It shows us all of the possible production combinations of goods, given a fixed amount of resources. (ii) What will be the value of the consumer surplus? Explain (ii) What will happen to the marginal revenue product of the last worker hired? (i) Is the monopolist earning positive economic profit? (i) In this case, is the market equilibrium quantity of fireworks greater than, less than, or equal to the socially optimal quantity? In the payoff matrix below, the first entry in each cell indicates PieCrust’s daily profit, and the second entry indicates LaPizza’s daily profit. (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”. Explain your answer using marginal analysis. The graph below shows Loriland’s sugar market, and PW represents the world price. Join Our Community. Monopoly Graph, price discrimination, economies of scale, (a) Using the numbers given in the graph, identify each of the following for the profit maximizing monopolist: the quantity produced, the price, and the allocatively efficient quantity (b) At the profit maximizing quantity from part (a)(i), is the monopolist experiencing economies of scale? ... PowerPoint: AP Microeconomics: 1.3 Key Terms and Factors of Production. Explain with a comparison to your answer in part (b)(i) and use specific values, Supply and Demand, Elasticity, price controls. (ii) Will consumer surplus increase, decrease, or not change? Explain. 2016/2017 This is a 13 question practice quiz for Macroeconomics and Microeconomics Unit 1. Explain (d) Single Cinema hires workers in a perfectly competitive labor market. Suppose the number of workers availibe in the market decreases (i) What happens to the wage rate? Explain, Market Failure and the Role of the Government, (a) Identify the market failure shown in the graph and explain (b) Using the numbers on the graph, identify the market equilibrium price and quantity (c) Using the labeling on the graph, identify the area representing the deadweight loss at the quantity identified in part (b). Explain (iii) Calculate the firm's ATC for its current level of production and show your work (iv) If the firm's output is sold in a competitive market, what is the lowest output price at which the third unit of labor would be hired? (ii) Price (iii) Industry output, Basic Economic Concepts, Supply and Demand, Marginal analysis, marginal utility, elasticity. Redraw the payoff matrix to reflect the effect of the higher advertising costs. Explain. (i) The consumer surplus (ii) The deadweight loss, Monopoly graph, economic profit, socially optimal quantity. Redraw your graph from part A and label the ceiling price as P2. Explain. We hit the traditional topics from a college-level microeconomics course. Unit 1 Test. Sample Free Response. Explain. Practice questions in Albert's AP® Microeconomics and review how individuals and firms make decisions in various situations of economic pressures. (i) What is her total utility from purchasing three toy cars? Show the effect of the wage increase on the graph, labeling the initial quantity of labor hired QL1 and the new quantity of labor hired QL2. Explain. (a) What is Dana's total benefit from purchasing 2 bottles of water and 1 unit of good X? (a) Draw a correctly labeled graph of the market for fireworks and show the market equilibrium price and quantity, labeled PE and QE. (i) What quantity will be produced? Module. A typical profit-maximizing firm in a perfectly competitive constant cost industry is earning a positive economic profit (a) Is the market price greater than, less than, or equal to the firm's price? 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) ? Originally Martha, with $20 of income bought 4 units of good Y, so her purchase of good Y has decreased. (a) Calculate the producer surplus before the tax. c) In the Nash equilibrium, determine each of the following. Will each of the following increase, decrease, or stay the same at FillUp's profit maximizing quantity? What is comparative vs. absolute advantage? (d) Corn is also used as an input in the production of cereal. (i) Marginal product curve for machine-hours (ii) Marginal revenue product curve for machine-hours. Use this list to practice! There will be 2 free-response questions to answer within 45 minutes. Perfect competition graph, cost minimizing rule. 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. (i) Show on your graph in part (a) the effect of the increase in demand for ethanol on the market price and quantity of corn in the short run, labeling the new equilibrium price and quantity as PM2 and QM2, respectively. Perfectly competitive firm, supply and demand, production inputs. (i) What is the numerical value of the price elasticity of demand for good R? The marginal product of the machine is 60 widgets per machine-hour. Both firms know all of the information in the payoff matrix. Module 46 Supplemental Material for AP. What is the effect of the increased demand for ethanol on the equilibrium price and quantity in the cereal market in the short run? (c) Identify the dominant strategy for Roadway (d) Is choosing an early departure a dominant strategy for Rankin Wheels? Your email address will not be published. (d) Between the prices of $16 and $18, is the monopolist in the elastic, inelastic, or unit elastic portion of its demand curve? What quantity of bagels and toy cars will maximize Theresa’s utility if she spends her entire weekly income on bagels and toy cars? On your graph in part (a), show each of the following. The AP Micro exam will take place on May 20th at 4PM Eastern. 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. (a) Using correctly labeled side-by-side graphs of the factor market for machines and the John Lamb Company, show each of the following. (c) Assume that avocado producers hire workers from a perfectly competitive labor market. (g) Assume instead that the monopolist practices perfect price discrimination (also called first-degree price discrimination). Assume the market wage rate increases from w1 to w2. Explain. Using the labeling on the graph, identify the area representing each of the following. Perfectly competitive capital market, rental rate, derived demand, marginal product, MRP, cost minimizing inputs. (b) Is choosing a location to the south of the city a dominant strategy for Red Shop? (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. (b) Now assume a per-unit tax of $2 is imposed whose impact is shown in the graph above. Fiveable Community students are already meeting new friends, starting study groups, and sharing tons of opportunities for other high schoolers. 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. Explain. (A) Using the specific information above, draw a correctly labeled graph of HZRad's current supply curve for unskilled labor. The cross-price elasticity of coffee with respect to muffins is -2. (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. (c) Do firms in this market experience economies of scale, diseconomies of scale, or neither in long run equilibrium? (a) In which market structure do these firms operate? (c) If the two firms cooperate in choosing locations, where will each firm locate? (d) At QR, is the firm’s accounting profit positive, negative, or zero? (a) Using a correctly labeled graph, show each of the following. Find out more, read a sample chapter, Microeconomics Unit 1 Sample Multiple Choice Answers: 1. (c) John Lamb is employing the cost-minimizing combination of inputs. 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! 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). Explain, (a) Nirali spends 3 hours studying microeconomics and 2 hours studying history. (ii) What is the after-tax price that the sellers now keep? (i) What will happen to market price and quantity? (iii) How does the average total cost for Farmer Roy at QF2 compare with PM2? (ii) If the government implements a per-unit tax of $2 on good R, how much of the tax will the seller pay? (a) Is the demand for V-necks relatively elastic, relatively inelastic, unit elastic, perfectly elastic, or perfectly inelastic when the price decreases from $60 to $45? Show your work (c) Now assume the price of a bottle of water is $3 and the price of a unit of good X is $6. Explain. Show on your graph in part (a) the effect of the wage increase on the marginal cost curve in the short run. (ii) What will happen to GCR profits? (ii) Does the price floor correct the market failure? Explain. Any firm that locates south of the city will receive a subsidy of $2,000 per day. given your answer to part (d), will Nirali allocate the additional hour to studying microecnomics or history? There are two pizza restaurants in College Town, PieCrust and LaPizza. 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. A 2. (b) Suppose that Loriland imposes a per-unit tariff on sugar imports and the new domestic price including the Draw a correctly labeled side-byside graph for the corn market and for Farmer Roy and show each of the following. (e) Assume that regulators set an output of 11 units. Pride textiles produces and sells towels in a perfectly competitive market. (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. Learners consider production possibilities using an authentic test question from College Board. milwaukee, wi 53211. (a) The table above shows Theresa’s marginal utility from bagels and toy cars. Question 1 is equivalent to a combination of 2 short questions like FRQ 2 and FRQ 3. Scarcity is faced by all societies and economic systems. 1.11/5 2010 Key Perfectly competitive draw, elasticity, demand increase, input cost increase. make up 33% of your exam score. (d) What is Martha's optimal combination of goods X and Y? (e) Assume that a new study reveals there are external benefits associated with watching TV. For special occasions some people purchase and set off fireworks in their backyards. Market Failures and the Role of the Government. Other questions include practicing supply and demand curves and examining the effects of inflation, employment, and other variables on a country. (c) Corn can be used as an input in the production of ethanol. How do you do marginal analysis? (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. Assume that a country’s economy is in a short-run equilibrium and the actual Over 200 AP microeconomics practice questions to help you with your AP microeconomics exam prep. Steverail, the only provider of train service operating between two cities, is currently incurring economic losses. (d) Assume that the south suburb has enacted an incentive package to attract new business. (a) At the world price of $2 per pound, how much sugar is Loriland importing? (b) Suppose the government imposes a $2 per unit tax on the producers of gasoline. Explain. Draw a correctly labeled graph and show the profit-maximising price and quantity. Don't give up,, you can do it!!! Assume John Lamb employs a fixed number of employees and rents a machine for a variable number of hours from a perfectly competitive market. You must show your work. (Explain.) (C) Assume instead that a per-unit subsidy is granted. (d) Suppose the government is considering granting a subsidy to correct the market failure. It couldn’t hurt. We’ve created a sortable table of all the AP Micro past prompts! So 1 unit of X and 3 units of Y will be purchased, this will use all of her income. The question above asks if the optimal quantity of good Y will decrease, increase, or stay the same. Show your work, (a) What is Martha's marginal benefit of the fifth unit of good X? (ii) Will Steverail’s economic losses increase, decrease, or not change? Using the labeling of the graph, identify each of the following. (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? Exam Skills: FRQ/MCQ  1 resource. tariff is $4. (i) The number of firms in the industry. (e) Nirali learns that her tennis practice has been cancelled, freeing up an additional hour for studying. Explain (d) Soybeans are produced in a perfectly competitive market. On your graph show the equilibrium price and quantity (Pm and Qm) and the profit maximizing quantity of corn produced by the representative farmer earning zero economic profit (Qf) (b) Assume the demand for ethanol increases, show what will happen to the following on your graph in part (a) (i) The market price and quantity (ii) The area of the profit or loss earned by the representative corn farmer shaded completed (c) Relative to your answer in part (b) state what will happen to the market equilibrium price and quantity of corn in the long run. Marginal utility is essentially the same thing as marginal benefit. Assume farmers can grow either corn or soybeans on the same land. Explain. Explain (d) Now suppose the market is in long run equilibrium. 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. 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! Use marginal analysis (ii) What are the optimal quantities of good X and bottles of water at these prices? What will happen to his total revenue if Clark raises its price? Callahan’s Orchard is currently in long-run equilibrium. Fiveable’s Guide to the 2020 AP Exam Updates, https://apcentral.collegeboard.org/courses/ap-microeconomics/exam/past-exam-questions. Explain using the dollar values in the payoff matrix. Y. in 2005, there are only released exams up to 2006 with questions using the updated format. Explain. (c) Given the world price of $2, what per-unit tariff maximizes the sum of Loriland’s domestic consumer surplus and producer surplus? Farmer Roy is a typical producer of corn. The world price of sugar is $2 per pound. Corresponding free-response question (FRQ) type in the course and exam description binder. View Unit2FRQ.pdf from ECON MISC at Western High School. (a) Draw correctly labeled side-by-side graphs for the apple market and Callahan’s Orchard, and show each of the following. 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. 20 free AP microeconomics practice tests. Find the value of: the monopolist's profit and the new consumer surplus, Perfectly competitive labor market, minimum wage. Explain. Mandy spends all her money and buys only these two goods. (b) Assume there is an increase in the market wage rate for labor, a variable input. Assume the market for fireworks is perfectly competitive. (ii) What happens to FillUp's profit-maximizing quantity and price in the short run assuming the firm continues to operate? In economics, marginal means additional, or the change in the total (you will see this term a lot!). Assume that the market for home security systems is perfectly competitive and in equilibrium (a) Graph supply and demand and show the equilibrium price and quantity and CS and PS (b) Suppose the government imposes an effective price ceiling. (i) Using the labeling in the graph, identify each of the following. (ii) Assume supply for coffee is perfectly elastic. Explain. Explain. Save my name, email, and website in this browser for the next time I comment. In economics, utility is defined as satisfaction. Calculate the cross-price elasticity for toy cars and blocks and indicate if it is positive or negative. Not only will it allow you to, of course, test your skills on the different topics on AP Micro (especially your graphing skills), but you will know exactly what to expect going into test day. The chart only includes prompts that use the up to date format, but all past prompts before then are also linked below. It’s important that you understand the rubrics and question styles going into the exam. *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. Callahan’s Orchard grows apples and operates in a constant-cost, perfectly competitive apple industry. (i) Are coffee and muffins normal, inferiour, complementary, or substitute goods? Will Theresa’s demand for bagels increase, decrease, or not change? Redraw the payoff matrix under the government subsidy system (i) Would quicklunch choose a high or low price? Required fields are marked *. Label Camden's profit-maximizing output Qm and price Pm. 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) What quantity will be produced? Each company must decide whether to advertise or to not advertise. Basically, it is unlimited wants and needs vs. limited resources. There are two pizza restaurants in College Town, PieCrust and LaPizza. CableNow is an unregulated firm and is currently earning an economic profit. 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. What will happen to each of the following? by Dylan Black | AP Microeconomics Exam Prep, Past prompts. Show each of the following on your graph in part (a): (i) The price paid by buyers, Pb (ii) The after-tax price received by sellers, Ps (iii) The quantity, Pt (c) Using the labeling on your graph, explain how to calculate the total tax revenue collected by the government (d) Will the tax burned fall entirely on buyers, entirely on sellers, or more on one than the other (Identify which is which)? (d) Assume instead that a lump-sum subsidy is provided to Steverail. (b) The graph below shows a natural monopoly. 2550 north lake drivesuite 2milwaukee, wi 53211. Two competing retail firms, Red Shop and Blue Mart, are studying potential locations for new stores in the suburbs of a major city. 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. (ii) Calculate the domestic consumer surplus for Loriland. Outdated Prompts: https://apcentral.collegeboard.org/courses/ap-microeconomics/exam/past-exam-questions, Your email address will not be published. Explain. Show your work (b) Assume the price of a unit of good X is $5. (ii) In this case, if the government bans fireworks, will the deadweight loss increase, decrease, or remain unchanged? All exams up to 2006 use question formats and rubrics that are very outdated. Explain. 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) Is the demand price elastic, inelastic, or unit elastic between the prices of $5 and $6 ? Key Concepts: Terms in this set (144) economics. The payoff matrix is shown below, with the first entry in each cell indicating Red Shop’s daily profit and the second entry indicating Blue Mart’s daily profit. 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? (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. Clark electronics has a monopoly and currently incurs short-run losses but continues to operate (a) What must be true for clark to continue to operate in the short run? The typical firm is earning positive economic profit in the short-run equilibrium. (i) Deadweight Loss, explain (ii) FillUp's economic profit (c) Assume the demand for gasoline decreases because people bike to work more ofted (i) What must be true in order for FillUp to continue operating in the short run? (a) Assume that the monopolist wants to maximize profit. (e) Suppose the monopolist perfectly price discriminates and maximizes profit. Draw a graph of labor supply and demand for the typical firm and label the supply curve MFC and the demand curve MRP. (i) Identify the new level of domestic production. Explain using the dollar values in the payoff matrix. Explain. Explain (c) Now assume the government imposes an effective minimum wage (i) Show the minimum wage on your graphs in part (a), labeled Wmin (ii) On the labor market graph, show the quantity of unskilled labor supplied in the labor market as a result of the minimum wage, labeled Qs (iii) As a result of the new minimum wage, will the marginal revenue product of the last worker hired by Ray's stable increase, decrease, or stay the same? As the only gas station in a small town, FillUp has a local monopoly on the sale of gasoline. 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. (a) Draw a correctly labeled graph for CableNow and show each of the following. Assume that the market for good X is perfectly competitive and that the production of good X creates a negative externality. 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? ap microeconomics frq 2003, This 2003 AP® Macroeconomics Free-Response Questions Form B AP Test Prep is suitable for 10th - 12th Grade. Assume that a country, Loriland, is a price taker in the world market for sugar. Explain. Scarcity is the basic problem in economics in which society does not have enough resources to produce whatever everyone needs and wants. Suppose the government imposes a price floor on bananas at $1.20 per pound, causing the quantity supplies to increase to 1500 pounds per week (i) Would this cause a shortage, surplus, or neither? The production possibilities curve is the first graph that we study in microeconomics. What will happen to GCR's profit in the long run. These questions and more will be answered by Shriya about unit 1 of AP Micro! In economics, consumers make rational choices by weighing the costs and benefits. The marginal product of labor is 28 widgets per worker hour and the wage rate is $14 per hour. 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) The chart only includes prompts that use the up to date format, but all past prompts before then are also linked below. In every economy there are three questions that must be answered: The production possibilities curve is the first graph that we study in microeconomics. (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. (aii) Does QuickLunch have a dominant strategy? Assume that CableNow does not practice price discrimination. Explain (b) If Roadway chooses an early departure, which time is better for Rankin Wheels? (ii) How will the new technology affect the wages paid to the workers hired? (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. , What are the features of a PPC? 2. Some of the sugar consumed in Loriland is produced domestically while the rest is imported. You must show your work (iii) Calculate the total tariff revenue collected by the government. Sugar is freely traded in the world market. (e) Is point f in the elastic, inelastic, or unit elastic portion of the demand curve? (b) Assume that the noise from the fireworks disturbs all of the neighbors. (A) Assume that GCR is making economic profit. Assume that the market for avocados is perfectly competitive. Microeconomics is all about how individual actors make decisions. Explain (c) If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? For the short run, answer the following. Explain. Explain. (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. *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. Supply and demand, negative externalities, The graph above shows the perfectly competitive market for hard candies in Country Alpha. Explain. (b) The table below shows the quantities, prices, and marginal utilities of two goods, fudge and coffee, which Mandy purchases.