AP Microeconomics Free Response Questions

AP Microeconomics “Free” Response Questions

Production-possibilities Curve

1999 #2 Production-possibilities Curve (wheat and cloth, comparative advantage) 2003 #3 Production-possibilities Curve (absolute/comparative advantage, terms of trade) 2008 #3 Production-possibilities Curve (absolute/comparative advantage, terms of trade)

Supply, Demand, Price Floor, Price Ceiling, Elasticity

1990 #2 Inelastic Portion of the Demand Curve 1996 #2 Supply/Demand (circus, price ceiling) 1994 #2 Supply/Demand (tax on cigarettes, elasticity of demand) 1993 #2 Supply/Demand (coffee/cream, supply/demand in product/factors markets) 1998 #1 Supply/Demand (elasticity, price floor, allocative efficiency) 2000 #3 Supply/Demand (tariffs, elasticity) 2005 #2 Supply/Demand (taxes, consumer/producer surplus, deadweight loss)

Utility

2002 #3 Utility (apples/oranges, total utility, marginal utility) 2008 #2 Utility (utility, marginal utility, perfectly inelastic, tax on product)

Perfect Competition

1990 #1 Perfect Competition (increase in demand) 1996 #3 Perfect Competition (MC, ATC, AVC) 2001 #1 Perfect Competition (graphs, AVC shut down, LR) 1989 #1 Perfect Competition (price ceiling) 1999 #1 Perfect Competition (price ceiling) 1993 #1 Perfect Competition (decrease in energy costs, MC, AVC, entry/exit) 2001 #1 Perfect Competition (graphs, AVC shut down, LR) 1992 #2 Perfect Competition (price ceiling, increase in wholesale price) 1991 #2 Perfect Competition (change in marginal and average costs) 2005 #1 Perfect Competition (demand decrease, shut down rule, long run) 2006 #2 Perfect Competition (costs—fixed costs, marginal cost, profit maximization, constant costs, per-unit tax) 2008 #1 Perfect Competition (graphs, lump-sum subsidy, profit, long run vs. short short run)

Monopoly

1989 #2 Monopoly 1992 #1 Monopoly (basic, economic efficiency) 1993 #3 Monopoly (single airline, fixed costs go up) 1994 #3 Monopoly (basic, barriers to entry) 1998 #3 Monopoly (elasticity of demand, price discrimination) 1997 #2 Monopoly (normal profits, economic efficiency) 2003 #2 Monopoly (basic, consumer surplus, deadweight loss) 2006 #1 Monopoly (graph with many questions relating to graph, accounting profits allocative efficiency) 2007 #1 Monopoly (graph, per-unit tax, per-unit subsidy)

Perfect Competition AND Monopoly (Combined)

1996 #1 Perfect Competition/Monopoly (dictator to PC, economic efficiency) 1999 #3 Perfect Competition/Monopoly (graphs, D = MR, D does not = MR) 2000 #1 Perfect Competition/Monopoly (elasticity, consumer surplus, allocative efficiency) 2008 #3 Perfect Competition/Monopoly (price celing, social efficiency, natural monopoly)

Monopolistic Competition

2004 #3 Monopolistic Competition Graph

Oligopoly

2007 #3 Game Theory (Roadway and Rankin)

Factors Market

1997 #1 MRP = MFC (Jones T-shirts) 2001 #3 MRP = MFC (Sparkle Car Wash, wages) 2005 #3 MRP = MFC (MP, MRP, MFC, how many workers?) 1998 #2 MRP = MFC (dim. Marginal returns, MP/AP curve, MP vs. AVC) 2003 #3 MRP = MFC (definition of MRP, side-by-side graph of PC of PC labor industry/individual market, increase in tech/productivity) 1000 #2 MRP = MFC (wages, p.c., profit) 1991 #1 Perfect Competition in the factors market 2002 #1 Perfect Competition/Monopoly (monopoly/p.c., PC factors market) 2007#2 MRP = MFC (table, graph MRP = MFC, profit-max., increased productivity, MRP = MFC)

MSB = MSC

2001 #2 MSC = MSB (externalities) 2002 #2 MSC = MSB (both MSC and MSB curves shift) 1997 #3 Marginal analysis (MC, MSB, MSC, MP/P) 1994 #1 Perfect Competition (wages, MRP = MFC, Price floor) 2003 #1 Perfect Competition (smoke alarm, short run/long run profits, positive externalities in the market) 2004 #1 Externality and Monopoly Graph 2006 #3 Negative externality, positive externality, per-unit subsidy, graphing

Tariffs and World Trade 2004 #2 Domestic/World Graph, tariffs AP Macroeconomics “Free” Response Questions

Production-possibilities Curve

1999 #2 Production-possibilities Curve (wheat and cloth, comparative advantage) 2003 #3 Production-possibilities Curve (absolute/comparative advantage, terms of trade) 2008 #3 Production-possibilities Curve (absolute/comparative advantage, terms of trade)

Circular Flow and GDP

1997 #2 Circular Flow (circular flow/AD/flow of expenditures/flow of earnings) 1999 #2 GDP (flow of expenditures/flow of earnings, what is included in GDP) 2007 #3 GDP (what is and is not included)

Monetary Policy

1993 #2 Reserve Requirement (T-account) 1996 #3 Reserve Requirement (MS, simple money multiplier, limitations) 2001 #3 Reserve Requirement (M1, M2, maximum loans, limitations) 2004 #3 FED buys bonds, T account, increase in the money supply

Aggregate Supply and Aggregate Demand (Monetary/Fiscal/LR)

1989 #1 AS/AD (economy less than full employment, fiscal/monetary, LR) 1990 #1 AS/AD (economy is ideal, fiscal, monetary, LR) 1993 #1 AS/AD (economy is perfect, fiscal messes it up, monetary corrects it) 1996 #1 AS/AD (high inflation, fiscal, monetary, limitations of these policies) 1998 #2 Sell Bonds (interest rates, investment, AD, PL, Q) 1998 #1 AS/AD (economy is perfect, fiscal policy messes it up, monetary policy, debt, deficit, supply-side tax policy, LR, AS, PP curve) 2000 #1 AS/AD (deep recession, monetary, fiscal, I, long run AS) 2000 #3 Money Market Graph (interest rates, components of AD, AD/AS, PL, Q) 2001 #1 AS/AD (less than full employment, fiscal, money demand, interest rates, corporate taxes, AD/AS, PL, Q) 2002 #1 AS/AD (economy has high unemployment, fiscal, monetary, interest rates) 2004 #1 AS/AD, state of economy, FED, flexible wages and prices 2005 #1 AS/AD, (economy is perfect, goes into recession, FED policies, real interest

International Market AND Exchange Rates

1996 #2 Exchange Rates (Yen, Franc, Mark, $, X, M, international value of $) 1998 #3 International value of the currency (change in labor productivity) 2000 #2 Exchange Rates (demand for French goods, increase in interest rate, international value of $) 2001 #2 Exchange Rates (international value of $, X, M) 2002 #3 International Value of $ (interest rates, X, M) 2003 #2 Inflation (effects on fixed interest account, fixed interest loan, how fiscal and monetary policy can correct inflation, affect of inflation on nominal rates, affect of inflation on international value of $) 2004 #2 Loanable funds and exchange market 2005 #2 Loanable funds, deficit spending, investment, international value of $ 2008 #2 Balance of Payments, current vs. capital account, currency exchange market)

Aggregate Supply and Aggregate Demand (Monetary/Fiscal/LR/International)

1992 #2 AS/AD (increase in AD, monetary, fiscal, international value of $, X, M) 1994 #3 Increase Productivity (AS, P, Q, X, international value of $) 1997 #3 AS/AD (recession, fiscal, monetary, X, M, international value of $) 1999 #1 AS/AD (increase in relative interest rates, value of $, X, M, I, AD, AS, fiscal, monetary) 2003 #1 AS/AD (severe recession, fiscal, monetary, value of $, X, M) 2006 #1 AS/AD (current state, energy costs rise, AS/AD, international value of $) 2007 #1 AS/AD (money market demand, AS/AD, international value of $)

Aggregate Supply Shift

1991 #1 AS/AD (supply shock, fiscal, monetary, X, M) 1994 #1 AS/AD (stagflation, fiscal, monetary) 1994 #2 Long Run Growth (short-term interest rates, aggregate expenditures, GDP) 1999 #3 AS/AD (increase in investment, AD, Capital Stock, LR, AS, Q, PP curve) 2002 #2 AS/Long-run effect (decrease in labor participation, increase in gov. deficit, decrease in quantity of inputs required to produce, increase in quality of education, increase in savings rate)

Difficult OR Misc. Questions

1997 #1 Interest rate/Money demand sensitivity 1993 #3 Nominal Wages Rise Faster than Labor Productivity (what happens to the general price level, X, international value of the $) 2005 #3 Phillips curve (short run and long run) 2006 #2 Loanable funds market, money market, real interest, nominal interest 2006 #3 Unemployment, natural rate of unemployment, part-time employees and unemployment rate, Phillips curve. 2007 #2 Federal funds rate, multiplier, nominal interest rate, real interest rate 2008 #1 Phillips Curve, recession, spending multiplier, tax multiplier, loanable loanable funds