AP Microeconomics FRQ Room

Analysis of Productive vs. Allocative Efficiency

Distinguish between productive efficiency and allocative efficiency using the production possibiliti

Comparative Advantage and International Trade

This question focuses on comparative advantage and its role in international trade. Answer all parts

Comparative Advantage and Trade

This question explores the concepts of absolute advantage, comparative advantage, and the benefits o

Comparative Advantage and Trade

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

Comparative Advantage and Trade

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

Comparative Advantage in Production Decisions

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

Comprehensive Guide to Basic Economic Concepts

This guide provides a complete overview of the foundational economic concepts necessary for understa

Consumer Choice and Budget Constraint

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

Cost-Benefit Analysis in Business Decisions

Analyze how cost-benefit analysis, including both explicit and implicit costs, informs business deci

Cost-Benefit Analysis in Investment Decisions

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

Diminishing Marginal Utility and Returns

Discuss the concepts of diminishing marginal utility and diminishing marginal returns, and provide a

Economic Growth and the Production Possibilities Curve

This question focuses on economic growth as depicted by shifts in the Production Possibilities Curve

Economic Systems and Government Policy

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

Economic Systems and Resource Allocation

Analyze different economic systems and their approaches to resource allocation.

Entrepreneurial Decision-Making: Factors of Production and Marginal Analysis

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

Evaluating Consumer and Producer Surplus

This question focuses on understanding and calculating consumer and producer surplus, and analyzing

Evaluating Trade-Offs in Personal Decision Making

Examine how individuals face trade-offs and opportunity costs when making personal decisions, such a

Factors of Production Analysis

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

Factors of Production and Resource Allocation

This question assesses your understanding of the factors of production and how they contribute to re

FRQ 7: Comparing Microeconomics and Macroeconomics

This question compares the two primary branches of economics by examining their scope, focus, and re

FRQ 11: Profit Maximization in Competitive Markets

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

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

Integrative Analysis: Economic Concepts in Business Decision-Making

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

Marginal Analysis and Consumer Choice

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

Marginal Analysis and Consumer Choice

Evaluate how consumers maximize utility using marginal analysis and the optimal consumption rule.

Marginal Analysis and Diminishing Returns

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

Marginal Analysis in Consumer Choice

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

Market Externalities and Government Intervention

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

Micro vs. Macroeconomics Perspectives

This question requires you to contrast the scope and analysis of microeconomics and macroeconomics.

Microeconomics vs. Macroeconomics

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

Opportunity Cost Using PPC and Real-World Scenario

Utilize a Production Possibilities Curve (PPC) to analyze opportunity costs and the impact of techno

Optimal Consumption and Marginal Utility Analysis

A consumer has a budget of $$100$$ to spend on Good X and Good Y. The price of Good X is $$10$$ and

Optimal Consumption Bundles Through Marginal Utility Per Dollar Analysis

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

Positive Analysis Using Economic Data

This question is designed to assess your ability to use positive economic analysis based on empirica

Positive vs. Normative Economics

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

Positive vs. Normative Economics Evaluation

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

Production Possibilities Curve Analysis

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

Production Possibilities Curve Analysis

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

Resource Allocation in a Mixed Economic System

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

The Role of Implicit and Explicit Costs

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

Trade-offs in Capital Investment Decisions

Examine the trade-offs involved in making capital investment decisions in terms of explicit and impl

Analyzing Market Dynamics through Price Elasticities and Surplus Loss

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

Basic Demand Analysis

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

Basic Demand Analysis and Shifts

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

Calculating Price Elasticity of Demand from Data

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

Cross Price Elasticity: Identifying Substitutes and Complements

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

Determining Market Equilibrium from Demand and Supply Functions

Consider a market where the demand curve is given by $$P = 100 - Q$$ and the supply curve is $$P = 2

Effects of a Price Ceiling in the Essential Medicines Market

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

Effects of a Price 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

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 Response in the Automotive Tire Market

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

FRQ 3: Determining Market Equilibrium, Consumer and Producer Surplus

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

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 8: Impact of Technological Innovation on Supply and Market Equilibrium

A firm operating in a competitive market experiences a technological breakthrough that reduces its p

FRQ 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

Impact of a Price Ceiling during a Pandemic in the Fast Food Market

During a pandemic, a government imposes a price ceiling of $8 on fast food to protect consumers, low

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

Implications of a Price Floor in the Athletic Shoes Market

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

International Trade: Impact of Tariffs and Quotas on Domestic Markets

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

Monopolist Output, Revenue, and Price Discrimination

This question examines a monopolist's decision-making process regarding output and pricing, includin

Negative Externality in Industrial Fishing

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

Noise Externality in Restaurant Operations

A restaurant operating late at night generates noise that disturbs local residents, creating a negat

Price Elasticity of Supply Analysis

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

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

Taxation Impact on Market Equilibrium

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

Technological Improvements and the Supply Curve

Assess how improvements in technology affect the supply curve in a competitive market.

Traffic Congestion in the Ride-Sharing Market

Ride-sharing services contribute to traffic congestion, which imposes additional social costs not bo

Urban Congestion from Ride-Hailing Services

Ride-hailing services in a busy city contribute to increased traffic congestion and pollution. The e

Waste Management in the Fast Food Industry

The fast food industry generates substantial waste, creating a negative externality for local commun

Agricultural Production and Pesticide Pollution

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

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

Analyzing Diminishing Marginal Returns with Production Data

A firm’s production data is provided in the table below. Analyze the data to answer questions on dim

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

Comparative Statics: Changes in Input Prices

A firm’s short-run total cost is given by $$TC = 30 + 6*Q + Q^2$$. Suppose a rise in the wage rate c

Competitive Market Long-Run Adjustments: Entry and Exit

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

Cost Curve Comparison: Short Run vs. Long Run

A firm’s cost environment is depicted in the graph below, which shows several short-run Average Tota

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

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$

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

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

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

Fixed and Variable Input Decisions in the Short Run

A firm operates with a fixed capital of 10 units while labor is variable. The production data is pro

Fossil Fuel Energy Production and Pollution

Fossil fuel energy production has substantial negative externalities due to air pollution. Analyze t

FRQ 2: Short-Run Cost Analysis

Firm B operates in the short run and has a total cost function given by $$TC(Q) = 100 + 20*Q + 5*Q^2

FRQ 3: 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 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 7: Accounting vs. Economic Profit Analysis

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

FRQ 9: Production Decisions Under a Shift in Demand

A firm operating in a perfectly competitive market faces a shift in demand. The attached graph shows

FRQ 11: Cost Minimization in the Long Run

Long-run cost minimization requires firms to choose the combination of inputs that minimizes the tot

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: Short-Run Shutdown Analysis

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

FRQ 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 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 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 19: Graph Interpretation: Perfect Competition Market Graph

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

FRQ 19: Impact of Increased Wage on Production and Costs

A fast-food chain originally had a variable cost function of $$VC(Q) = 2 * Q + 0.1 * Q^2$$. Due to a

Graphing Cost Curves and Determining Shutdown Point

A firm’s short-run cost structure is represented by several cost curves. Based on the provided graph

Graphing Production and Cost Curves

A firm’s cost curves are presented in the graph provided. Analyze the diagram and answer the followi

Impact of Factor Input Changes on the Production Function

A firm produces output using both capital and labor. The table below provides data for different com

Impact of Scale on Average Total Cost

Discuss the relationship between output scale and average total cost in the context of economies of

Impact of Technological Change on Production and Costs

A firm adopts new technology that alters its production process. Below are two production tables: on

Input Price Changes and Cost Curves in Perfect Competition

Suppose a firm in a competitive market experiences an increase in the rental rate of capital. (a)

Long-Run Market Exit Decision

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

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

Market Price Change and its Impact on Output and Shutdown

A sudden market event causes the market price to drop from $30 to $20. Analyze the impact of this ch

Mining and Environmental Degradation

Mining activities can cause significant environmental degradation, which is a negative externality n

Perfect Competition Market Graph Analysis

In a perfectly competitive market, many small firms operate as price takers. Answer the following pa

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

A firm operating in the short run has a total cost (TC) function given by $$TC(Q) = 100 + 20*Q + 2*Q

Short-run Shutdown Decision Analysis

Assess the shutdown decision for a firm in the short run based on its variable costs relative to mar

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

Calculating Output in a Price-Discriminating Monopoly

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

Cartels and Collusive Behavior in Oligopoly

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

Cost Evaluation for Craft Clothing Co.

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

Cost Structures in Monopolistic Competition

Examine the implications of cost structures on firm behavior in monopolistic competition.

Cross-Price Elasticity in Imperfect Competition

This question focuses on the concept of cross-price elasticity and its implications for related good

Dominant Strategy and Nash Equilibrium in Oligopoly

Analyze a strategic decision scenario in an oligopolistic market using game theory.

Economies of Scale as Barriers to Entry

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

Elasticity and Marginal Revenue in Monopoly Pricing

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

Entry and Exit in Monopolistic Competition

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

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 16: Comparative Market Structure Analysis

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

Game Theory and Collusion in an Oligopoly

Consider an oligopolistic market where two firms are deciding whether to "Cooperate" (maintain high

Government Regulation of Natural Monopolies

This question explores the existence of natural monopolies and examines government interventions aim

Impact of Advertising in Monopolistic Competition

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

Impacts of Price Wars in Oligopolistic Markets

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

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

International Externalities in the Steel Market

An international steel producer, operating in an imperfectly competitive market, generates considera

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

Monopoly Profit Maximization and Deadweight Loss Analysis

In this question, you will analyze how a monopolist maximizes profit, the concepts of allocative and

Nash Equilibrium Analysis in an Oligopolistic Market

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

Natural Monopoly and Regulation

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

Negative Externalities and Regulatory Challenges in the Shipping Industry

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

Negative Externality in the Soft Drink Market

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

Price Discrimination and Welfare Analysis in a Monopoly

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

Price Discrimination Strategies in Imperfectly Competitive Markets

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

Price Discrimination: Data Analysis and Calculations

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

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

Regulatory Impacts on Monopoly: A Price Ceiling Analysis

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

Rising Input Costs in a Natural Monopoly

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

Short-Run and Long-Run Analysis in Monopolistic Competition

Examine the transition from short-run profit to long-run normal profit in a monopolistically competi

Shutdown Decisions in Imperfectly Competitive Firms

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

Taxation Impact in an Oligopolistic Market

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

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,

Adjustments to Rising Labor Costs: Firm's Response

Investigate how a firm adjusts its hiring decision in response to an increase in wages in a competit

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 in Response to Changes in Final Product Markets

An increase in the price of the final product can lead to a higher derived demand for labor. Examine

Analyzing the Effects of a Tax on Labor Employment

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

Application of the Least Cost Rule 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

Calculating Marginal Revenue Product from Production Data

A firm’s hiring decision is based on the marginal revenue product (MRP) of labor. Using given produc

Changes in Derived Demand due to Technological Advances

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

Comparative Factor Pricing: Changes in Input Prices

A firm employs both labor and capital. Initially, the prices are $$P_L = 10$$ and $$P_K = 20$$, with

Cost Analysis and Factor Input Decisions

A firm produces output using the production function $$Q = L^{0.5} * K^{0.5}$$, where L is labor and

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 Analysis

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

Deriving Marginal Revenue Product from a Production Function

A firm’s production function is given by $$Q = L^{0.5} * K^{0.5}$$. With capital fixed at K = 100 an

Determinants of Labor Supply

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

Determinants of Labor Supply: Qualitative Analysis

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

Determining Profit Maximizing Labor Using Production Data

A firm uses production data to decide how many workers to hire. Using this data, determine the profi

Dynamic Factor Demand under Seasonal Demand Shifts

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

Economic Impact of Changing Government Policies on Factor Markets

A regional economy experiences simultaneous policy changes: an increase in the minimum wage and a re

Economies of Scale and Factor Demand

This question explores how economies of scale, which reduce average production costs as output incre

Effect of Wage Changes on Labor Hiring Decisions

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

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 Legal Interventions on Labor Market Costs

New safety regulations increase the cost of hiring labor for firms. Answer the following:

Effects of Unionization on Labor Costs and Employment

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

Externalities in Food Production: Pesticide Use

A large-scale farm uses pesticides that result in runoff, which negatively impacts neighboring commu

Factor Market Dynamics in an Economic Downturn

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

Factor Market Equilibrium and Derived Demand Analysis

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

Factor Market Equilibrium under Demand and Supply Shifts

A new government policy increases the minimum wage, while at the same time an innovation boosts work

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

Firm Size, Economies of Scale, and Factor Demand

Large firms experiencing economies of scale may demand factors of production differently compared to

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 Factor Market Equilibrium

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

Impact of a Wage Subsidy on Factor Market Outcomes

The government introduces a wage subsidy for low-income workers, effectively reducing the cost of la

Impact of an Influx of Migrant Workers on Labor Supply

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

Impact of 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 Input Price Change on Factor Demand

A firm initially pays $30 per unit for labor and $50 per unit for capital. If the wage rate increase

Impact of Minimum Wage on Competitive Factor Markets

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

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

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

Industrial Production and Environmental Costs

A manufacturing plant producing electronic devices generates toxic waste that imposes a negative ext

Integrative Analysis: Factor Market Shifts and Firm Profitability

This integrative question examines how changes in technology, government policy, and input prices in

International Trade and Factor Demand

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

Labor Market Equilibrium and Elasticities

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

Labor Supply and Demand in Competitive Markets

Consider a competitive labor market. Analyze the market equilibrium and the effects of a binding min

Labor Supply Shifts Due to Immigration

This question explores the effects of an influx of immigrants on the labor market, particularly on l

Least Cost Input Combination and the Least Cost Rule

Firms choose the combination of inputs that minimizes production costs. Using the least cost rule, a

Least Cost Rule and Factor Choice

A firm uses both labor and capital in production. It faces input prices of $$P_{L} = 15$$ and $$P_{K

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 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

Minimum Wage Effects in Competitive and Monopsonistic Markets

Analyze the effects of imposing a binding minimum wage on employment in both competitive and monopso

Monopolistic Competition in Factor Markets

Analyze the behavior of factor markets under conditions of monopolistic competition and discuss the

Monopsonistic Labor Market Analysis

This question analyzes the characteristics of a monopsonistic labor market, where a single employer

Monopsonistic Labor Market Analysis

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

Monopsony vs Competitive Market Wage Differentiation

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

Negative Externalities in Tech Manufacturing

A semiconductor manufacturing plant generates hazardous waste that contaminates local water supplies

Negative Externality in Fast Food Production

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

Negative Externality in Textile Production

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

Optimal Use of Labor and Capital

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

Profit Maximization in Multi-Factor Production

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

Profit Maximization under Technological Change

This question explores how technological change affects a firm’s production decisions, specifically

Welfare Implications of Monopsonistic Labor Markets

Monopsonistic labor markets often result in inefficiencies compared to competitive markets. Analyze

Analyzing Negative Externalities and Corrective Tax

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

Antitrust Policies and Market Efficiency Improvement

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

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 Price Control and Subsidy Interventions in the Coffee Market

In the coffee market, a binding price ceiling is imposed to protect consumers from high prices. Alte

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 the Role of Antitrust Policy in Promoting Competition

This FRQ assesses the role of antitrust policy in addressing market concentration. A recent merger i

Externality from Pesticide Use in Agriculture

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

FRQ 1: Graphing the Impact of a Per Unit Tax on Market Efficiency

Analyze the impact of a per unit tax on a competitive market for Good X. In this problem, you will d

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 13: Minimum Wage in a Monopsony Labor Market

Analyze the effects of imposing a minimum wage in a monopsonistic labor market. Explain how it affec

FRQ 16: Taxation in Competitive vs. Monopolistic Markets

Compare the effects of a per unit tax on a perfectly competitive market with those on a monopolistic

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

Impact of a Price Ceiling on Market Efficiency

This FRQ examines how a price ceiling affects market equilibrium, consumer surplus, producer surplus

Long Run Effects of Government Subsidies on Market Structure

An industry receives government subsidies in the short run. Over time, these subsidies may alter 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

Minimum Wage Effects in the Labor Market

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

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

Positive Externality in Research and Development Investment

Investment in research and development (R&D) projects often yields benefits that spill over to socie

Production Function and Cost Analysis in a Competitive Market

Consider a firm operating in a perfectly competitive market with a fixed cost F = $50 and a wage per

Public Goods and the Free Rider Problem

Public goods, characterized by non-excludability and non-rivalry, are often underprovided in free ma

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

Public vs. Private Goods and the Free-Rider Problem

Compare and contrast public and private goods, and analyze the free-rider problem associated with pu

Quantifying Deadweight Loss from a Per-Unit Tax in a Competitive Market

Consider a perfectly competitive market with the following functions: Demand: $$P = 100 - 2*Q$$ and

Subsidies and Cost Structure in Perfect Competition

Consider a perfectly competitive firm with a total cost function: $$TC(Q) = 50 + 10*Q + 2*Q^2$$. The

Subsidizing Renewable Energy: Impact on Market Equilibrium

Focus on the renewable energy market, where demand is given by $$P = 150 - 2*Q$$ and supply is given

Subsidizing Urban Green Spaces: Addressing Positive Externalities

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

Tax Burden Distribution in a Competitive Market

Analyze how the burden of a per-unit tax is distributed between buyers and sellers in a competitive

Taxation Effects on a Firm's Cost Structure: Per-Unit vs. Lump-Sum Tax

A firm operating in a perfectly competitive market faces typical cost curves. Government policy is c

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