy Intervention

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

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 Failure in Imperfect Competition Due to Market Power

This FRQ analyzes how monopolistic market power leads to allocative inefficiency and deadweight loss

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

Measuring Income Inequality: The Lorenz Curve and Gini Coefficient

Analyze income inequality by constructing a Lorenz curve and calculating the Gini coefficient using

Negative Externality in Automobile Fuel Production

Consider the market for automobile fuel. In this market, firms face a private marginal cost (MPC) bu

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

Public Transfers and Labor Market Incentives

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

Public vs. Private Goods and the Free Rider Problem

Differentiate between public and private goods and explore the inefficiencies caused by the free rid

Role of Information Disclosure in Externality Adjustment

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

Short-Run Versus Long-Run Effects of Government Intervention

This FRQ contrasts the short-run and long-run effects of government intervention on a firm's product

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

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

The Dynamics of Income Distribution: Lorenz Curve Analysis

Examine how the Lorenz curve represents income distribution and inequality. Explain what deviations

The Impact of Minimum Wage Laws on Employment and Inequality

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

Urban Air Pollution and Market Failure

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