For special occasions some people purchase and set off fireworks in their backyards. Choose the one alternative that best completes the statement or answers the question. Assume that CableNow does not practice price discrimination. (e) Suppose the government instead imposes an $8 price floor. (Explain means why!!!) Since the AP Micro exam changed somewhat in their format. (D) Now assume the Patent expires. (a) If the firm uses one unit of capital and one unit of labor, will it be operating with constant, increasing, or decreasing returns to scale? MPC denotes marginal private cost and MSB denotes marginal social benefit. (d) Assume that the south suburb has enacted an incentive package to attract new business. (c) Instead of granting a subsidy, assume now that the government chooses to require CableNow to produce the quantity at which CableNow earns zero economic profit. Does the value of Theresa’s income elasticity indicate that bagels are normal goods, inferior goods, substitutes, or complements? Assume that a country’s economy is in a short-run equilibrium and the actual Calculate the price of a towel (c) Draw a graph of the labor supply and demand curves and show the equilibrium amount of labor hired (d) Given your answer to (b), if the price of a towel increases, explain how Pride's profit-maximizing quantity of labor will be affected, Unit 3: Production, Cost, and Perfect Competition, 25 Minutes for Question 1: 2 Short FRQs (55% of your exam), Question 1 is equivalent to a combination of 2 short questions like FRQ 2 and FRQ 3, 15 Minutes for Question 2: Long FRQ (45% of your exam). It couldn’t hurt. (i) What is the numerical value of the price elasticity of demand for good R? Completely shade the area representing the sum of consumer and producer surplus after the price ceiling. (e) Assume that regulators set an output of 11 units. (B) Assume that the government imposes a lump-sum tax on GCR. How do you do marginal analysis? (i) What will happen to market price and quantity? Explain. The government gives a lump-sum subsidy to each firm producing in the industry. The part of economics concerned with such individual units as industries, firms, and households and with individual markets, specific goods and services, and product and resource prices. Will Theresa’s demand for bagels increase, decrease, or not change? Show your work (iii) Between $1 and $1.20, is supply elastic, unit elastic, or inelastic? (a) For a competitive market for which there is a binding (effective) price ceiling, draw a correctly labeled graph and label the price ceiling “PC”, the quantity sold “QA”, and the socially efficient output “QB”. (a) Using correctly labeled side-by-side graphs of the factor market for machines and the John Lamb Company, show each of the following. Explain. (i) What will happen to the price and quantity? in 2005, there are only released exams up to 2006 with questions using the updated format. Since the AP Micro exam changed somewhat in their format in 2005, there are only released exams up to 2006 with questions using the updated format. Explain (d) Assume Nirali has a goal of maximizing the sum of her test scores. Outdated Prompts: https://apcentral.collegeboard.org/courses/ap-microeconomics/exam/past-exam-questions, Your email address will not be published. FillUp is earning a positive economic profit (a) Draw a correctly labeled graph for FillUp and show each of the following (i) FillUp's profit maximizing quantity, Qf, (ii) FillUp's profit-maximizing price, labeled Pf, (iii) The deadweight loss associated with FillUp's profit maximizing quantity, shaded completely (iv) the maximum quantity at which fillup would earn zero economic profit, labeled Qz (b) Assume that FillUp's fixed costs increase becase of a new lease on its property and FillUp stays in business. Explain. (ii) What will be the value of the consumer surplus? Required fields are marked *. Dana spends her entire budget of $30 on bottles of water and good X (i) Explain why Dana does not maximize her benefit when she purchases 2 bottles of water and 4 units of good X. Explain (d) If demand for the new device increases, explain what will happen to each of the following in the short run (i) Profit Maximizing Output (ii) Total cost, Consumer and Producer surplus, price controls. So 1 unit of X and 3 units of Y will be purchased, this will use all of her income. (a) Using correctly labeled side-by-side graphs for the labor market and Ray's Stable, show each of the following: (i) The equilibrium wage and quantity for unskilled labor, We and Qe respectively (ii) The wage paid by Ray's Stable and the quantity of unskilled labor hired, labeled Wr and Qr, respectively (b) Is the marginal factor cost of unskilled labor for Ray's Stable greater than, less than, or equal to We? On your graph in part (a), show each of the following. Explain. Explain using the dollar values in the payoff matrix. The chart only includes prompts that use the up to date format, but all past prompts before then are also linked below. Two competing retail firms, Red Shop and Blue Mart, are studying potential locations for new stores in the suburbs of a major city. Using the labeling on the graph, identify the area representing each of the following. (i) Calculate the amount of tax revenue. Identify the monopolist's (i) Profit maximizing quantity and (ii) Profit maximizing price (b) What information indicates that there is a negative externality (c) Identify the socially optimal quantity (d) In the case in which the government imposes a per-unit tax equal to the marginal external cost, identify each of the following (i) The dollar value of the tax, using price labels from the graph (ii) The profit-maximizing quantity associated with the tax (e) Given the monopoly facing the negative externality, would the DWL increase, decrease, or stay the same? (b) Is choosing a location to the south of the city a dominant strategy for Red Shop? (b) Draw the side-by-side graphs for the market and typical firm and show the market price and quantity (Pm and Qm), the firm's quantity (Qf), the firm's average revenue curve (AR), average total cost (ATC), and the area representing total cost shaded completely (c) If one firm in the market were to raise its price what will happen to its total revenue? (i) Marginal product curve for machine-hours (ii) Marginal revenue product curve for machine-hours. (a) What strategy should PieCrust choose if LaPizza chooses to advertise? Explain. What is the effect of the increased demand for ethanol on the equilibrium price and quantity in the cereal market in the short run? Utility and price elasticity of demand are important concepts in explaining consumer behavior. make up 33% of your exam score. The demand for ethanol has significantly increased. (e) Nirali learns that her tennis practice has been cancelled, freeing up an additional hour for studying. What is the dollar value of the per-unit subsidy that would acieve the socially optimal quantity? Exam Skills: FRQ/MCQ 1 resource. All exams up to 2006 use question formats and rubrics that are very outdated. (i) What quantity will be produced? While this post was originally designed for the regular, full-length version of the exam, we’ve included a list of updates to keep track of for the 2020 exam. The AP Micro exam will take place on May 20th at 4PM Eastern. CableNow is an unregulated firm and is currently earning an economic profit. Learn how supply and demand determine prices, how companies think about competition, and more! *ap® and advanced placement® are registered trademarks of the college board, which was not involved in the production of, and does not endorse, this product. S denotes the current supply curve, and D denotes the demand curve. 2010 Average 6.02/10 1… (i) The equilibrium price and quantity for the corn market, labeled as PM1 and QM1, respectively (ii) The equilibrium quantity for Farmer Roy, labeled as QF1 (b) For Farmer Roy’s corn, is the demand perfectly elastic, perfectly inelastic, relatively elastic, relatively inelastic, or unit elastic? Soon the Fiveable Community will be on a totally new platform where you can share, save, and organize your learning links and lead study groups among other students!. Explain. Explain. On the graph you drew in part (a), label this quantity QR. The content of the exam is restricted to what is covered in Units 1–5 of the course; Unit 6 will not be assessed on this year’s exam. Some of the sugar consumed in Loriland is produced domestically while the rest is imported. (a) Using the labeling on the graph, identify the area representing each of the following at the market equilibrium. (i) The monopolist’s quantity of output (ii) The monopolist’s price (iii) The profit earned by the monopolist (iv) The deadweight loss (b) Now assume that the monopolist can perfectly price discriminate. AP Microeconomics Exam Free-Response Question and Scoring Information Archive Download free-response questions from past exams along with scoring guidelines, sample responses from exam takers, and scoring distributions.AP Exams are regularly updated to align with best practices in college-level … The chart only includes prompts that use the up to date format, but all past prompts before then are also linked below. Module 46 Practice Questions. (d) At QR, is the firm’s accounting profit positive, negative, or zero? Unit 1 Test. Will the socially optimal quantity of cable services now be larger than, smaller than, or equal to the QS you identified in part (a)(iv) ? Explain. The AP Micro exam will take place on May 20th at 4PM Eastern. Find the value of: the monopolist's profit and the new consumer surplus, Perfectly competitive labor market, minimum wage. (iii) Calculate the producer surplus after the tax. ... PowerPoint: AP Microeconomics: 1.3 Key Terms and Factors of Production. Explain. 20 free AP microeconomics practice tests. What will happen to each of the following? Soon the Fiveable Community will be on a totally new platform where you can share, save, and organize your learning links and lead study groups among other students! (i) The number of firms in the industry. Your email address will not be published. Steverail, the only provider of train service operating between two cities, is currently incurring economic losses. (a) Assume that Farmer Roy is making zero economic profit in the short run. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Practice questions in Albert's AP® Microeconomics and review how individuals and firms make decisions in various situations of economic pressures. Assume the market wage rate increases from w1 to w2. Label Camden's profit-maximizing output Qm and price Pm. (a) State the conditions necessary for hiring the profit-maximizing amount of labor (b) At the profit-maximizing level of output, suppose that the marginal product of the last worker hired is 20 towels per day. Each cafe produces a slightly differentiated product and there are no barriers to entry or exit and the firm is in long run equilirbium (a) Draw a correctly labeled graph showing Camden's demand curve, marginal revenue curve, marginal cost curve, and the LRATC curve. (c) Suppose demand decreases and the price ceiling remains binding. 2016/2017 This is a 13 question practice quiz for Macroeconomics and Microeconomics Unit 1. Using the equilibrium price and quantity given above, draw a correctly labeled graph for the coffee market, showing the impact of the increase in price of muffins (iii) Given the original quantity of 100 cups of coffee per week, if the increase in the price of muffins is 10%, calculate the new equilibrium quantity in the coffee market. Use this list to practice! (g) Assume instead that the monopolist practices perfect price discrimination (also called first-degree price discrimination). Scarcity is the basic problem in economics in which society does not have enough resources to produce whatever everyone needs and wants. The AP Micro FRQs make up 33% of your exam score. (e) Suppose the monopolist perfectly price discriminates and maximizes profit. (i) The socially efficient quantity (ii) The consumer surplus at the socially efficient quantity (d) Is the monopolist facing the regulation in part (c) earning a positive economic profit, earning zero economic profit, or incurring a loss? (a) The table above shows Theresa’s marginal utility from bagels and toy cars. Explain (d) Soybeans are produced in a perfectly competitive market. 2012 Microeconomics Exam FRQ #1. Explain. Using the labeling of the graph, identify each of the following. While you can’t predict exactly what the questions will be, by looking at past exams, you can notice trends of specific types of questions the CollegeBoard likes to ask, like question #1 typically being about perfect competition or a monopoly, and marginal analysis being a popular topic. (c) Assume that the monopolist is maximizing profit. (c) Do firms in this market experience economies of scale, diseconomies of scale, or neither in long run equilibrium? Use this list to practice! Explain. (a) At the world price of $2 per pound, how much sugar is Loriland importing? (ii) Calculate the domestic consumer surplus for Loriland. (i) The profit-maximizing quantity of cable services, labeled as Q* (ii) The profit-maximizing price, labeled as P* (iii) The area of economic profit, completely shaded (iv) The socially optimal level of cable services, assuming no externalities, labeled as QS (b) Assume that the government grants CableNow a lump-sum subsidy of $1 million. (ii) Assume supply for coffee is perfectly elastic. What quantity of bagels and toy cars will maximize Theresa’s utility if she spends her entire weekly income on bagels and toy cars? Market graph analysis, CS & PS, negative externality, per-unit tax. (b) If the two shops do not cooperate, what will be the profit for each shop? Callahan’s Orchard grows apples and operates in a constant-cost, perfectly competitive apple industry. The graph below shows Loriland’s sugar market, and PW represents the world price. c) In the Nash equilibrium, determine each of the following. These questions and more will be answered by, 1.2 Resource Allocation and Economic Systems, 1.6 Marginal Analysis and Consumer Choice, Fiveable Community students are already meeting new friends, starting study groups, and sharing tons of opportunities for other high schoolers. (A) Using the specific information above, draw a correctly labeled graph of HZRad's current supply curve for unskilled labor. (ii) Will consumer surplus increase, decrease, or not change? Explain (ii) What will happen to the marginal revenue product of the last worker hired? It shows us all of the possible production combinations of goods, given a fixed amount of resources. (a) Draw correctly labeled side-by-side graphs for the apple market and Callahan’s Orchard, and show each of the following. (e) Is point f in the elastic, inelastic, or unit elastic portion of the demand curve? In order to maximize her utility, should Mandy purchase more fudge and less coffee, purchase more coffee and less fudge, or maintain her current consumption? (i) PieCrust’s daily profit (ii) LaPizza’s daily profit (d) Suppose that advertising costs increase by $60 per day. Assume John Lamb employs a fixed number of employees and rents a machine for a variable number of hours from a perfectly competitive market. Each company must decide whether to advertise or to not advertise. (a) In which market structure do these firms operate? (ai) Does Breadbasket have a dominant strategy? given your answer to part (d), will Nirali allocate the additional hour to studying microecnomics or history? What will happen to GCR's profit in the long run. What is the hourly rental price of a machine? AP Microeconomics Unit 2 FRQ Exam Supply and Demand 1) The table above gives the quantity of V-necks demanded and supplied at various prices. Explain (b) Bananas are an input for muffins (i) Draw a correctly labeled graph of the market for muffins indicating the equilibrium price and quantity, labeled P0 and Q0 respectively (ii) On the graph drawn in part (b)(i), show the impact of an increase in the price of bananas on the muffin market, labeling the new equilibrium price and quantity P1 and Q1, respectively (iii) On the same graph, shade the area that represents the change in consumer surplus (c) In the market for coffee, the equilibrium price is $3 per cup and the equilibrium quantity is 100 cups. In every economy there are three questions that must be answered: The production possibilities curve is the first graph that we study in microeconomics. (f) Assume instead that regulators impose a price ceiling of $22. The John Lamb Company, a profit-maximizing firm producing widgets, is in a perfectly competitive widget market. Draw a labeled graph of the corn market and show the following: (i) The binding price ceiling and (ii) The quantity purchased by consumers in the corn market, Production, Cost, and Perfect Competition, factor markets. (d) Assuming no externalities, how does the tax affect allocative efficiency? What will happen to his total revenue if Clark raises its price? (b) Assume there is an increase in the market wage rate for labor, a variable input. (b) Suppose that Loriland imposes a per-unit tariff on sugar imports and the new domestic price including the (e) Indicate whether each of the following will cause the optimal quantity of good Y to increase, decrease, or stay the same (i) The price of Y doubles (ii) Martha's income falls to $10 with no changes in price (iii) Martha's income doubles and the price of both goods double, Camden's cakery is one of many cafes serving a local community. (c) The government decides to give a daily subsidy of $20 to any shop that chooses to set a low price for its food items. It’s important that you understand the rubrics and question styles going into the exam. (b) The table below shows the quantities, prices, and marginal utilities of two goods, fudge and coffee, which Mandy purchases. (c) Assume that consumers always buy 20 units of good R each month regardless of its price. Explain, Supply and Demand, Elasticity, cross price elasticity, price controls, (a) In the market for bananas, the equilibrium price is $1/pound and the equilibrium quantity is 1000 pounds per week. (ii) Price (iii) Industry output, Basic Economic Concepts, Supply and Demand, Marginal analysis, marginal utility, elasticity. Indicate whether the following will increase, decrease, or stay the same (i) The firm's quantity in the short run (ii) The market price and quantity in the long run, Explain. (d) Corn is also used as an input in the production of cereal. You must show your work. , What are the features of a PPC? (a) If Red Shop chooses a location south of the city, which location is better for Blue Mart? CableNow is the only supplier of cable TV services offering a wide range of TV channels. Perfectly competitive capital market, rental rate, derived demand, marginal product, MRP, cost minimizing inputs. Explain. Unit 1: Basic Economic Concepts; Unit 2: Supply and Demand suite 2 Explain. This unit introduces students to imperfectly competitive market structures: monopoly, monopolistic competition, and oligopoly. Explain. Both firms have complete information. (i) The equilibrium rental price of machines in the factor market, labeled as PR (ii) John Lamb’s equilibrium rental quantity of machines, labeled as QL (b) Assume that the popularity of widgets declines, decreasing the demand for widgets. (c) Suppose that Theresa’s income elasticity for bagels is –0.2. Draw a correctly labeled graph and show the profit-maximising price and quantity. Redraw the payoff matrix under the government subsidy system (i) Would quicklunch choose a high or low price? Explain. ... microeconomics. (c) Assume a per-unit subsidy is provided to Steverail. Find the 2020 exam schedule, learn tips & tricks, and get your frequently asked questions answered on Fiveable’s Guide to the 2020 AP Exam Updates. (ii) Does the price floor correct the market failure? Show on your graph in part (a) the effect of the wage increase on the marginal cost curve in the short run. Explain using numbers from the table (b) Assume that the firm has 2 units of capital and 3 units of labor (i) Calculate the marginal product for the third unit of labor (ii) Did the firm experience diminishing marginal returns with the addition of the third unit of labor? Calculate her total gain from the second hour spent studying history (b) Caluclate Nirali's opportunity cost of the second hour spent studying history (c) Assume Nirali increases the time she allocates to studying history. As consumers, we want to maximize our satisfaction, which is known as utility maximization. (ii) How will the new technology affect the wages paid to the workers hired? It’s important that you understand the rubrics and question styles going into the exam. (i) How many units will consumers and producers exchange at the price floor? (c) Assume that avocado producers hire workers from a perfectly competitive labor market. (c) Identify the dominant strategy for Roadway (d) Is choosing an early departure a dominant strategy for Rankin Wheels? These questions and more will be answered by Shriya about unit 1 of AP Micro! Note: While the exam won’t be testing on Unit 6, we strongly recommend that you study the course in full as the content is especially relevant today, and who knows, maybe it’ll help you on the exam even if not directly tested! (C) Suppose the company uses a new technology to increase the productivity of the workers. Using the labeling of the graph, identify each of the following. Explain using the dollar values in the payoff matrix. 2. Don't give up,, you can do it!!! What happens to the price of soybeans in the next planting season if the price of corn increases? (b) Conditional on your response on part (a), does either Patrick's Pie or Dee's Pizzeria have an incentive to cheat? (ii) What quantity will be produced? What happens to the deadweight loss? For this year only, due to COVID-19 and widespread school cancellations, there will be a major update to how the AP Exams will work this year. (i) Identify the new level of domestic production. Pride Textiles hires its workers in a perfectly competitive labor market and the wage rate is $80/day. Redraw the payoff matrix to reflect the effect of the higher advertising costs. (a) What is Dana's total benefit from purchasing 2 bottles of water and 1 unit of good X? Explain (ii) Would profits for Breadbasket increase, decrease, or stay the same? Explain (b) If Roadway chooses an early departure, which time is better for Rankin Wheels? Question 1 is equivalent to a combination of 2 short questions like FRQ 2 and FRQ 3. Marginal utility is essentially the same thing as marginal benefit. Explain. (A) Assume that GCR is making economic profit. Explain. PowerPoint: AP Microeconomics: 1.4 Production Possibilities Curve. Draw a graph of labor supply and demand for the typical firm and label the supply curve MFC and the demand curve MRP. For example, countries can specialize in what they are good at producing and then trade for goods and services that they are not as efficient at. Using the labeling in the graph, identify each of the following. What happens to the opportunity cost of studying history? View Unit2FRQ.pdf from ECON MISC at Western High School. (d) Suppose the government is considering granting a subsidy to correct the market failure. (i) What is the marginal revenue for the eighth unit? Suppose the number of workers availibe in the market decreases (i) What happens to the wage rate? The cross-price elasticity of coffee with respect to muffins is -2. (e) Assume that a new study reveals there are external benefits associated with watching TV. (i) The quantity produced (ii) The total revenue received by the monopolist (c) Instead, assume the monopolist charges a single price and is regulated to produce the socially efficient quantity. 2550 north lake drivesuite 2milwaukee, wi 53211. What Units Will Be Covered on the AP Micro exam? (a) Draw a correctly labeled graph of the market for good X and show each of the following. (a) Define marginal utility. A 2. Explain (c) Assume that the monopolist produces 10 units .Calculate each of the following and show your work (i) The monopolist's economic profit (ii) The consumer surplus (iii) The deadweight loss (d) At what quantity is demand unit elastic? (c) If the two firms cooperate in choosing locations, where will each firm locate? (B) What is HZRad's profit maximising output level? (i) The consumer surplus (ii) The producer surplus (b) Assume that the production of each unit of candy creates a negative externality equal to (p5 -p2 ). . Explain. Explain (d) Single Cinema hires workers in a perfectly competitive labor market. Originally Martha, with $20 of income bought 4 units of good Y, so her purchase of good Y has decreased. Explain using numbers from the payoff matrix (c) Doesn Patrick's Pie have a dominant strategy? (i) The marginal social cost curve, labeled MSC (ii) The marginal social benefit curve, labeled MSB (iii) The deadweight loss, if any, shaded completely (c) Now instead assume that all of the neighbors enjoy watching the fireworks. Each firm must choose between a location north of the city and a location south of the city. It shows us all of the possible production combinations of goods, given a fixed amount of resources. In economics, marginal means additional, or the change in the total (you will see this term a lot!). Key Concepts: Terms in this set (144) economics. ap microeconomics frq 2003, This 2003 AP® Macroeconomics Free-Response Questions Form B AP Test Prep is suitable for 10th - 12th Grade. (d) Suppose that when the price of toy cars increases by 10 percent, Theresa buys 5 percent fewer toy cars and 4 percent less of a different toy, blocks. Will each of the following increase, decrease, or stay the same at FillUp's profit maximizing quantity? In economics, utility is defined as satisfaction. Explain. As the only gas station in a small town, FillUp has a local monopoly on the sale of gasoline. Explain. Unit 1 : An introduction of Ten Principles of Economics in Mankiw, Principles of Microeconomics Unit 2 : Basic concepts of Microeconomics and fundamental economic systems Unit 3: Why people should specialize and trade with others (Specific contents about opportunity cost and comparative advantage） Explain (e) If both firms know all of the information if the payoff matrix but do not cooperate, what will be Rankin Wheels' daily profit? (c) Given the world price of $2, what per-unit tariff maximizes the sum of Loriland’s domestic consumer surplus and producer surplus? (d) Assume instead that a lump-sum subsidy is provided to Steverail. The marginal product of the machine is 60 widgets per machine-hour. (a) Draw a correctly labeled graph for the typical firm, illustrating the short-run equilibrium and labeling the equilibrium market price and output PE and QE, respectively. (b) Draw a correctly labeled graph and show the profit maximizing price and output and the area of loss (c) Assume Clark is maximizing profit. Using the labeling on the graph, identify the socially optimal quantity. Draw a correctly labeled side-byside graph for the corn market and for Farmer Roy and show each of the following. Problem in economics, consumers make rational choices by weighing the costs and.. Production of cereal graph above shows the perfectly competitive market unskilled labor ) on your graph from a. Faced with scarcity, we want to maximize our satisfaction, which is as. Review how individuals and firms make decisions in various situations of economic pressures i ) does. 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