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AP Microeconomics

AP Microeconomics. Free Response Questions. Label Graphs Clearly and Correctly. Label both axes Label all curves Label curve shifts using arrows, dotted line, and numbers (e.g., S1 and S2) Label price changes and quantity changes using arrows and numbers (e.g., P1 and P2).

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AP Microeconomics

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  1. AP Microeconomics Free Response Questions

  2. Label Graphs Clearly and Correctly • Label both axes • Label all curves • Label curve shifts using arrows, dotted line, and numbers (e.g., S1 and S2) • Label price changes and quantity changes using arrows and numbers (e.g., P1 and P2)

  3. Example: Supply and Demand - Axes labeled - S and D labeled - S shift labeled - Equilibrium labeled - Q change labeled - P change labeled - Directional arrows used P S1 S2 Pe P2 D Qe Q2 Q

  4. Mistakes/Suggestions • Mislabeled or unlabeled graphs • Missing or unlabeled P and Q changes • Side-by-side graphs drawn as anything but side-by-side • Teeny, tiny graphs • Messy and illegible….really messy and really illegible….graphs • Use proper terms • Track answer format to question format • Answer questions in any order

  5. Tips • Big Two for free-response: Market structure & factor markets • Free-response prediction…externality??...game theory?? • Product market v. factor market • Firm v. industry….Firm: (a) price taker (b) “can sell/hire all it wants” (c) horizontal curve • “Profit-maximizing” signifies producing at MC = MR…not necessarily experiencing positive profit • Lots of Qs about how much to produce…look at where firm is w/ respect to MC = MR • Lump-sum taxes (or subsidies) shift total cost curves whereas per-unit taxes (or subsidies) shift marginal cost curves or marginal revenue curves • Patent or license….synonymous with monopoly • Elasticity and demand curve….above mid-point (MR positive): elastic; below mid-point (MR negative): inelastic; at mid-point (MR = 0), unit elastic • Monopsony….sole buyer • VMPL is synonymous with MRP • Horizontal (e.g., own all burger producers) v. vertical integration (e.g., own/control all aspects of burger production…cows, potatoes, trains to ship cows/potatoes, straws, cups, etc.) • Watch for “True…False…Uncertain” format on free-response questions • Allocative (or economic) efficiency: P = MC • Technical(or productive)efficiency: P = min ATC • “Normal” profit is synonymous with zero economic profit • Least cost allocation: VMPL/w = VMPK/r….MRP/w = MRP/w… • Gini coefficient (i.e., Gini index)….income inequality…Lorenz curve

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