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 and Trade

Analyze the roles of absolute advantage and comparative advantage in determining trade patterns betw

Comparative Advantage and Trade

Evaluate how comparative advantage leads to mutually beneficial trade between entities.

Comparative Advantage and Trade Decisions

Evaluate comparative advantage between two countries and discuss potential gains from trade based on

Cost-Benefit Analysis of a Public Policy Initiative

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

Cost-Benefit Analysis: Evaluating Investment Decisions

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

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

Economic Systems and Resource Allocation

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

Economic Systems: Market, Command, and Mixed Economies

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

Evaluating Economic Systems: Market vs. Command

This question analyzes how different economic systems address resource allocation through the fundam

Factors of Production Analysis

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

Factors of Production Analysis

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

FRQ 1: Scarcity and Opportunity Cost

This question examines the fundamental economic concepts of scarcity and opportunity cost, and asks

FRQ 5: Factors of Production – Analysis of Resource Allocation

This question addresses the four factors of production and the role they play in resource allocation

FRQ 8: Opportunity Costs in Decision Making

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

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 14: Government Intervention in Mixed Economies

This question examines how governments can intervene in a mixed economic system to improve resource

FRQ 16: Optimal Consumption and Marginal Utility Analysis

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

FRQ 17: Short-Run vs. Long-Run Firm Decisions

This question explores the differences between short-run and long-run decision-making in a firm's op

FRQ 20: Competitive Market Analysis – Cost Curves and Zero Economic Profit

This question integrates multiple concepts by examining a firm's decision-making process in a perfec

Graphical Analysis of Economic Growth and Shifting PPC

This question requires a detailed graphical analysis of economic growth through shifts in the produc

Graphical Analysis of Market Shifts due to Resource Scarcity

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

Impact of Economic Growth on Production Possibilities

An economy initially has a production possibilities frontier (PPC) connecting 100 units of Good A to

Integrative Analysis: Economic Concepts in Business Decision-Making

This integrative question requires you to apply several economic concepts—scarcity, opportunity cost

Labor vs. Capital: Analyzing Factors of Production

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

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

Market Externalities and Government Intervention

This question focuses on analyzing a market with a negative externality, calculating welfare losses,

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 Production

Analyze the trade-offs involved in production decisions by calculating opportunity costs from given

Opportunity Cost in Education vs. Work Decisions

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

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 and Normative Economic Analysis

Examine the differences between positive and normative economic analysis using the example of evalua

Positive vs. Normative Economics Evaluation

Differentiate between positive and normative economics using theoretical definitions and practical e

Production Possibilities Curve (PPC) and Opportunity Costs

This question requires you to illustrate a production possibilities curve and calculate opportunity

Production Possibilities Curve (PPC) Interpretation

Analyze a production possibilities curve (PPC) to demonstrate understanding of efficient resource al

Production Possibilities Curve and Economic Growth

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

Scarcity and Household Budget Allocation

Analyze how scarcity influences household budgeting decisions and discuss trade-offs using a given m

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

Analyze how the concept of scarcity influences decision-making at both individual and societal level

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

Shifts in the PPC and Economic Growth

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

Specialization, Comparative Advantage and Terms of Trade

This question analyzes the benefits of specialization along with the concepts of comparative advanta

Supply and Demand: Scarcity and Resource Allocation

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

Technological Advancements and Economic Growth Analysis

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

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 in Government Policy Decision

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

Utility Maximization and Consumer Choice: Optimization Problem

This question requires you to solve a consumer choice optimization problem using utility maximizatio

Analyzing Market Dynamics through Price Elasticities and Surplus Loss

This question tests your ability to integrate price elasticity calculations with analysis of total r

Calculating Deadweight Loss from Taxation

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

Consumer and Producer Surplus Changes with a Demand Shift

This question assesses your ability to analyze welfare changes when there is a shift in demand. Answ

Cross-Price and Income Elasticity of Demand Analysis

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

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

Double Shifts in Supply and Demand

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

Effects of Supply-Side Taxes and Subsidies on Market Equilibrium

This question examines how government interventions in the form of taxes and subsidies affect market

Elasticity of Supply Calculation

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

Emission Costs in Brewery Operations

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

FRQ 1: Demand Shifts Analysis in the Smartphone Market

In the premium smartphone market, an increase in consumer income has led to a rise in demand. Firms

FRQ 2: Supply Analysis and Shifts in the Smartphone Market

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

FRQ 2: Supply Response in the Automotive Tire Market

An automotive tire manufacturer experiences a technological innovation that lowers its production co

FRQ 5: Price Elasticity of Supply in the Electronics Market

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

FRQ 6: Cross Price Elasticity of Demand for Coffee and Tea

In the market for hot beverages, an increase in the price of coffee by 20% resulted in a 10% increas

FRQ 10: Cross Price Elasticity of Demand between Coffee and Tea

In a local market, data shows that the quantity demanded of coffee is influenced by changes in the p

FRQ 12: Impact of a Per Unit Tax on Consumer and Producer Surplus in the Soft Drink Market

In a soft drink market, the initial equilibrium is at a price of $2 per unit and a quantity of 1000

FRQ 14: Impact of Technological Advancements on the Tablet Market Supply

A new machine is introduced in the tablet industry that significantly lowers production costs. Answe

FRQ 18: Price Elasticity of Demand and its Impact on Total Revenue at a Restaurant

A restaurant lowers the price of a signature dish from $20 to $15, resulting in an increase in quant

FRQ 20: Impact of Advertising on Market Equilibrium and Surpluses

A firm increases its advertising budget, which shifts the demand curve to the right in the market fo

Impact of a Government-Imposed Price Floor

Examine the effects of a government-imposed price floor on a market.

Impact of Technological Innovation on Supply

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

Impacts of a Price Ceiling in the Dairy Market

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

Income Effect on Demand for Normal and Inferior Goods

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

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

Long Run vs Short Run Elasticity: Comparative Analysis

This question asks you to compare short-run and long-run price elasticity of supply through definiti

Market Disequilibrium: Analyzing Shortages and Surpluses

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

Market Equilibrium and Surplus

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

Market Equilibrium, Consumer and Producer Surplus

Analyze market equilibrium and welfare analysis in a widget market.

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

Multi-step Analysis of Income and Price Elasticity on Market Revenue

A firm collects the following data: When price rises from $$\$20$$ to $$\$25$$, quantity demanded fa

Negative Externality in Industrial Fishing

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

Negative Externality in Widget Production

In the widget market, a factory produces widgets while emitting pollutants that impose an external c

Pollution from Inter-City Bus Services

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

Price Elasticity of Supply and Its Implications

This question explores the concept of price elasticity of supply. You are asked to calculate it usin

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 Shift: Impact of Technology on Production

A technological innovation reduces production costs for suppliers in the market for Product Y. Analy

Taxation Impact on Market Equilibrium

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

Agricultural Production and Pesticide Pollution

Agricultural production using heavy pesticides generates negative externalities that harm the enviro

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

Automobile Emissions in Urban Areas

Urban areas are facing high levels of air pollution due to automobile emissions. Consider the 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

Calculating the Shutdown Point

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

Calculation of Short-run Production Costs

Examine short-run production costs for a firm using the provided data. Analyze fixed and variable co

Comprehensive Profit Maximization under Perfect Competition

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

Cost Functions and Marginal Cost Curve Calculation

A firm’s total cost function is given by $$TC(Q) = 5*Q + 3*Q^2 + 40$$. Analyze the cost structure ba

Cost Minimization in the Long Run

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

Dairy Production and Manure Pollution

Dairy production can create negative externalities, notably through manure pollution. Analyze the re

Economies and Diseconomies of Scale Analysis

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

Effects of Scale on Long-Run Production Costs

A firm’s long-run average total cost (LRATC) is represented by the function $$LRATC = 100 + \frac{20

Efficiency Losses from Government Price Floors

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

Entry and Exit in Perfect Competition (Long-run Analysis)

Consider a market where firms operate under perfect competition. The representative firm's total cos

Ethanol Production and Land Use Externalities

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

FRQ 3: Long-Run Production Costs and Economies of Scale

In the long run, all inputs are variable and firms experience economies and diseconomies of scale. C

FRQ 3: Long-Run Production Costs: Economies and Diseconomies of Scale

Company XYZ is reviewing its long-run production costs. The firm’s long-run average total cost (LRAT

FRQ 4: Entry and Exit Decisions – Short Run vs. Long Run

A firm faces a daily fixed cost of $100 and variable costs of $5 per unit produced. Part A: Explain

FRQ 4: Profit Calculation and Types of Profit

Firm C produces 200 units of its product and sells each unit at a market price of $10. The firm incu

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 15: Market Adjustments in Perfect Competition

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

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

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

FRQ 16: Combined Production and Cost Decision in a Competitive Market

Consider a firm with the production function $$Q = 3*L^{0.5}$$. The firm faces a fixed cost of $100

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 17: Marginal Cost and Revenue in Competitive Firms

In a perfectly competitive market, a firm’s output decision is determined by comparing marginal cost

FRQ 19: Graph Interpretation: Perfect Competition Market Graph

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

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_

Long-Run Entry and Exit Decisions in Perfect Competition

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

Long-Run 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 Cost and Marginal Product Relationship

A manufacturing firm has a marginal product of labor (MPL) given by the function $$MPL = 30 - 2*L$$

Marginal Product Calculation in Production

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

Marginal Revenue and Marginal Cost Dynamics

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

Production Function Analysis

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

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 Calculation: Accounting vs Economic Profit

A firm reports total revenue of $1,000 and explicit costs of $600. If the opportunity cost of the fi

Profit Maximization in Perfect Competition

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

Restaurant Production and Congestion Externalities

A cluster of restaurants in a downtown area is causing increased traffic congestion, a negative exte

Short-Run Shutdown Decision Analysis

A firm’s average variable cost (AVC) is given by $$AVC(Q) = 4 + \frac{20}{Q}$$ for Q ≥ 1. The curren

Short‐Run Production Costs Analysis

Consider a firm operating in the short run with fixed and variable costs. The following table shows

Technological Improvements and Cost Impact

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

Advertising and Strategic Interaction in Oligopoly

Examine the role of advertising in shaping competitive interactions among firms in an oligopolistic

Advertising Effects in Monopolistic Competition

A firm in a monopolistically competitive market launches an advertising campaign to differentiate it

Advertising Expenditure and Market Demand Shifts

Examine how advertising expenditures affect the demand curve and market equilibrium in a monopolisti

Advertising, Demand Elasticity, and Pricing

Examine the effect of advertising on demand elasticity and pricing decisions in monopolistic competi

Barriers to Entry in Various Market Structures

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

Collusion and Cartel Formation in Oligopolistic Markets

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

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 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 Evaluation for Craft Clothing Co.

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

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.

Examining Production in a Software Solutions Firm

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

Externality Impact in a Regional Utility Company

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

FRQ 1: Market Regulation in a Natural Monopoly

Consider a natural monopoly that faces the market demand function $$P = 100 - Q$$ and has a total co

FRQ 2: Price Discrimination in a Monopoly

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

FRQ 3: Oligopoly Game Theory Analysis

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

FRQ 16: Comparative Market Structure Analysis

Compare how monopoly, monopolistic competition, and oligopoly differ in terms of pricing, output, ef

FRQ 18: Merger Effects in Oligopolistic Markets

In an oligopolistic industry composed of four firms, a merger takes place resulting in a combined fi

Game Theory in Oligopoly: Dominant Strategies and Nash Equilibrium

Consider an oligopolistic market where Firms A and B have the following payoff matrix (values repres

Game Theory in Oligopoly: Dominant Strategy and Nash Equilibrium

Consider a duopoly where each firm must choose between cooperating or competing. Use game theory to

Impact of Advertising in Monopolistic Competition

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

Impact of Price Floors in Monopolistic Competition

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

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

Marginal Analysis at Deli Delights

Deli Delights, an innovative delicatessen, operates under imperfect competition. It faces a fixed co

Market Dynamics in Monopolistic Competition

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

Oligopoly and Game Theory: Payoff Matrix Analysis

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

Price Discrimination in a Natural Monopoly

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

Price Elasticity and Price Discrimination Strategies

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

Production Analysis at Urban Prints

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

Regulatory Impact on Monopolistic Pricing Strategies

A monopoly faces public and regulatory pressure to reduce its profit-driven price. A government-impo

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 and Price Discrimination in the Software Industry

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

Taxation in a Market with Economies of Scale: High-Tech Gadgets

High-tech gadgets are produced in a market where economies of scale are present, and the competitive

Third-Degree Price Discrimination in the Airline Industry

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

Air Pollution from Cement Production

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

Analysis of Derived Demand Curve Shifts

This question requires you to analyze shifts in the derived demand curve for labor and to explain ho

Analysis of Diminishing Marginal Returns

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

Assessing the Derived Demand for Labor in Various Industries

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

Budget Constraints and Factor Markets

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

Comparative Analysis: Perfect Competition vs. Monopsony in Factor Markets

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

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 Labor

Examine the concept of derived demand for labor by deriving the Marginal Revenue Product (MRP) funct

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

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 Demographic Changes on Labor Supply

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

Effects of Unionization on Labor Costs and Employment

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

Effects of Universal Basic Income on Labor Supply

A government introduces a universal basic income (UBI), which provides a fixed income to all citizen

Elasticity of Labor Supply

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

Externalities in Agriculture: Overuse of Fertilizers

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

Factor Market Dynamics in an Economic Downturn

Analyze how an economic downturn impacts factor markets, focusing on shifts in demand for labor and

Factor Supply Shifts: Effects on Employment and Wages

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

Factors Affecting Labor Supply and Demand

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

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

Graphical Analysis of Supply and Demand in Factor Markets

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

Impact of External Shocks on Labor Demand

A technological innovation in a production process increases worker productivity by 20%. Initially,

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 Improvement on Derived Demand

A firm upgrades its technology, which improves the productivity of labor. Initially, at a given leve

Impact of Trade Liberalization on the Derived Demand for Labor in Local Manufacturing

Following trade liberalization, a local manufacturing sector faces reduced product demand, which in

Input Substitution Under Changing Relative Factor Prices

This question examines how changes in relative prices affect the firm's input mix for cost minimizat

Long-Run Adjustments in Factor Markets due to Entry and Exit

Over the long run, the entry and exit of firms in a product market affect the derived demand for lab

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 Hiring Decisions in Labor Markets

Understanding marginal factor cost (MFC) is critical for a firm’s hiring decision, especially in mar

Marginal Factor Cost Determination in a Monopsony

A monopsonistic firm has a labor supply function given by $$w = 5 + 0.4*L$$. The firm must determine

Market Failure and Underemployment in Factor Markets

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

Minimum Wage Effects in Different Market Structures

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

Monopsonistic Labor Market Analysis

In a monopsonistic labor market, a single employer determines both the wage rate and employment leve

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 Hospitality Industry

A hotel chain’s expansion in a residential area causes increased congestion and noise, which imposes

Negative Externality in Mining Operations

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

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

Profit Maximization and Hiring Decisions in Competitive Factor Markets

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

Profit Maximization in 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

Returns to Scale and Labor Demand

This question explores the relationship between returns to scale and the marginal revenue product of

Seasonal Variations in Labor Supply in the Retail Sector

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

Skill-Biased Technological Change and Labor Market Outcomes

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

Wage Determination: A Case Study

In a small town, a manufacturing plant is the primary employer. Initially, the plant pays workers $1

Addressing Underinvestment in Education with Subsidies

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

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

Allocative Efficiency and Market Outcomes in a Competitive Market

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

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 the Impact of Subsidies on Equilibrium in a Monopolistically Competitive Market

This FRQ investigates the effect of a per-unit subsidy on equilibrium outcomes in a monopolistically

Comparative Analysis of Government Interventions in Externality Markets

A manufacturing process creates a significant negative externality due to waste emissions. The gover

Correcting Negative Externalities in the Cigarette Market

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

Cost-Benefit Analysis of an Environmental Regulation

A government regulation requires factories to install pollution filters at a cost of $$30$$ per unit

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 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

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

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

FRQ 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 6: Effects of Price Floors in the Labor Market

Examine the impact of a minimum wage (price floor) in the labor market. Analyze changes in employmen

FRQ 14: Government Intervention in R&D Markets

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

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 19: Government Subsidies and Public Goods Underinvestment

Analyze the market failure associated with the underproduction of public goods and evaluate the role

Government Intervention and Market Power: Effects on Consumer Choice

A dominant firm in an imperfectly competitive market is charging high prices, reducing consumer choi

Government Intervention in a Labor Market: Minimum Wage Effects

This FRQ explores the effects of imposing a minimum wage in a labor market. Using the graph provided

Government Intervention in a Monopolistic Market

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

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

Inequality and Income Redistribution Policy

Examine the current state of income inequality using a Lorenz curve and propose income redistributio

Market Power and Antitrust Regulation: A Comparative Analysis

Evaluate how market power in a monopolistic market leads to inefficiency and how antitrust policies

Minimum Wage Effects in the Labor Market

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

Negative Externalities and Tax Policy

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

Negative Externality in Industrial Factory Emissions

An industrial factory produces goods while emitting pollutants into the air, resulting in a negative

Negative Externality in Water Pollution from Irrigation

Excessive fertilizer use in irrigation can lead to water pollution, a negative externality affecting

Non-price Regulation and Market Efficiency

A polluting industry is subject to non-price regulation in the form of mandated emission standards.

Price Ceiling in the Rental Market

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

Regulating Natural Monopolies

Natural monopolies often require government regulation to prevent excessive pricing. Analyze how gov

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

Tax Structures and Income Inequality

Compare how different tax structures (progressive, proportional, and regressive) impact income distr

Taxation and Income Distribution: Progressive vs. Regressive Taxes

Different tax structures can have significant effects on income distribution.

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