AP Micro 2025

If Aurora maximizes her total utility by spending her entire budget on purchasing apples and oranges, which of the following best explains her decision making?

Shrimp and chicken are substitute inputs on the production of Frozen meals. Both shrimp and chicken are sold in perfectly competitive markets. If the government imposes a per-unit tax on shrimp, how will the demand for chicken and the equilibrium price of Frozen meals be affected in the short run?

Which of the following would cause an increase in the supply of tacos in the short run?

Which of the following is true about the restaurants dominant strategies?

Brass With Class is a profit-maximizing firm that produces trumpets in a monopolistically competitive market. Brass With Class currently produces 100 trumpets and sells each trumpet at a price of 50, If the average total cost when producing 100 trumpet is 45, what is Brass With Class's total economic profit in the short run, and what adjustment will happen in the trumpet market in the long run?

Initially, Markus corporation is the only firm that produces aluminum. The government breaks up Markus’ monopoly,creating two firms in its place. The long-run ATC for each firm is higher than if Markus operated alone in the industry. This would suggest that before the breakup, Markus corporation was operating under conditions of:

Firm Z is a typical firm in a perfectly competitive market that produces a quantity of output where marginal revenue equals marginal cost in a constant cost industry. If the sum of Firm Zs' average fixed cost and average variable cost is below its marginal revenue at the profit-maximizing quantity, which of the following will occur in the long run?

A profit-maximizing firm hiring workers from a perfectly competitive labor market will continue to hire workers until the wage rate is equal to 

Olivia has a limited weekly income of 10 and spend it all on chocolate bars and slice of pizza. Assume that the price of chocolate bars is $1 the price of each slice of pizza is $2. What combination of chocolate bars and pizza slices will maximize Olivia’s total utility given her weekly income?

Kareem is willing to pay 25 for ancuremote control produced by Remotek in a perfectly competitive market. Which of the following is true if the market price is 10?

The farm grows and sells soybeans at a price of $15 per bushel competitive market. What is the farm's total economic profit at the profit maximizing quantity of output?

which of the following changes will increase the equilibrium market wage for plumbers?

A firm hires labor and rents machines as variable inputs from perfectly competitive factor market to produce Good X. The firm also requires land, as a fixed input, for is operation. The firm’s short-run profit maximizing quantity of output would not be affected by a change in which of the following?

Which of the following is the best example of a fixed input for a firm producing leather boots in the short run?

If the only two firms in an industry collude to charge a higher price and produce a lower quantity  than what is socially optimal, what will happen to consumer surplus and total economic surplus in the market in the short run?

The small town of Markervile had four firms producing coal. The four firms then merged into one firm which is now the sole employer of coal miners in Markervile. What effect will then change the market for coal miners in Marketville?

Which of the following describes why scarcity exists in an economy?

Which of the following describes a difference between the imposition of a tariff on imports and the imposition of a quota on imports?

Which of the following will definitely result in a decrease in a monopoly's profit-maximizing quantity of output?

If a firm is experiencing increasing returns to scale, then doubling inputs will necessarily 

Which of the following is the best example of a fixed input for a firm producing leather boots in the short run?

Two monopolies with identical cost structures are compared. Cose is an unregulated profit-maximizing monopoly, and the other is regulated to produce the quantity at which it breaks even with zero economic profit. Which of the following accurately describes the difference between the two monopolies?

Which of the following is always true for a perfectly competitive market?

A firm hires labor and rents machines as variable inputs from perfectly competitive factor market to produce Good X. The firm also requires land, as a fixed input, for its operation. The firm’s short-run profit maximizing quantity of output would not be affected by a change in which of the following? 

Ally’s Candles and Bob’s Candles are the only two sellers of candles in town. Both candle companies considering changing their current pricing strategies. Each company is deciding between increasing prices or decreasing prices to increase their profits. Suppose Ally’s Candles realizes that increasing price will increase its profits regardless of what Bob's Candles does. Which of the following concepts best describes this situation?

Nikita was working at a law firm earning an annual salary of $80,000 but she decided to start her own law practice. She used a building she owns and had been renting to a tenant for $15,000 a year. Her law practice earned an accounting profit of $90.000 in its first year. Based on the preceding information, Nikita's economic profit equaled

The graph shows a per - unit subsidy being granted to producers of Good X. The letters on the graph represent enclosed areas.

What is the total cost of the per - unit subsidy to the government?

Ming and Andreas are the only two employees at a pizza shop where they can either take orders or clean tables. Ming has a comparative advantage over Andreas in taking orders. It must therefore be true that 

Donatello operates a firm that sells frozen treats in a perfectly competitive market. Which of the following would explain why Donatello is hiring more workers this year than last year?

Avocado production requires land to grow avocado trees and workers to pick the avocados. Which of the following is most likely to occur if a binding minimum wage (a price floor on wages) is set in the labor market of avocado - farming workers?

An air-conditioning unit is a normal good. Which of the following would cause an increase in the equilibrium price and equilibrium quantity of air-conditioning units in the short run?

A firm is selling its product in two separate markets. If the firm practices price discrimination, it is most likely to charge a higher price in the market that

A 5% increase in the price of Good A results in a 10% decrease in the quantity demanded of Good B. What is the cross - price elasticity between Good A and Good B, and what does this indicate about the relationship between these two goods?

Which of the following best explains the difference in resource allocation between a pure command economy and a pure market economy?

What's Whistles is a profit maximizing firm that hires workers from a monopsonistic labor market, the market for whistles is perfectly competitive, and the equilibrium price of whistles is $10.How many workers will Whit's Whistles hire to maximize profits?

If the income elasticity of demand for Good X is negative, how will an increase in consumers' income affect market for Good X?

Suppose that Lindser landscaping is the sole provider of landscaping services in a small city. A new firm Horticultural Experts, enters the market which of the following is most likely to occur?

Which of the following is true about the production function as labor usage increases from L1 to L2 when all other inputs are held constant?

A firm in a monopolistically competitive market is producing the profit maximizing quantity at 60 units of output at a price of 12 per unit. What is the firm’s economic profit if the firm’s average variable cost is 8, its marginal cost is 7,and its average fixed cost is 2 at 60 units of output?

Which of the following would cause a decrease in both the market wage and the equilibrium quantity of labor?

Good X, a popular item with consumers, is non-rival and non-excludable in consumption. What is the most likely outcome in the market for Good X if there is no government intervention?

Which of the following is an example of a negative externality in production?

Emma's Hoops produces toy hoops that are identical to all other toy hoops produced by many firms in a market with no barriers to entry. The market price of toy hoops is P₂, and Emma's Hoops is producing the quantity Q₃ of toy hoops. Which of the following is true?

If the government imposes a binding price ceiling in the gasoline market, which of the following will occur in the short run?

The table shows the number of labor hours it takes Alpha and Beta to produce a smartphone or a cake with the same resources.

If tasks assigned according to comparative advantage ,Which of the following is true?

The market for bottled mineral water is perfectly competitive. After she discovery of several new sources of mineral water, the price of bottled mineral water decreases. The substitution effect of the price decrease implies an increase in which of the following?

Which of the following conditions is necessary for productive efficiency?

A perfectly competitive market in equilibrium is allocatively efficient and it maximizes

Reff Corp is a firm with total revenue of $1,000, marginal cost of $5, and average variable cost of $4. Both the output and the input markets are perfectly competitive, and Reff Corp is currently in long-run equilibrium. Reff Corp's output and total fixed cost of production must be equal to which of the following?

At a perfectly competitive firm's current output level, average total cost is $15, average variable cost is $10, and marginal cost is $8 and increasing. If the product price is $15, what should this firm do to maximize profits?

A typical firm in a perfectly competitive constant-cost industry is operating with an economic loss in the short run. When the industry returns to long-run equilibrium, what will happen to the number of firms in the industry, the market price, and the typical firm's quantity?

Answer this question in your free-response booklet.
1.

Tronic is a typical profit-maximizing firm that produces and sells power cords in a constant-cost, perfectly competitive market that is in long-run equilibrium. The market equilibrium price of power cords is $4.

Part A
Draw correctly labeled side-by-side graphs for the power cord market and for. Tronic. and show each of the following.
i. The market equilibrium price and quantity, labeled $4 and Qm respectively
ii. Tronic's profit-maximizing price and quantity, labeled Pf and Qf, respectively
iii. Tronic's average total cost curve consistent with long-run equilibrium, labeled ATC

Part B
The price of Good X, a complement in consumption to power cords, has increased. On your graphs in part A, show the impact of this change in the short run on each of the following.
i. The new market equilibrium price and quantity of power cords, labeled P2and Q2 respectively
ii. Tronic's new profit-maximizing price and quantity, labeled P* and Q*, respectively
iii. The area representing Tronic's economic profit, shaded completely

Part C
Given the increase in the price of Good X, what will happen to the market equilibrium price and quantity of power cords as the market adjusts from the short-run equilibrium in part B to the long-run equilibrium? Explain.

Part D
Tronic uses the cost-minimizing combination of capital and labor in its production process. The marginal product of labor is 75 power cords, the wage rate is 25, and the rental rate for capital is 40.
Calculate the marginal product of capital. Show your work.

Part E
Consumers can choose whether to use power cords or smart cables. A 10 percent decrease in the price of smart cables caused the quantity demanded of smart cables to increase by 12 percent and the quantity demanded of power cords to decrease by 8 percent. Calculate the cross-price elasticity of demand for power cords with respect to the price of smart cables. Show your work.

Part A
Suggest Yuni whether to consume 1 tennis racket or 2 shirts to maximize her total utility,

Part B
 i.

The cost is $100 for one tennis racket and $50 for one shirt, with an income of $500, Yuni decided to buy 2 tennis rackets, suggest Yuni the maximum number of shirts she could buy after she purchases 2 tennis rackets. 
ii.

Find the utility-maximizing combination of tennis racket and shirts Yuni could buy with her income of $500.

Part C
if the consumption of tennis rackets results in a positive externality, is the marginal social benefit of tennis rackets greater than, lower than, or equal to the marginal social cost at the market equilibrium?

Part D
In order to eliminate the deadweight loss generated by the positive externality, the government decide to give a per-unit subsidy to consumers who consume tennis rackets, could this policy effectively solve the problem of positive externality?

Part A
Identify the market structure in which Haye is operating

Part B
Identify Haye's profit maximizing quantity and price

Part C
Calculate the consumer surplus at the profit-maximizing quantity and price identified in part B. Show your work

Part D
is the profit-maximizing quantity identified in Part B allocatively efficient? Explain using numbers.

Part E
What will happen to Haye’s economic profit in the long run? Explain.