AP Microeconomics FRQ Room

Analysis of Implicit vs. Explicit Costs in Business Decisions

Discuss the differences between implicit and explicit costs in a business context and how they facto

Analyzing the Role of Positive and Normative Statements in Policy Debates

Evaluate how positive and normative statements influence policy debates and economic decision-making

Consumer Choice and Budget Constraint

This question examines consumer choice within the framework of a budget constraint.

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 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

Factors of Production and Economic Growth

This question explores the four factors of production and how changes in these factors can influence

FRQ 9: Consumer Choice and Marginal Analysis

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

FRQ 12: Efficiency and Economic Growth via the PPC

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

FRQ 13: Market Failures – Externalities and Public Goods

This question explores market failures by examining negative externalities and the provision of publ

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

Graphical Analysis of Demand Elasticity

Interpret a graphical representation of demand for Product Z and analyze consumer responsiveness to

Impacts of External Shocks on the PPC

Analyze how external shocks, such as natural disasters, can affect an economy's production possibili

Integrative Analysis: Economic Concepts in Business Decision-Making

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

Managerial Decision-Making and Opportunity Costs

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

Marginal Analysis and Consumer Choice

This question examines the role of marginal analysis in consumer decision-making, particularly throu

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 Equilibrium

Analyze how consumers achieve equilibrium by maximizing utility through the optimal allocation of th

Market Equilibrium and Surplus Analysis

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

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

Microeconomics vs. Macroeconomics Distinction

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

Microeconomics vs. Macroeconomics: Analyzing Economic Perspectives

Compare and contrast microeconomics and macroeconomics, and analyze how each field addresses economi

Normative vs. Positive Economic Statements

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

Opportunity Cost and Strategic Business Decisions

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

Positive vs. Normative Economics Analysis

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

Positive vs. Normative Economics Evaluation

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

Production Possibilities Curve (PPC) Analysis

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

Production Possibilities Curve (PPC) Interpretation

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

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 in Resource Allocation

Discuss the concepts of scarcity and opportunity cost in the context of personal budgeting. Consider

Scarcity and Opportunity Costs

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

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

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.

Analyzing the Effects of Market Interventions Using Supply and Demand Functions

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

Calculating Deadweight Loss from Taxation

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

Calculating Price Elasticity of Demand from Data

Using the data provided, analyze the price elasticity of demand for a product.

Changes in Consumer Preferences and Market Equilibrium

A new trend increases the popularity of a specific tech gadget, causing a shift in consumer preferen

Comparative Analysis of Demand and Supply Elasticities

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

Comparative Statics: Demand Increase

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

Cross Price Elasticity and Market Competition

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

Demand Elasticity and Total Revenue Dynamics

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

Double Shift: Simultaneous Increase in Demand and Supply

In a market where both demand and supply increase simultaneously, analyze how the equilibrium price

Double Shifts: Simultaneous Changes in Supply and Demand

Examine the market outcome when both supply and demand shift simultaneously. Answer the following pa

Dust Pollution from Cement Production

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

Effects of a Price Ceiling in the Essential Medicines Market

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

Effects of a Price Ceiling on Public Transit Fares

A government imposes a price ceiling of $2 on public transit fares, while the market equilibrium is

Elasticity of Supply Calculation

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

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

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 3: Determining Market Equilibrium, Consumer and Producer Surplus

A market is characterized by the following data: | Price ($) | Quantity Demanded | Quantity Supplied

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 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 14: Long-Run Adjustments in Perfect Competition

A perfectly competitive market initially experiences short-run economic profits. Over time, new firm

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 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

FRQ 20: Integrated Analysis in the Electric Vehicle Market

Electric vehicles (EVs) have been gaining popularity. Initially, the market demand is given by $$D:

Impact of Government-Imposed Price Floor in the Agricultural Market

A government has set a price floor for wheat at $3 per unit in an effort to support farmers. Prior t

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

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.

Income Elasticity and Good Classification

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

International Trade Policies: Tariffs and Quotas Impact on Domestic Markets

This question explores the impact of international trade policies on domestic markets, focusing on t

Law of Demand: Effects of Price Change on Quantity Demanded

A market study finds that when the price of smartphones increases from $$\$500$$ to $$\$600$$, the q

Market Equilibrium, Consumer and Producer Surplus

Analyze market equilibrium and welfare analysis in a widget market.

Market Impact of Rent Controls on Housing

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

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

Supply Shocks: Effects of a Technological Improvement

A technological advancement reduces production costs in an industry. The initial supply and demand c

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

Accounting vs. Economic Profit Analysis

A restaurant owner operates in a competitive market and, over a month, earns a total revenue of $200

Accounting vs. Economic Profit Analysis

Examine the differences between accounting profit and economic profit using the provided numerical d

Adjustment to Increased Capital Rental Rate

A firm uses both capital and labor in its production. The rental rate for capital increases from $10

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

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

Chemical Manufacturing with Health Risks

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

Competitive Market Long-Run Adjustments: Entry and Exit

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

Cost Functions and Marginal Analysis and Optimal Production in Perfect Competition

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

Dairy Production and Manure Pollution

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

Deriving the Firm's Supply Curve from its MC Curve

Demonstrate how a firm's marginal cost (MC) curve forms the basis for its supply curve in a perfectl

Effect of a Per-Unit Subsidy on Production and Deadweight Loss

A government introduces a per-unit subsidy of $3 for a firm operating in a competitive market. The f

Electronics Manufacturing and E-Waste

The manufacturing of electronic products is associated with e-waste, a negative externality that imp

Estimating Average and Marginal Costs from a Cost Function

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

FRQ 1: Production Function and Diminishing Marginal Returns Analysis

A company uses labor as its only variable input in the production process. The table below shows the

FRQ 2: Short-Run Production Cost Analysis

A firm operates in the short run with a fixed cost (FC) of $200. Its variable cost (VC) function is

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: Exit Rule and Long-Run Equilibrium in Perfect Competition

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

FRQ 8: Impact of New Technology on Production and Costs

A manufacturing firm introduces new machinery that increases the marginal product of labor (MPL) fro

FRQ 8: Market Supply and Firm Production Decisions

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

FRQ 9: Marginal Analysis and Optimal Output Determination

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

FRQ 13: 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 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 14: Graphing the Production Function

A firm’s production function is given by $$Q = 8 * L - (L^2)/2$$, where L represents the units of la

FRQ 14: Impact of Price Controls on Competitive Firms

Government-imposed price controls can affect both consumer and producer surplus in a market. Part A

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 20: Cost Function Evolution and Scaling Decisions

A firm’s cost function is given by $$TC(Q) = 200 + 3*Q + 0.5*Q^2$$ and it operates in a perfectly co

Graph Analysis of Perfect Competition Market Supply and Demand

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

Industry Supply and Firm’s Cost Structure

An industry consists of 10 identical firms, each with a cost function $$TC(Q) = Q^2 + 40$$. The mark

Industry-Wide Cost Minimization in Perfect Competition

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

Input Price Changes and Cost Curvature

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

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)

Long-Run Market Exit Decision

In a perfectly competitive market, a firm has an average total cost (ATC) of $$40$$ per unit while t

Managerial Decision-Making: Cost Minimization

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

Marginal Cost and Shutdown Decision

A firm’s total cost function is given by $$TC(Q) = Q^2 + 100$$. With this cost structure, answer the

Multi-Stage Production Decision and Profit Maximization

A firm operates with a total cost function of $$TC(Q) = 5 + 10*Q + Q^2$$. Answer the following quest

Paper Production and Deforestation Externalities

Paper production can contribute to deforestation, an externality that is not reflected in the firm’s

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

Profitability Analysis with Changing Market Price

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

Short-Run 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 Production Costs Analysis

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

Shutdown Rule in the Short Run

A firm operating in a competitive market faces a market price of $10. Its cost structure yields an A

Water Consumption and River Pollution

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

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 and Market Structure Dynamics

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

Calculating Price Elasticity in a Monopoly

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

Collusion and Profit Sharing in an Oligopoly Cartel

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

Comparative Analysis of Elasticities: Monopoly vs. Monopolistic Competition

In this question, you will compare the price elasticity of demand for a monopolist versus a firm in

Comparative Analysis: Price Makers and Price Takers

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

Comparing Pricing Strategies across Market Structures

Different market structures lead to distinct pricing strategies and efficiency outcomes. Answer the

Cost Curves and Inefficiencies in Imperfect Competition

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

Determining Diminishing Returns in Tech Gadgets

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

Efficiency Analysis in Custom T-Shirts

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

Efficiency Analysis in Imperfect Markets

Examine the concepts of allocative and productive efficiency and compare efficiency outcomes between

Externalities and Market Inefficiencies in the Online Streaming Sector

An online streaming service, operating in an imperfectly competitive market, creates negative extern

FRQ 2: Price Discrimination in a Monopoly

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

FRQ 5: Advertising Effects on Demand Elasticity in Monopolistic Competition

A monopolistically competitive firm launches an advertising campaign aimed at reducing the price ela

FRQ 8: Regulatory Intervention in Monopolies

A monopolist operates in a market where the demand function is given by $$P = 150 - Q$$ and the marg

FRQ 9: Price Cap Regulation in a Natural Monopoly

A natural monopoly has a total cost function $$TC = 200 + 20*Q$$ and faces the demand function $$P =

FRQ 12: Repeated Game in Oligopoly Collusion

In an oligopolistic market, two firms interact repeatedly over time. Their decisions to cooperate or

FRQ 18: Merger Effects in Oligopolistic Markets

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

FRQ 19: Non-Price Competition through Advertising

Firms in monopolistically competitive markets often rely on advertising to improve market share. Con

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 Luxury Smartphone Accessories Market

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

Government Intervention in Monopoly Markets

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

Government Regulation of a Natural Monopoly

A natural monopoly is subject to government regulation that forces it to set price equal to its aver

Impact of Price Discrimination under Per‐Unit Tax

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

Labor and Production at Gourmet Coffee

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

Long-run Equilibrium in Monopolistic Competition

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

Long-Run Tax Effects in the Coffee Shops Market

In the coffee shops market, which exhibits characteristics of imperfect competition in the long run,

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 Dynamics in Monopolistic Competition

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

Market Entry and Exit in Monopolistic Competition

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

Market Structure Analysis in Imperfect Competition

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

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

Examine the profit-maximizing behavior of a monopolist.

Negative Consumption Externality in the Fast Food Market

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

Oligopolistic Market Externality in the Airline Industry

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

Oligopoly and Strategic Pricing

Examine the strategic pricing decisions in an oligopoly, taking into account interdependent firm beh

Price Discrimination Analysis

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

Price Discrimination and Welfare Analysis in a Monopoly

A monopolist practices price discrimination in order to capture consumer surplus. Consider a scenari

Rising Input Costs in a Natural Monopoly

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

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 on Organic Food Producers

Organic food producers operate in a niche market that exhibits characteristics of imperfect competit

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 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 Competitive and Monopsonistic Labor Markets

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

Changes in Factor Demand and Supply

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

Changes in Factor Demand: Product Market Shifts

A firm experiences an increase in product demand, which affects its derived demand for labor. (i) E

Comparative Analysis of Labor and Capital Markets

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

Comparing Monopsony and Competitive Labor Markets

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

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 the Least Cost Rule

A firm aims to minimize production costs while maintaining its output level by choosing the optimal

Derived Demand and Labor Hiring Decision in Perfect Competition

A firm, Timber Furniture Company, produces handcrafted furniture using labor as a key input. The mar

Derived Demand and Marginal Revenue Product

A firm operates in a perfectly competitive product market where the product sells at $20 per unit. T

Derived Demand and Marginal Revenue Product in Factor Markets

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

Derived Demand and MRP Calculation

This question examines the concept of derived demand and the computation of marginal revenue product

Derived Demand Calculation and Graphing

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

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 =

Economic Profit and Zero Profit in Long-Run

A firm operating in a perfectly competitive factor market is earning short-run economic profit. (a)

Economies of Scale and Cost Analysis

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

Effects of Demographic Changes on Labor Supply

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

Efficiency Analysis in Factor Markets with Subsidies

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

Factor Endowments and Comparative Advantage in International Trade

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

Factor Premium and Least Cost Input Combination

A firm uses both labor and capital in its production process. The cost minimizing condition is achie

Factor Supply: Impact on Wage Equilibrium

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

Government Intervention and Factor Market Outcomes

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

Graphical Analysis of Factor Market Equilibrium

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

Impact of Government Policy on Factor Supply

This question evaluates the effect of a government-imposed minimum wage, which is set above the comp

Impact of Immigration on Domestic Labor Supply

A country experiences an inflow of immigrants, which increases the domestic supply of labor. Initial

Impact of Increased Productivity on Labor Demand

A technological breakthrough increases worker productivity in an industry. Analyze the effect of thi

Impact of Technology on Labor Demand

A firm adopts new technology that increases labor productivity. Analyze the effects of this technolo

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

Labor Demand Response

A firm’s initial marginal product of labor is 25 units and its product sells for $10 each. A new sof

Labor Market Equilibrium with Derived Demand

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

Labor Supply and MFC Analysis in a Monopsony

In a monopsonistic labor market, the labor supply curve is given by $$w = 10 + 0.5*L$$ and the margi

Least Cost Input Mix Determination

A firm uses labor and capital to produce output with marginal products given by $$MPL = 40 - 2*L$$ a

Monopsonistic Labor Market Analysis

Consider a monopsonistic labor market where a single employer faces an upward-sloping labor supply a

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

Multi-Input Factor Market Analysis with Budget Constraint

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

Negative Externality in 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 Urban Transportation

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

Noise Pollution in Residential Construction

Construction firms in a residential area generate significant noise, creating a negative externality

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 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 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

Rapid Increase in Product Demand and Derived Labor Demand

A sudden surge in consumer demand for smartphones leads to an immediate increase in the derived dema

Regression Analysis of Labor Demand

This question analyzes the quantitative relationship between labor demand and wage rates using regre

Short-run vs. Long-run Factor Decisions

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

Technological Change and Derived Labor Demand

This question assesses the impact of technological improvements on the derived demand for labor.

Technological Change and Its Impact on Factor Demand

Consider the impact of a technological improvement that increases the marginal product of labor. Ana

Wage Discrimination and Monopsony

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

Wage Rigidity, Unemployment, and Factor Markets

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

Water Consumption in Beverage Industry

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

Addressing Underinvestment in Education with Subsidies

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

Analyzing the Impact of a Progressive Income Tax on Labor Supply

Evaluate how a progressive income tax influences individual labor supply decisions. Consider both th

Antitrust Policy and Market Efficiency in Monopolistic Competition

Discuss how market power in monopolistic competition can lead to inefficiency and how antitrust inte

Carbon Tax and Environmental Externalities

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

Comparing Private and Social Costs in Externalities

Examine the difference between private cost (MPC) and social cost (MSC) in the presence of externali

Congestion Externality in Urban Transportation

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

Cost-Benefit Analysis of an Environmental Regulation

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

Determining Socially Efficient Output in a Market with Negative Externalities

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

Economic Efficiency vs. Equity: Trade-Offs in Progressive Taxation

Progressive taxation is used to redistribute income and address inequality, but it may also lead to

Evaluating the Efficacy of Anti-Poverty Programs in Reducing Inequality

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

Evaluating the Efficiency of Public Expenditures for Public Goods

This FRQ assesses the efficiency of public expenditures aimed at providing public goods. Using the p

Externality from Pesticide Use in Agriculture

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

FRQ 2: Evaluating Government Intervention for a Negative Externality

Examine a market for Widgets that exhibits a negative externality. In this scenario, the marginal pr

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 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 7: Efficiency Effects of Subsidies in a Market with Positive Externalities

Consider a market with positive externalities, where private markets underproduce relative to the so

FRQ 8: Government Regulation and Non-Price Interventions

Discuss how non-price regulations, such as environmental or safety standards, can be used by the gov

FRQ 12: Impact of Price Ceilings on Housing Markets

Analyze how a government-imposed price ceiling affects the housing market. Assess the changes in con

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 in External Markets: Case Study Analysis

A city faces significant air pollution from local manufacturing. In response, the government impleme

Government Policies and Their Impact on Income Distribution

This FRQ explores how government policies, particularly progressive taxation, can influence income d

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

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

Market Failure due to Asymmetric Information

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

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 Optimal Taxation

Explain how a negative externality can lead to market inefficiency and welfare loss. Analyze how a p

Negative Externality in Automobile Fuel Production

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

Positive Externalities and Subsidies Impact

Analyze how positive externalities lead to market underproduction and explain how government subsidi

Price Floors and Their Effects on Surpluses

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

Public vs. Private Goods and the Free Rider Problem

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

Regulatory Intervention versus Taxation in Externality Reduction

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

Regulatory Measures and Pollution Spillovers

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

Social Efficiency in Labor Markets

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

Subsidies in Monopolistically Competitive Markets

In a monopolistically competitive market, a per-unit subsidy is introduced to encourage the producti

Subsidizing Urban Green Spaces: Addressing Positive Externalities

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

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