AP Microeconomics FRQ Room

Comparative Advantage and Trade Benefits

This question examines the concepts of absolute advantage and comparative advantage and their role i

Comparative Advantage in a Domestic Market

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

Comparative Advantage in Production Decisions

Discuss the concept of comparative advantage and how it influences specialization in production.

Cost-Benefit Analysis in Decision-Making

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

Cost-Benefit Analysis of a Public Policy

Apply cost-benefit analysis to evaluate a public infrastructure decision.

Economic Growth and Efficiency

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

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 Resource Allocation

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

Economic Systems and Resource Allocation

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

Economic Systems: Market, Command, and Mixed Economies

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

Entrepreneurial Decision-Making: Factors of Production and Marginal Analysis

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

Evaluating Entrepreneurial Investment Decisions Amid Scarcity

Assess how the concept of scarcity and opportunity cost informs an entrepreneur’s decision-making in

Evaluating Government Price Controls in Housing Markets

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

Factors of Production Analysis

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

FRQ 2: Production Possibilities Curve (PPC) Analysis

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

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 18: Technological Change and Shifts in the PPC

This question investigates how technological advancements impact the production possibilities of an

Graphical Analysis of Market Shifts due to Resource Scarcity

Analyze how resource scarcity affects market equilibrium using a supply and demand framework.

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 Consumer Choice

Using marginal analysis, examine how a consumer maximizes utility given a limited budget.

Marginal Analysis in Production Decisions

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

Market Equilibrium and Surplus Analysis

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

Microeconomics vs. Macroeconomics

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

Normative vs. Positive Economic Statements

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

Positive vs. Normative Economics

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

Positive vs. Normative Economics Analysis

Analyze the difference between positive and normative economics and evaluate their roles in economic

Production Possibilities Curve (PPC) and Economic Growth

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

Production Possibilities Curve Analysis

An economy operates at full employment with a Production Possibilities Curve (PPC) that represents t

Production Possibilities Curve and Economic Growth

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

Scarcity and Decision Making

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

Scarcity and Opportunity Cost Analysis

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

Scarcity and Opportunity Cost Analysis

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

Scarcity and Opportunity Cost Analysis

This question asks you to explain basic economic concepts such as scarcity, opportunity cost, and tr

Scarcity and Opportunity Cost: Decision Making Basics

This question examines the core concepts of scarcity and opportunity cost in economic decision makin

Supply and Demand and Scarcity

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

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 Demand Shifts in a Local Market

This question explores the determinants of demand and their impact on the market. Answer the followi

Analyzing Income Elasticity and Market Demand Changes

Examine how changes in income affect market demand by analyzing income elasticity.

Analyzing Taxation and Elasticity in Market Outcomes

Assess the incidence of a per-unit tax in a market with elastic demand and inelastic supply.

Comparative Analysis of Demand and Supply Elasticities

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

Consumer and Producer Surplus Analysis with Demand and Supply Shifts

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

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

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

Domestic Market Outcomes under Tariff Policy

Evaluate the impact of an import tariff on a domestic market.

Dust Pollution from Cement Production

A cement production facility emits dust during production, which imposes a negative health impact on

Effect of a Price Ceiling and Import Quota

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

Effects of a Price Ceiling in the Essential Medicines Market

To ensure affordability of essential medicines, the government imposes a price ceiling at $35 in a m

Effects of a Price Floor in the Furniture Market

A government sets a price floor of $250 on furniture in a market currently in equilibrium at $200 wi

Elasticity of Demand Calculation

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

Elasticity of Supply and Total Revenue Impact

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

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

Environmental Externality in Apparel Production

Factories producing apparel sometimes emit pollutants into waterways, imposing an environmental exte

Environmental Impact in Car Manufacturing

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

Evaluating Substitution and Income Effects on Demand

Assess how a change in the price of a normal good affects consumer choice through substitution and i

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 9: Welfare Analysis with Tax Implementation and Deadweight Loss

Consider a market with the demand function $$D: P = 150 - Q$$ and the supply function $$S: P = 50 +

FRQ 11: Analyzing Market Surplus and Adjustments

A certain electronic gadget is sold at a price above its equilibrium level, resulting in a surplus.

FRQ 13: Evaluating the Effects of Tariffs in the Steel Market

The United States imposes a tariff on imported steel. Answer the following: (a) Draw a supply and de

FRQ 15: Short-Run vs Long-Run Supply Elasticities

Consider a market where the production of a commodity is difficult to adjust in the short-run but ea

FRQ 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

Hazardous Waste in Electronics Manufacturing

Electronics manufacturing can produce hazardous waste that creates significant environmental damage.

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

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

Impact of Price Ceilings on Markets

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

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: 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, Consumer and Producer Surplus

This question focuses on understanding market equilibrium and the calculation of consumer and produc

Market Impact of a Price Floor

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

Substitute and Complement Effects

This question explores the impact of changes in the price of related goods on demand. Answer the fol

Supply Elasticity and Producer Behavior

The following table shows data on the quantity supplied of a product at various prices: | Price ($)

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

Wastewater Contamination in Textile Production

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

Air Travel and Noise Pollution

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

Analysis of Diminishing Marginal Returns in the Short Run

Consider a firm with a short-run production function given by $$Q = 50 + 20*L - L^2$$, where L repre

Bottled Water Production and Plastic Waste

The production of bottled water has externalities associated with plastic waste. Evaluate the result

Comprehensive Profit Maximization under Perfect Competition

A firm in a perfectly competitive market faces the following conditions: its total cost function can

Construction and Urban Dust Pollution

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

Derivation of Cost Functions

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

Economic vs. Accounting Profit with Implicit Costs

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

Economies and Diseconomies of Scale Analysis

Discuss the impact of economies and diseconomies of scale on a firm's long-run cost structure using

Entry and Exit in Perfect Competition Analysis

A firm in a perfectly competitive market faces an average total cost (ATC) of $$25$$ per unit while

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: Short-Run Shutdown Decision Analysis

A firm faces a fixed cost of $500 and has a variable cost function given by $$VC(Q) = 4 * Q + Q^2$$.

FRQ 10: Production Decisions under Diminishing Returns

A firm experiences diminishing marginal returns as it increases its labor input. Part A: Explain th

FRQ 11: Short Run versus Long Run Decision Analysis

A firm’s short-run total cost function is given by $$TC_{SR}(Q) = 100 + 5*sqrt(Q)$$, while its long-

FRQ 12: Impact of Technological Change on Production Function

A firm introduces a new technology that alters its production function. The table below shows output

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 18: Analyzing Returns to Scale

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

FRQ 18: Industry Entry and Exit Decisions

In a perfectly competitive industry, a representative firm faces a total cost function of $$TC(Q) =

FRQ 20: Integrated Analysis: Production, Cost, and Market Entry in Perfect Competition

A tech startup operating in a perfectly competitive market has a total cost function given by $$TC(Q

Input Costs and Rental Rate Impacts on Production Decisions

A firm uses two inputs, capital (K) and labor (L), with a production function given by $$Q = 2*K + 3

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

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

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

Long-run Production Costs and Scale Economies

A firm in the long run faces the cost function $$LRATC(Q) = 0.05*Q^2 - 0.8*Q + 30$$. Answer the foll

Managerial Decision-Making: Cost Minimization

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

Marginal, Average and Total Cost Analysis

For a firm with the total cost function $$TC(Q) = 20 + 4*Q + 3*Q^2$$, answer the following parts:

Market Supply Determination from Firm‐Level Cost Functions

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

Multi-stage Production Decision Analysis

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

Production Function Analysis

A firm uses labor as its only variable input. The table below shows the number of workers (L) employ

Production Function Analysis and Diminishing Returns

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

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: 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

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

Water Consumption and River Pollution

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

Advertising Effects on Demand Elasticity in Monopolistic Competition

This question examines how advertising influences the price elasticity of demand in monopolistically

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

Analyzing Returns in Eco-Friendly Furniture

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

Barriers to Entry and Long-Run Efficiency in Monopolistic Competition

In some monopolistically competitive markets, high barriers to entry limit the number of firms, lead

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

Calculating Output in a Price-Discriminating Monopoly

Analyze a price-discriminating monopolist's decision-making process and calculate optimal outputs an

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 Cartel Formation in Oligopolistic Markets

This question explores how collusion and cartel formation can influence market outcomes in an oligop

Comparative Analysis of Allocative Efficiency in Market Structures

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

Comparative Analysis: Price Makers and Price Takers

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

Comparative Efficiency in Monopolistic Competition vs. Monopoly

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

Cost Curves and Inefficiencies in Imperfect Competition

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

Cost Structures in Organic Juice Co.

Organic Juice Co. operates in an imperfectly competitive market and produces organic juice. The firm

Demand and Pricing Strategies in Imperfect Markets

Analyze how demand elasticity affects pricing strategies in imperfectly competitive markets.

Economies of Scale as Barriers to Entry

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

Effects of Tax in the Fashion Apparel Market

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

Efficiency Analysis in Custom T-Shirts

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

FRQ 14: Price Elasticity Analysis in Differentiated Markets

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

FRQ 15: Stackelberg Leadership in Oligopoly

In an oligopolistic market, one firm acts as a leader while the other acts as a follower. The firms’

Game Theory in Oligopolies: Prisoner's Dilemma

Analyze the Prisoner’s Dilemma in the context of duopolistic competition and its implications for co

Game Theory in Oligopoly Markets

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

Government Intervention in Natural Monopolies

Evaluate the need for government intervention in natural monopolies and its impact on pricing and ma

Government Regulation of a Natural Monopoly Market

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

Graphical Analysis of Monopoly Pricing and Output

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

Impact of Advertising in Monopolistic Competition

Examine the role of advertising in shaping demand and profitability in monopolistic competition.

Impact of Price Discrimination under Per‐Unit Tax

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

Input-Output Analysis in an Organic Farm

An organic farm operates in an imperfectly competitive market. The farm has a fixed cost of $500, pa

Long-run Equilibrium in Monopolistic Competition

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

Market Entry and Exit in Monopolistic Competition

Discuss the dynamics of market entry and exit in monopolistic competition and their effects on long-

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 Regulation and Natural Monopoly Pricing

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

Negative Environmental Externality in the Textile Industry

A textile firm in an imperfectly competitive market produces fabrics but generates negative external

Negative Externalities and Regulatory Challenges in the Shipping Industry

A shipping company operating within an oligopolistic market is responsible for significant negative

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

Production Costs in Innovative Apparels

Innovative Apparels operates in an imperfectly competitive market and uses skilled labor to produce

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

Tax Effects in a Monopolistically Competitive Differentiated Goods Market

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

Tax Impact on Eco-Friendly Products Market

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

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

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 Monopsony: Wage Determination and Employment

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

Analyzing Derived Demand for Labor in a Competitive Market

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

Analyzing Diminishing Marginal Returns and Factor Demand

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

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

Application of the Least Cost Rule for Capital-Labor Substitution

A firm produces output using both labor and capital. It faces a wage rate of $20 per hour and a rent

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

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 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 Factor Market Outcomes: Monopsony versus Perfect Competition

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

Comparing Perfect Competition and Monopsonistic Factor Markets

Labor markets can take different forms. Compare and contrast a perfectly competitive labor market wi

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 Using the Least Cost Rule

A firm uses both labor and capital for production. The firm’s technology yields a marginal product o

Derived Demand for Labor: Analyzing MRP and Optimal Hiring

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

Derived Demand Impact from Product Market Conditions

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

Determinants of Labor Supply: Qualitative Analysis

Labor supply is influenced by various factors. Analyze these determinants and their impact on the la

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

Disruption in Labor Supply Due to a Natural Disaster

A sudden natural disaster disrupts the local labor market, leading to a temporary leftward shift in

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

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 Binding Minimum Wage on Labor Market Dynamics

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

Effects of Demographic Changes on Labor Supply

In a regional economy, demographic changes lead to a decrease in the labor supply. Assess the impact

Effects of Technological Innovation on Factor Productivity

A firm adopts new technology that increases its marginal product of labor. Initially, $$MPL(L) = 15

Elasticity of Labor Supply

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

Enhanced Productivity Through Training

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

Equilibrium in Perfectly Competitive Factor Markets

Consider a competitive labor market where firms hire workers until $$MRP = MFC$$. The table below pr

Externalities in Agriculture: Overuse of Fertilizers

Excessive fertilizer use in agriculture leads to nutrient runoff that damages aquatic ecosystems. An

Factor Supply: Impact on Wage Equilibrium

Consider a local labor market where the supply of labor is influenced by factors such as personal va

Factors Affecting Labor Supply and Demand

List and describe three determinants of labor demand and three determinants of labor supply. (a) For

Government Intervention and Factor Market Outcomes

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

Government Intervention: Minimum Wage in the Labor Market

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

Government Intervention: Tax on Hiring in Labor Markets

The government imposes a per-worker tax of $4 on firms in a competitive labor market. Analyze how th

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

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

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

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

Influence of Immigration on the Factor Market

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

International Trade and Factor Demand

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

Interpreting Factor Demand Shifts Due to Product Price Changes

A firm experiences a decline in the market price of its final product from $50 to $40 while the marg

Labor 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.

Marginal Factor Cost Analysis

A firm faces an upward sloping labor supply schedule and must determine its marginal factor cost (MF

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

Negative Externality in Renewable Energy Production

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

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 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 Factor Adjustments and Diminishing Marginal Returns

This question explores how diminishing marginal returns in labor affect a firm’s short-run hiring de

Skill-Biased Technological Change and Labor Market Outcomes

Recent technological advancements have increased the productivity of skilled workers relative to uns

Technological Change and Factor Demand

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

Water Consumption in Beverage Industry

A beverage company uses large quantities of water in its production process, leading to environmenta

Allocative Efficiency and Deadweight Loss

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

Analyzing Price Controls: Price Ceiling and Price Floor Cases

This FRQ examines the effects of government-imposed price controls, such as price ceilings and floor

Analyzing Price Floors and Agricultural Surplus

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

Antitrust Policies and Market Efficiency Improvement

Antitrust policies are enacted to reduce market power and promote competitive markets. Answer the fo

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

Comparative Policy Analysis: Tax vs Subsidy vs Regulation

Policymakers have several tools to correct market failures due to externalities. Compare the effects

Comparing Per-Unit and Lump-Sum Taxes in Different Market Structures

This FRQ compares the effects of per-unit and lump-sum taxes on a firm operating in a monopolistic c

Correcting Underproduction in the Education Market

In the market for higher education, positive externalities result in benefits to society that exceed

Cost-Benefit Analysis in Regulatory Policy

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

Deadweight Loss Correction in Manufacturing with Externality

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

Determining Elasticities and Their Policy Implications in Retail Markets

This FRQ requires the calculation of own-price and cross-price elasticities for retail products and

Effects of a Per-Unit Tax in a Competitive Market

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

Evaluating Price Ceilings in the Rental Housing Market

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

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 15: Government Intervention to Address Pollution Externalities

Consider a market where production creates pollution, introducing a negative externality. Analyze ho

FRQ 17: Anti-Trust Policies and Market Efficiency

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

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

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

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 Regulation in Response to Negative Externalities: Pollution Control

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

Government Subsidy to Address a Positive Externality in Education

This FRQ examines how a per-student subsidy can correct an underprovided positive externality, such

Market Failure from Asymmetric Information

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

Market Power and Antitrust Policies

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

Market Power, Monopolies, and Antitrust Policy

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

Measuring Income Inequality: Lorenz Curve and Gini Coefficient

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

Measuring Income Inequality: The Lorenz Curve and Gini Coefficient

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

Positive Externality in Renewable Energy Investment

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

Price Ceiling Effects in Monopolistic Competition

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

Price Floor in Agricultural Markets

The government has implemented a binding price floor to support wheat farmers' incomes. Analyze the

Promoting Positive Externalities with Subsidies

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

Public Goods and the Free Rider Problem

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

Public Goods Provision and the Free-Rider Problem

This FRQ explores why public goods are underprovided in a free market and the role of the free-rider

Public Health and Government Subsidy Analysis

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

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

Social Efficiency in Labor Markets

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

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