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2019 Apmicro

This document is the AP Microeconomics Practice Exam from 2019, published by the College Board, detailing exam instructions, structure, and materials required for proctors. It includes information on multiple-choice and free-response sections, timing, and scoring guidelines. Additionally, it outlines the procedures for administering the exam and ensuring compliance with AP policies.

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0% found this document useful (0 votes)

39 views107 pages

2019 Apmicro

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AP Micro 2019 Practice

Economics HL (Üsküdar American Academy)

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From the 2019 Administration

AP Microeconomics
®

Practice Exam

© 2019 The College Board. College Board, Advanced Placement, AP, AP Central, and the acorn logo are
registered trademarks of the College Board. Visit the College Board on the web: collegeboard.org.
AP Central is the official online home for the AP Program: apcentral.collegeboard.org.

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Contents

Exam Instructions

Student Answer Sheet for the Multiple-Choice Section

Section I: Multiple-Choice Questions

Section II: Free-Response Questions

Multiple-Choice Answer Key

Course Framework Alignment and Rationales

Free-Response Scoring Guidelines

Scoring Worksheet

Question Descriptors and Performance Data

Note: This publication shows the page numbers that appeared in

the 2018−19 AP Exam Instructions book and in the actual exam.
This publication was not repaginated to begin with page 1.

© 2019 The College Board. College Board, Advanced Placement Program, AP, SAT and the acorn logo are
registered trademarks of the College Board. All other products and services may be trademarks of their
respective owners. Permission to use copyrighted College Board materials may be requested online at:
www.collegeboard.org/request-form.
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AP Macroeconomics Exam
Regularly Scheduled Exam Date: Wednesday afternoon, May 15, 2019
Late-Testing Exam Date: Friday afternoon, May 24, 2019

AP Microeconomics Exam
Regularly Scheduled Exam Date: Friday morning, May 17, 2019
Late-Testing Exam Date: Wednesday morning, May 22, 2019

Section I Total Time: 1 hour and 10 minutes

Calculator not permitted
Number of Questions: 60
(The number of questions may vary slightly depending on the form of the exam.)
Percent of Total Score: 66.67%
Writing Instrument: Pencil required

Section II Total Time: 1 hour

(10-minute reading period, 50-minute writing period)
Calculator not permitted
Number of Questions: 3 required free-response questions
Percent of Total Score: 33.33%
Writing Instrument: Pen with black or dark blue ink

What Proctors Need to Bring to This Exam

Exam packets Extra No. 2 pencils with erasers
Answer sheets Extra pens with black or dark blue ink
AP Student Packs Lined paper
2018-19 AP Coordinator’s Manual Stapler
This book—2018-19 AP Exam Instructions Watch
AP Exam Seating Chart template Signs for the door to the testing room
School Code and Homeschool/Self-Study Codes – “Exam in Progress”
Pencil sharpener – “Phones of any kind are prohibited during the
Container for students’ electronic devices (if needed) test administration, including breaks”

76 AP Economics Exams
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2018-19 AP Exam Instructions

Macroeconomics

AP Economics Exams
Before Distributing Exams: Check that the title on exam covers is Macroeconomics, and
is printed in blue on the Section I exam booklet covers. (On any large-type exams, the
exam title will be printed in black.) If there are any exam booklets with a different title,
contact the AP coordinator immediately.

Microeconomics
Before Distributing Exams: Check that the title on all exam covers is Microeconomics,
and is printed in black. If there are any exam booklets with a different title, contact the
AP coordinator immediately.

SECTION I: Multiple Choice

› Do not begin the exam instructions below until you have completed the
appropriate General Instructions for your group.

Make sure you begin the exam at the designated time. Remember, you must complete a
seating chart for this exam. See pages 295–296 for a seating chart template and instructions.
See the 2018-19 AP Coordinator’s Manual for exam seating requirements (pages 56–59).

Macroeconomics
If you are giving the regularly scheduled exam, say:
It is Wednesday afternoon, May 15, and you will be taking the
AP Macroeconomics Exam. Look at your exam packet and confirm that the exam
title is “AP Macroeconomics” and is printed in blue on the Section I booklet
cover. [For large-type exams: If you are taking a large-type exam, the exam title
“AP Macroeconomics” is printed in black.] Raise your hand if your exam packet
contains any title other than “AP Macroeconomics,” and I will help you.

If you are giving the alternate exam for late testing, say:
It is Friday afternoon, May 24, and you will be taking the AP Macroeconomics Exam.
Look at your exam packet and confirm that the exam title is “AP Macroeconomics”
and is printed in blue on the Section I booklet cover. [For large-type exams: If you
are taking a large-type exam, the exam title “AP Macroeconomics” is printed
in black.] Raise your hand if your exam packet contains any title other than “AP
Macroeconomics,” and I will help you.

Microeconomics
If you are giving the regularly scheduled exam, say:
It is Friday morning, May 17, and you will be taking the AP Microeconomics Exam.
Look at your exam packet and confirm that the exam title is “AP Microeconomics”
and is printed in black. Raise your hand if your exam packet contains any title other
than “AP Microeconomics,” and I will help you.

If you are giving the alternate exam for late testing, say:
It is Wednesday morning, May 22, and you will be taking the AP Microeconomics
Exam. Look at your exam packet and confirm that the exam title is “AP
Microeconomics” and is printed in black. Raise your hand if your exam packet
contains any title other than “AP Microeconomics,” and I will help you.

AP Economics Exams 77
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2018-19 AP Exam Instructions

Once you confirm that all students have the correct exam, say:
In a moment, you will open the exam packet. By opening this packet, you
agree to all of the AP Program’s policies and procedures outlined in the
2018-19 Bulletin for AP Students and Parents.
You may now remove the shrinkwrap from the outside only of your exam
packet. Do not open the Section I booklet; do not remove the shrinkwrap from
the Section II materials. Put the white seals and the shrinkwrapped Section II
booklet aside. . . .
Carefully remove the AP Exam label found near the top left of your exam
booklet cover. Place it on page 1 of your answer sheet on the light blue box near
the top right corner that reads “AP Exam Label.”
If students accidentally place the exam label in the space for the number label or vice
versa, advise them to leave the labels in place. They should not try to remove the label;
their exam can still be processed correctly.
Listen carefully to all my instructions. I will give you time to complete each
step. Please look up after completing each step. Raise your hand if you have
any questions.
Give students enough time to complete each step. Don’t move on until all students are ready.
Read the statements on the front cover of the Section I booklet. . . .
Sign your name and write today’s date. . . .
Now print your full legal name where indicated. . . .
Turn to the back cover of your exam booklet and read it completely. . . .
Give students a few minutes to read the entire cover.
Are there any questions? . . .
You will now take the multiple-choice portion of the exam. You should have in
front of you the multiple-choice booklet and your answer sheet. You may never
discuss the multiple-choice exam content at any time in any form with anyone,
including your teacher and other students. If you disclose the multiple-choice
exam content through any means, your AP Exam score will be canceled.
Open your answer sheet to page 2. You must complete the answer sheet using a
No. 2 pencil only. Mark all of your responses beginning on page 2 of your answer
sheet, one response per question. Completely fill in the circles. If you need
to erase, do so carefully and completely. No credit will be given for anything
written in the exam booklet. Scratch paper is not allowed, but you may use the
margins or any blank space in the exam booklet for scratch work. Calculators
are not allowed on any part of this exam. Are there any questions? . . .
You have 1 hour and 10 minutes for this section. Open your Section I booklet
and begin.

Note Start Time . Note Stop Time .

Check that students are marking their answers in pencil on their answer sheets and that
they have not opened their shrinkwrapped Section II booklets.

After one hour, say:

There are 10 minutes remaining.
After 10 minutes, say:
Stop working. Close your booklet and put your answer sheet on your desk,
faceup. Make sure you have your AP number label and an AP Exam label on
page 1 of your answer sheet. Sit quietly while I collect your answer sheets.

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2018-19 AP Exam Instructions

Collect an answer sheet from each student. Check that each answer sheet has an

AP Economics Exams
AP number label and an AP Exam label.

After all answer sheets have been collected, say:

Now you must seal your exam booklet using the white seals you set aside
earlier. Remove the white seals from the backing and press one on each area of
your exam booklet cover marked “PLACE SEAL HERE.” Fold each seal over the
back cover. When you have finished, place the booklet on your desk, faceup.
I will now collect your Section I booklet. . . .
Collect a Section I booklet from each student. Check that each student has signed the front
cover of the sealed Section I booklet.

There is a 10-minute break between Sections I and II. When all Section I materials
have been collected and accounted for and you are ready for the break, say:
Please listen carefully to these instructions before we take a 10-minute break.
All items you placed under your chair at the beginning of this exam, including
your Student Pack, must stay there, and you are not permitted to open or
access them in any way. Leave your shrinkwrapped Section II packet on your
desk during the break. You are not allowed to consult teachers, other students,
notes, textbooks, or any other resources during the break. You may not make
phone calls, send text messages, check email, use a social networking site,
or access any electronic or communication device. You may not leave the
designated break area. Remember, you may never discuss the multiple-choice
exam content with anyone, and if you disclose the content through any means,
your AP Exam score will be canceled. Are there any questions? . . .
You may begin your break. Testing will resume at .

SECTION II: Free Response

After the break, say:
May I have everyone’s attention? Place your Student Pack on your desk. . . .
You may now remove the shrinkwrap from the Section II packet, but do not open
the exam booklet until you are told to do so. . . .
Read the bulleted statements on the front cover of the exam booklet. Look up
when you have finished. . . .
Now take an AP number label from your Student Pack and place it on the
shaded box. If you don’t have any AP number labels, write your AP number in the
box. Look up when you have finished. . . .
Read the last statement. . . .
Using your pen, print the first, middle, and last initials of your legal name in the
boxes and print today’s date where indicated. This constitutes your signature and
your agreement to the statements on the front cover. . . .
Now turn to the back cover. Using your pen, complete Items 1 through 3 under
“Important Identification Information.”. . .
Read Item 4. . . .
Are there any questions? . . .
If this is your last AP Exam, you may keep your Student Pack. Place it under your
chair for now. Otherwise if you are taking any other AP Exams this year, leave
your Student Pack on your desk and I will collect it now. . . .

AP Economics Exams 79
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2018-19 AP Exam Instructions

Read the information on the back cover of the exam booklet. Do not open the
booklet until you are told to do so. Look up when you have finished. . . .
Collect the Student Packs from students who are taking any other AP Exams this year.

Then say:
Are there any questions? . . .
The total Section II time is one hour. This includes a 10-minute reading period.
The reading period is designed to provide you with time to develop thoughtful,
well-organized responses. You are advised to take advantage of the reading
period to plan what you will write. You may begin writing your exam responses
before the reading period is over. You may make notes on page 3 and the pages
that contain the exam questions, but your responses must be written on the
designated lined pages. Are there any questions? . . .
You are responsible for pacing yourself and may proceed freely from one
question to the next. You must write your answers in the Section II booklet
using a pen with black or dark blue ink. You are not permitted to use other
colored pens or pencils to draw graphs or diagrams. If you need more paper
to complete your responses, raise your hand. At the top of each extra sheet of
paper you use, write only:
your AP number,
the exam title, and
the question number you are working on.
Do not write your name.
Make sure to begin your response on the lined page directly following the first
appearance of the question and continue your response on the additional lined
pages that follow. Remember to write your answers on the lined pages provided
for each question; only responses written on the lined pages will be scored.
You may now open the Section II booklet and begin the 10-minute
reading period.

Note Start Time . Note Stop Time .

After 10 minutes, say:
The reading period is over. You have 50 minutes remaining to complete Section II.

Note Start Time . Note Stop Time .

Check that students are using pens and that they are writing their answers in their
exam booklets.

After 40 minutes, say:

There are 10 minutes remaining.

After 10 minutes, say:

Stop working and close your exam booklet. Place it on your desk, faceup. . . .
If any students used extra paper for a question in the free-response section, have those
students staple the extra sheet(s) to the first page corresponding to that question in their
free-response exam booklets. Complete an Incident Report after the exam and return
these free-response booklets with the extra sheets attached in the Incident Report return
envelope (see page 68 of the 2018-19 AP Coordinator’s Manual for complete details).

Then say:
Remain in your seat, without talking, while the exam materials are collected. . . .

80 AP Economics Exams
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2018-19 AP Exam Instructions

Collect a Section II booklet from each student. Check for the following:

AP Economics Exams
Exam booklet front cover: The student placed an AP number label on the shaded box
and printed their initials and today’s date.
Exam booklet back cover: The student completed the “Important Identification
Information” area.
When all exam materials have been collected and accounted for, return to students any
electronic devices you may have collected before the start of the exam.

If you are giving the regularly scheduled exam, say:

You may not discuss or share the free-response exam content with anyone
unless it is released on the College Board website in about two days. Your
AP Exam score results will be available online in July.

If you are giving the alternate exam for late testing, say:
None of the content in this exam may ever be discussed or shared in any way at
any time. Your AP Exam score results will be available online in July.

If any students completed the AP number card at the beginning of this exam, say:
Please remember to take your AP number card with you. You will need the
information on this card to view your scores and order AP score reporting
services online.

Then say:
You are now dismissed.

After-Exam Tasks
Be sure to give the completed seating chart to the AP coordinator. Schools must retain
seating charts for at least six months (unless the state or district requires that they be
retained for a longer period of time). Schools should not return any seating charts in their
exam shipments unless they are required as part of an Incident Report.
NOTE: If you administered exams to students with accommodations, review the 2018-19 AP
Coordinator’s Manual and the 2018-19 AP SSD Guidelines for information about completing
the Nonstandard Administration Report (NAR) form, and returning these exams.
The exam proctor should complete the following tasks if asked to do so by the
AP coordinator. Otherwise, the AP coordinator must complete these tasks:

Complete an Incident Report for any students who used extra paper for the free-response
section. (Incident Report forms are provided in the coordinator packets sent with
the exam shipments.) These forms must be completed with a No. 2 pencil. It is
best to complete a single Incident Report for multiple students per exam subject, per
administration (regular or late testing), as long as all required information is provided.
Include all exam booklets with extra sheets of paper in an Incident Report return
envelope (see page 68 of the 2018-19 AP Coordinator’s Manual for complete details).
Return all exam materials to secure storage until they are shipped back to the
AP Program. (See page 27 of the 2018-19 AP Coordinator’s Manual for more information
about secure storage.) Before storing materials, check the “School Use Only” section on
page 1 of the answer sheet and:
Fill in the appropriate section number circle in order to access a separate
AP Instructional Planning Report (for regularly scheduled exams only) or subject
score roster at the class section or teacher level. See “Post-Exam Activities” in the
2018-19 AP Coordinator’s Manual.
Check your list of students who are eligible for fee reductions and fill in the
appropriate circle on their registration answer sheets.

AP Economics Exams 81
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Name:____________________________________

Answer Sheet for AP Microeconomics

Practice Exam, Section I

No. Answer No. Answer

1 31
2 32
3 33
4 34
5 35
6 36
7 37
8 38
9 39
10 40
11 41
12 42
13 43
14 44
15 45
16 46
17 47
18 48
19 49
20 50
21 51
22 52
23 53
24 54
25 55
26 56
27 57
28 58
29 59
30 60

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®
AP Microeconomics Exam
SECTION I: Multiple Choice 2019
DO NOT OPEN THIS BOOKLET UNTIL YOU ARE TOLD TO DO SO.

Instructions
At a Glance
Section I of this exam contains 60 multiple-choice questions. Fill in only the circles for
Total Time numbers 1 through 60 on your answer sheet.
1 hour and 10 minutes
Number of Questions Indicate all of your answers to the multiple-choice questions on the answer sheet. No
60 credit will be given for anything written in this exam booklet, but you may use the booklet
Percent of Total Score for notes or scratch work. After you have decided which of the suggested answers is best,
66.67% completely fill in the corresponding circle on the answer sheet. Give only one answer to
Writing Instrument each question. If you change an answer, be sure that the previous mark is erased
Pencil required completely. Here is a sample question and answer.
Electronic Device
None allowed

Use your time effectively, working as quickly as you can without losing accuracy. Do not
spend too much time on any one question. Go on to other questions and come back to
the ones you have not answered if you have time. It is not expected that everyone will
know the answers to all of the multiple-choice questions.
Your total score on the multiple-choice section is based only on the number of questions
answered correctly. Points are not deducted for incorrect answers or unanswered
questions.

Form I
Form Code 4PBP4-S

34
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The inclusion of source material in this exam is not intended as an

endorsement by the College Board or ETS of the content, ideas, or
values expressed in the material. The material has been selected by
the economics faculty who serve on the AP Microeconomics
Development Committee. In their judgment, the material printed
here reflects various aspects of the course of study on which this
exam is based and is therefore appropriate to use to measure the
skills and knowledge of this course.

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MICROECONOMICS
Section I
Time—1 hour and 10 minutes
60 Questions

Directions: Each of the questions or incomplete statements below is followed by five suggested answers or
completions. Select the one that is best in each case and then fill in the corresponding circle on the answer sheet.

1. Which of the following is a defining characteristic Good X (units) Good Y (units)

of a market economy?
0 100
(A) Private ownership of resources
(B) Equitable distribution of income 20 95
(C) Taxation of personal income 40 85
(D) Reliance on public goods
(E) Government-guided resource allocation 60 65
80 35
100 0

2. The table above shows the maximum possible

output combinations of good X and good Y that
Microland can produce by using all of its
available resources and technology. As the
production of good X increases, what happens to
the opportunity cost of producing good X?
(A) It decreases, because the production of
good Y decreases by greater amounts.
(B) It decreases, because the production of
good Y increases by smaller amounts.
(C) It remains constant, because the production
of good X increases by the same amount.
(D) It increases, because the production of
good Y decreases by greater amounts.
(E) It increases, because the production of
good Y increases by smaller amounts.

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3. An increase in the supply of good X resulted in 7. The marginal benefit of consuming a good is
an increase in the price and quantity of good Y.
(A) the change in average utility that results from
It can be concluded that good Y is
consuming one more unit of the good
(A) an inferior good (B) the same as the total benefit
(B) a luxury good (C) equal to the marginal cost of the good
(C) a normal good (D) the change in total expenditures as a result of
(D) a substitute for good X buying one more unit of the good
(E) a complement for good X (E) the maximum amount a consumer is willing
to pay for one more unit of the good
4. Which of the following will shift the supply curve
for apples to the right? 8. The economic concept of total consumer surplus
refers to which of the following?
(A) An increase in consumers’ income
(B) An increase in the price of apples (A) The difference between the quantity of
(C) An increase in the wages of apple pickers a good or service that people purchase and
(D) A decrease in the rental price for apple the amount that they actually consume
harvesting equipment (B) The overproduction of goods and services
(E) A decrease in the demand for oranges, a relative to the socially optimal level of
substitute in consumption output
(C) The sum of the differences between the prices
5. Which of the following relationships among the that consumers are willing to pay for a good
price elasticity of demand, change in price, and or service and the price they actually pay
change in total revenue is consistent? (D) The sum of the differences between the prices
that consumers are willing to pay for a good
Price Elasticity Change Change in
or service and the minimum prices that
of Demand in Price Total Revenue
sellers must receive to offer that quantity
(A) Elastic Increase Increase (E) The difference between the quantity
(B) Elastic Decrease Decrease demanded and the quantity supplied
(C) Unit Elastic Decrease Decrease of a product at a given price
(D) Inelastic Decrease Increase
(E) Inelastic Decrease Decrease 9. The table below is partially filled in with the
different types of costs for a firm. Based on the
6. Which of the following best describes how information in the table, what is the marginal cost
a consumer maximizes total utility from the of producing the second unit?
consumption of a bundle of goods and services?
(A) By choosing the quantity of each good such Average
that the quantity demanded of each good is Total
Quantity Variable Fixed Total
equal to the quantity supplied Cost
Cost Cost Cost
(B) By choosing the quantity of each good such
that the marginal utility from each good is 0 $0 $60
equal to zero
(C) By choosing the quantity of each good such 1 $130
that the price is equal to the marginal 2 $90
revenue
(D) By choosing the level of output where (A) $50
marginal revenue is equal to marginal cost (B) $60
(E) By choosing the combination of goods such (C) $70
that the marginal utility per dollar spent on (D) $90
the last unit of each good is equal (E) $180

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13. In monopolistic competition, an individual firm’s

market power stems from which of the following?
(A) Economies of scale in production
(B) The production of a differentiated product
(C) The absence of perfectly competitive firms
that produce similar products
(D) Barriers to entry allowing firms to earn
economic profit
(E) The maintenance of excess capacity to meet
unexpected increase in demand

10. How many units of output should a firm with the 14. A profit-maximizing firm hires labor in a
cost and demand curves shown above produce to perfectly competitive market. Labor is the only
maximize profit? variable input, and the marginal product of the
last worker hired is 10 units per hour. If the
(A) 0 hourly wage is $20, the firm’s marginal revenue
(B) Q1
(A) is $2
(C) Q2 (B) is $20
(D) Q3 (C) increases as more output is produced
(E) Q4 (D) increases first and then decreases as more
output is produced
11. Currently, XYZ Corporation can produce 50 units (E) decreases first and then increases as more
of output using 20 workers and 8 units of capital. output is produced
Which of the following changes in the number of
workers, units of capital, and quantity of output 15. Assume the demand curve for a good is
are consistent with constant returns to scale? perfectly inelastic and the production of
each unit of this good generates external costs.
Workers Capital Output A profit-maximizing firm producing the good
in an unregulated free market will
(A) 40 8 100
(B) 40 16 90 (A) generate deadweight loss because marginal
(C) 20 4 25 social cost is greater than marginal
(D) 10 4 25 private cost.
(E) 10 8 25 (B) generate deadweight loss only if marginal
costs are constant
(C) not generate deadweight loss because the
equilibrium quantity is socially optimal
12. If the four largest firms in a market produce (D) not generate deadweight loss unless marginal
88 percent of total industry output, the market is costs are constant
(E) not generate deadweight loss unless fixed
(A) perfectly competitive
costs are zero
(B) a pure monopoly
(C) a natural monopoly
16. A linear production possibilities curve indicates
(D) an oligopoly
which of the following?
(E) a monopsony
(A) Constant opportunity costs
(B) Decreasing opportunity costs
(C) Increasing opportunity costs
(D) Diminishing marginal returns
(E) Labor-intensive production

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19. Which of the following occurs as a result of the

substitution effect of an increase in the price of a
normal good?
(A) The demand for the good decreases.
(B) The demand for the complementary good
increases.
(C) The demand for the good becomes more
elastic.
(D) The quantity demanded of the substitute good
decreases.
(E) The quantity demanded of the good
decreases.

Number of Quantity of
Workers Output

0 0
17. Assume that the government imposes a
1 10
$4 per-unit tax on sellers of a good in the
market described by the graph above. What 2 25
are the price paid by buyers, the after-tax price
3 35
received by sellers, and the deadweight loss?
4 40
Price Paid Price Received Deadweight
by Buyers by Sellers Loss 5 42
(A) $8 $6 $100
(B) $8 $4 $200 20. Given the production schedule above, what is the
(C) $6 $6 $0 maximum number of workers the firm can hire
(D) $4 $8 $100 before the effects of diminishing marginal returns
(E) $4 $8 $200 set in?
(A) 1
(B) 2
(C) 3
18. Which of the following must be true if at the (D) 4
tenth unit of output, marginal cost (MC) is (E) 5
$130 and average total cost (ATC) is $150 ?
(A) ATC of producing the ninth unit is higher
than $150.
(B) ATC of producing the ninth unit is less
than $150.
(C) MC of producing the ninth unit is higher
than $130.
(D) Average variable cost of producing the tenth
unit is higher than $150.
(E) Average variable cost of producing the tenth
unit is equal to $20.

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Town Herald
Do Not Increase
Change Subscription
Subscription Price
Price
Do Not
Change $500, $400 $200, $700
Daily Subscription
Voice Price
Increase
Subscription $600, $300 $300, $100
Price
21. Which of the following combinations of output,
price, and economic profit is consistent for the 22. The two major newspapers in a city, Daily Voice
profit-maximizing monopolist depicted in the and Town Herald, are considering whether to
graph above? raise the subscription price. The first entries in the
Output Price Economic Profit matrix above show the profits to Daily Voice, and
the second entries show the profits to Town
(A) Q1 P1 0P1LQ1 Herald. Which of the following is consistent with
(B) Q1 P4 P1P4IL the above payoff matrix?
(C) Q1 P4 P2 P4 IM (A) Do Not Change Subscription Price is a
(D) Q2 P3 P2 P3 NM dominant strategy for Daily Voice.
(E) Q3 P1 P1 P2 ML (B) Do Not Change Subscription Price is a
dominant strategy for Town Herald.
(C) Increase Subscription Price is a dominant
strategy for Daily Voice.
(D) Increase Subscription Price is a dominant
strategy for Town Herald.
(E) There are no dominant strategies in the above
payoff matrix.

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23. If a firm engages in perfect price discrimination, it Questions 25-26 refer to the data in the table
charges below.
(A) each customer the highest price the customer
is willing to pay A perfectly competitive firm operates with a fixed
(B) each customer the average cost of the product amount of capital that costs $1,000 per day. Labor is
(C) each customer the lowest price the customer the only variable input. The firm hires labor in a
is willing to pay perfectly competitive labor market at $100 per day
(D) different prices to customers based on how per worker. The table below shows the firm’s
old they are production function.
(E) different prices to customers based on how
many units of output they buy Number of Quantity of
Workers Hired Output (units)
24. Assume a perfectly competitive firm is currently 0 0
producing 100 units of output. Its marginal cost
is $6 and rising at that output quantity. Its average 1 10
variable cost is $7 and its average fixed cost is $3.
2 30
If the product’s price is $6, which of the following
will the firm do in the short run to maximize its 3 54
profit?
4 75
(A) Shut down
(B) Produce, but less than 100 units of output 5 85
(C) Produce more than 100 units of output 6 90
(D) Continue to produce at exactly 100 units
of output 25. What is the marginal product of the third worker?
(E) Increase its price above $6
(A) 5
(B) 10
(C) 20
(D) 24
(E) It cannot be determined from the
information given.

26. The firm will maximize profit in the short run if it

(A) shuts down and the price is $10
(B) produces 30 units and the price is $4
(C) produces 30 units and the price is $10
(D) produces 54 units and the price is $4
(E) produces 85 units and the price is $10

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Hours of Marginal 29. The Lorenz curve represents the relationship

Labor Product between

0 0 (A) the cumulative percentage of households

and the cumulative percentage of income
1 10 (B) income tax rates and income tax revenues
(C) child labor rates and the poverty levels
2 12
(D) income inequality and education level
3 9 (E) market structure and the number of firms
in the market
4 7
5 4
30. Antitrust laws are designed to maintain a
27. The table above shows how a firm’s hourly level competitive market environment by
of output changes as more of the labor input is (A) eliminating monopolies wherever they exist
employed. The firm sells its output and hires labor (B) preventing monopolies from generating
in perfectly competitive markets. The wage paid negative externalities
to labor is $10 per hour, and the price of the (C) limiting practices that increase a firm’s
firm’s output is $2 per unit. Based on the data in market power
the table, the marginal revenue product of the (D) imposing price ceilings on products produced
fourth hour of labor is equal to by monopolies
(A) $4 (E) making charging a price above marginal cost
(B) $7 illegal
(C) $14
(D) $26
(E) $70

Levels of Total Cost of Total Benefit

Cleanup Cleanup ($) of Cleanup ($)
0 0 0
1 7 45
2 37 80
3 92 105
4 172 125
5 272 140

28. The table above shows the total cost and the total
benefit of cleaning up pollution in a community.
Which of the following cleanup levels is socially
optimal?
(A) 1
(B) 2
(C) 3
(D) 4
(E) 5

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32. If the price elasticity of supply for pickles is 2 and

Opportunity Cost Opportunity Cost the price of pickles increases by 10 percent, then
Country of 1 Ton of of 1 Ton of the quantity supplied of pickles will increase by
Apples Oranges
(A) 0.2%
X 1 ton of oranges 1 ton of apples (B) 5%
(C) 8%
Y 2 tons of oranges 0.5 ton of apples (D) 12%
(E) 20%

31. The table above shows the opportunity costs of 33. If a 10 percent increase in the price of good X
producing apples and oranges in Countries X results in a 20 percent decrease in the quantity of
and Y. Which of the following can be concluded good Y demanded, which of the following is true?
based on the data given in the table? (A) Good X and good Y are complementary
(A) Country Y has an absolute advantage goods, and the cross-price elasticity is −0.5.
in producing both goods. (B) Good X and good Y are substitute goods, and
(B) Country Y has a comparative advantage the income elasticity is +2.
in producing both goods. (C) Good X and good Y are complementary
(C) Country X has an absolute advantage goods, and the cross-price elasticity is −2.
in producing both goods. (D) Good X and good Y are normal goods, and
(D) Country X has a comparative advantage the income elasticity is +2.
in producing oranges. (E) Good X and good Y are substitute goods, and
(E) Country X has a comparative advantage the cross-price elasticity is −2.
in producing apples.
34. Which of the following provides a possible
explanation for a simultaneous increase in the
equilibrium price and the quantity of blueberries
in a market?
(A) An increase in the price of strawberries, a
substitute
(B) An increase in the supply of strawberries, a
substitute
(C) An increase in the price of farmland used to
grow blueberries
(D) A decrease in the price of blueberry
harvesting equipment
(E) Imposition of a price floor in the market for
blueberries

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35. The table below shows the per-unit prices and 37. When two firms interact in an oligopolistic
marginal utility for the last unit of video games market, which of the following statements is true?
and comic books that Kyle purchased.
(A) If one firm has a dominant strategy, then
Video Comic the other firm does not have a dominant
Games Books strategy.
(B) If one firm has a dominant strategy, then the
Price per unit $25 $10 other firm also has a dominant strategy.
(C) Both firms must have dominant strategies.
Marginal utility 50 50 (D) If one firm has a dominant strategy, then
there is no Nash equilibrium.
Kyle spent all of his allocated budget on (E) If both firms have dominant strategies, then
video games and comic books. To maximize there is a Nash equilibrium.
his utility, Kyle should have purchased
38. Which of the following is true when a
(A) more video games and fewer comic books profit-maximizing monopolist produces in
(B) fewer video games and more comic books the elastic portion of its demand curve?
(C) fewer of both goods
(D) equal amounts of both goods (A) It can increase total revenue by raising price.
(E) more of both goods (B) It can decrease average total cost by
reducing output.
36. A perfectly competitive firm currently produces (C) Price is equal to marginal revenue.
1,000 units of output and hires its resources in (D) Marginal revenue is less than
a perfectly competitive factor market. It uses marginal cost.
both labor and capital as inputs. The price of (E) Marginal revenue is positive.
labor is $40; the price of capital is $100. The
marginal product of labor is 8 units, and the
marginal product of capital is 10 units. Which
of the following must be true?
(A) The firm is currently maximizing its profit.
(B) The firm can produce more than 1,000 units
without increasing the total cost if it uses
more labor and less capital.
(C) The firm can produce more than 1,000 units
without increasing the total cost if it uses
more capital and less labor.
(D) The firm can reduce the cost of producing
1,000 units by using less capital and
employing the same amount of labor.
(E) The firm can reduce the cost of producing
1,000 units by employing less labor and
using the same amount of capital.

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Questions 39-40 refer to the cost and revenue 41. At the current quantity that a firm is selling, the
conditions of a monopolistically competitive firm firm has marginal revenue of $750 and marginal
shown in the graph below. MC = marginal cost, cost of $800. Which of the following is true?
ATC = average total cost, AVC = average variable (A) The firm is maximizing profit.
cost, and MR = marginal revenue. (B) The firm’s profits would increase if the firm
increased the quantity sold.
(C) The firm’s profits would increase if the firm
decreased the quantity sold.
(D) The firm earns negative economic profit.
(E) The firm earns zero accounting profit.

42. Which of the following is true of a monopsony in

a labor market?
(A) It faces a labor supply curve that is horizontal
at the competitive market equilibrium wage.
(B) Its marginal factor (resource) cost is the same
as the market supply curve.
(C) At its optimal level of employment, it pays
a wage rate higher than the competitive
market wage rate.
(D) The imposition of a minimum wage results in
a larger reduction in employment than is
true in a competitive market.
(E) Its marginal factor (resource) cost curve lies
above the labor supply curve because hiring
an extra worker means paying more to
39. The firm’s profit-maximizing output in the existing workers.
short run is
(A) zero, because P < AVC 43. Which of the following indicates that a perfectly
(B) Q1, because MR = MC competitive firm has hired the profit-maximizing
(C) Q2, because P = MC amount of labor?
(D) Q3, because MC = ATC (A) The total product of labor exceeds the total
(E) impossible to determine real wage payments to workers.
(B) The average product of labor exceeds the real
40. Which of the following will the firm do in the wage paid to workers.
long run if market conditions do not change? (C) The marginal revenue product of labor is
below the wage paid to workers.
(A) It will increase output to Q2 and lower price (D) The marginal revenue product of labor is
to P2 to minimize losses. above the wage paid to workers.
(B) It will increase output to Q3 and raise price (E) The marginal revenue product of labor equals
to P4 to earn zero economic profit. the wage paid to workers.
(C) It will produce Q1 and set price equal to
marginal revenue.
(D) It will exit the industry.
(E) It will build a larger plant to achieve
decreasing returns to scale.

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44. In a competitive market in which the production 47. Assume the market for disposable coffee cups
of a good causes pollution, the socially optimal is in equilibrium and disposable coffee cups
output is different from the competitive market are inputs for serving brewed coffee. Which of
equilibrium output of that good because the the following will result in a higher short-run
equilibrium price of disposable coffee cups?
(A) marginal social benefit is higher than the
marginal social cost (A) A decrease in the supply of coffee
(B) marginal social benefit is lower than the (B) A decrease in the number of locations serving
marginal private cost brewed coffee
(C) marginal social cost is higher than the (C) An increase in the supply of disposable
marginal private cost coffee cups
(D) marginal social benefit is higher than the (D) An increase in the demand for brewed coffee
marginal private benefit (E) An increase in the price of tea, a complement
(E) total social cost is less than the total social for coffee
benefit
48. The equilibrium price for a good with a vertical
45. Which of the following explains why free-riding supply curve and a downward-sloping demand
can result in a market failure? curve is $20. If a binding price floor is set, which
of the following will occur?
(A) More than the socially optimal quantity is
produced and consumed. (A) There will be a shortage of the good.
(B) The socially optimal quantity is produced but (B) The sum of consumer and producer surpluses
less than the socially optimal quantity is will decrease.
consumed. (C) The equilibrium price of the good will
(C) Private producers of nonexcludable goods are decrease.
unable to charge everyone who consumes (D) The quantity sold of the good will remain
the good. unchanged.
(D) There is a market surplus of the good. (E) Demand for substitutes for the good will
(E) There is no consumer surplus derived from decrease.
the good.

46. Individual private property rights provide people

incentives to
(A) meet societal goals rather than pursue their
own self-interest
(B) produce goods and services regardless of
market demand
(C) achieve equitable distribution of goods and
services through competitive markets
(D) focus only on benefits without regard to costs
(E) produce goods and services that are valued in
markets

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Adey Sarah

49. The graphs above show the individual demand curves for the only two consumers, Adey and Sarah, in the
market for popcorn. As the price of popcorn decreases from $12 to $6, how does the quantity demanded change
along the market demand curve?
(A) It increases from 2 to 4 units.
(B) It increases from 2 to 5 units.
(C) It increases from 2 to 8 units.
(D) It increases from 0 to 14 units.
(E) It increases from 8 to 14 units.

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50. Which of the following is true for a firm that uses 52. The characteristic that causes firms in a perfectly
labor as a variable input and capital as a fixed competitive industry to earn zero economic profits
input in the short run? in the long run is
(A) If the marginal product of labor is negative, (A) firms are price takers
the average product of labor must also be (B) firms produce identical products
negative. (C) individual firms account for a small fraction
(B) If the marginal product of labor is rising, the of the total market
average product of labor must be greater (D) the industry supply curve is horizontal
than the marginal product of labor. (E) there are no barriers to entry or exit
(C) If the average product of labor is rising, the
marginal product of labor must be rising. 53. If individual firms in a perfectly competitive
(D) If the average product of labor is falling, the market are earning positive economic profits,
marginal product of labor must be less than the number of firms and the price of the product
the average product of labor. in the market will most likely change in which
(E) The average product of labor can never be of the following ways in the long run?
equal to the marginal product of labor.
Number of Firms Price
(A) Increase Increase
(B) Decrease Increase
(C) Increase Decrease
(D) Decrease Decrease
(E) No change Decrease

54. Jamal quits a job that was paying him $30,000

per year and decides to start his own business. He
runs his business out of his house in a room he
had been renting to his colleague for $12,000 a
year. Jamal withdraws the $20,000 in his savings
account that had been earning him a 10 percent
annual interest to purchase computers and related
accessories and equipment for the business.
During the first year of operation, Jamal’s
business incurred $30,000 in explicit costs and
51. The graph above shows the cost curves facing generated $60,000 in total sales. Jamal’s
May’s Fruit Farm, where MC is marginal cost, economic profit is
ATC is average total cost, and AVC is average
(A) $30,000
variable cost. May’s short-run supply curve
(B) $17,000
includes which of the following points?
(C) $0
(A) TW (D) – $2,000
(B) RST (E) – $14,000
(C) STV
(D) STW
(E) RSTV

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55. Firms in monopolistic competition do not 58. Assume that firms providing health-care services
attain allocative efficiency because at the to older people operate in a perfectly competitive
long-run equilibrium output, which of the market. What must happen in the market for
following is true? health-care workers if there is an increase in the
number of older people in a country?
(A) Price is greater than marginal cost.
(B) Marginal cost is greater than minimum (A) The demand for health-care workers will
average total cost. increase.
(C) Marginal revenue is greater than (B) The marginal factor cost in the health-care
marginal cost. industry will decrease.
(D) There is an overallocation of resources (C) The number of health-care workers will
to the market. decrease.
(E) Products are homogeneous. (D) The quality of health-care services will
increase.
56. A perfectly competitive firm is producing 10 units (E) The wages of health-care workers will
of output and sells the product for $5 per unit. At decrease.
this level of output the average total cost is $4, the
average variable cost is $3 and the marginal cost 59. As an unregulated monopolist, City Cable is
is $7. What should this firm do to maximize earning positive economic profits. If the
short-run profits? government regulated the firm by requiring it to
produce the level of output that allowed the firm
(A) Increase output until price equals average
to earn zero economic profit, City Cable would
total cost.
set a price that is equal to its
(B) Increase output until price equals
marginal cost. (A) marginal cost
(C) Leave output unchanged because price (B) marginal revenue
is greater than average total cost. (C) average total cost
(D) Decrease output until price is equal to (D) average variable cost
marginal cost. (E) total cost
(E) Decrease output until price is equal to
average total cost. 60. A progressive income tax is characterized by
(A) a higher average tax rate at low income levels
57. Assume accountants and teachers have identical
than at high income levels
marginal revenue product schedules. Which of
(B) tax rates that increase total tax revenues
the following provides an explanation for why
(C) marginal tax rates that do not change as
accountants receive higher starting salaries than
income changes
school teachers?
(D) marginal tax rates that increase as income
(A) Accountants have less human capital than increases
school teachers. (E) marginal tax rates that decrease as income
(B) Accountants have lower opportunity cost increases
than school teachers.
(C) Accounting firms provide a more pleasant
work environment than schools provide.
(D) The supply of accountants is low relative to
the supply of teachers.
(E) Fewer teaching majors graduate from college
each year than accounting majors.

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END OF SECTION I

IF YOU FINISH BEFORE TIME IS CALLED, YOU MAY

CHECK YOUR WORK ON THIS SECTION.

DO NOT GO ON TO SECTION II UNTIL YOU ARE TOLD TO DO SO.

MAKE SURE YOU HAVE DONE THE FOLLOWING.

• PLACED YOUR AP NUMBER LABEL ON YOUR ANSWER SHEET

• WRITTEN AND GRIDDED YOUR AP NUMBER CORRECTLY ON YOUR

ANSWER SHEET

• TAKEN THE AP EXAM LABEL FROM THE FRONT OF THIS BOOKLET

AND PLACED IT ON YOUR ANSWER SHEET

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®
AP Microeconomics Exam
SECTION II: Free Response 2019
DO NOT OPEN THIS BOOKLET UNTIL YOU ARE TOLD TO DO SO.

At a Glance
Total Time
1 hour
Number of Questions
3
Percent of Total Score
33.33%
Writing Instrument
Pen with black or dark
blue ink
Electronic Device
None allowed

Reading Period
Time
10 minutes. Use this
time to read the Instructions
questions and plan your
answers.You may begin The questions for Section II are printed in this booklet. You may use page 3 and the pages
writing your responses the questions are printed on to organize your answers and for scratch work, but you must
before the reading
period is over. write your answers on the lined pages provided for each question.

Writing Period The proctor will announce the beginning and end of the reading period. You are advised
to spend the 10-minute period reading all the questions and planning your answers. You
Time may begin writing your responses before the reading period is over.
50 minutes
Write clearly and legibly. Do not skip lines. Cross out any errors you make; crossed-out
Question 1
work will not be scored.
Suggested Time
25 minutes Manage your time carefully. You may proceed freely from one question to the next. You
Percent of Section II Score may review your responses if you finish before the end of the exam is announced.
50%

Question 2
Suggested Time
12.5 minutes
Percent of Section II Score
25%
Question 3
Suggested Time
12.5 minutes
Percent of Section II Score
25%

Form I
Form Code 4PBP4-S

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MICROECONOMICS
Section II
Total Time—1 hour
Reading Period—10 minutes
Writing Period—50 minutes

Directions: You are advised to spend the first 10 minutes reading all of the questions and planning your
answers. You will then have 50 minutes to answer all three of the following questions. You may begin
writing your responses before the reading period is over. It is suggested that you spend approximately half
your time on the first question and divide the remaining time equally between the next two questions.
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled
diagram must have all axes and curves clearly labeled and must show directional changes. Use a pen with
black or dark blue ink.

Question 1 begins on page 4.

Question 2 begins on page 10.
Question 3 begins on page 14.

THIS PAGE MAY BE USED FOR TAKING NOTES AND PLANNING YOUR ANSWERS.
NOTES WRITTEN ON THIS PAGE WILL NOT BE SCORED.
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1. L&P Power is a natural monopoly supplying electricity for a city. The firm produces the profit-maximizing
quantity of electricity and earns a positive economic profit.
(a) Describe a condition that distinguishes a natural monopoly from a typical monopoly.
(b) Draw a correctly labeled graph for the natural monopoly market in which L&P Power operates and show
each of the following.
(i) The profit-maximizing quantity, labeled QM
(ii) The profit-maximizing price, labeled PM
(iii) The area representing economic profit, shaded completely
(c) Suppose the government wants to regulate L&P to produce the maximum quantity that would allow it to
earn zero economic profit. On your graph in part (b), show the maximum quantity it will produce to earn
zero economic profit, labeled QR, and price, labeled PR.
(d) Suppose instead the government wants to regulate L&P to produce the allocatively efficient quantity.
(i) Does L&P earn positive economic profit if it produces the allocatively efficient quantity? Explain.
(ii) Under what condition will L&P agree to produce the allocatively efficient quantity?

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ANSWER PAGE FOR QUESTION 1

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Question 1 is reprinted for your convenience.

THIS PAGE MAY BE USED FOR TAKING NOTES AND PLANNING YOUR ANSWERS.
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2. A movie theater company obtains the following estimated elasticities of demand.

• The absolute value of the short-run price elasticity of demand for movie tickets is 0.85.
• The absolute value of the long-run price elasticity of demand for movie tickets is 3.2.
• The cross-price elasticity of demand for good X, another product sold by the theater, with respect to the
price of movie tickets is – 0.26.
• The income elasticity of demand for movie tickets is 0.75.
Answer each of the following by referring to the given elasticities.
(a) If the theater raises movie ticket prices by 10 percent, by what percentage and in what direction will the
quantity demanded for movie tickets change in the short run?
(b) Explain why the short-run price elasticity of demand for movie tickets differs from the long-run price
elasticity of demand for movie tickets.
(c) What will happen to total revenue from movie ticket sales in the long run if movie ticket prices increase?
Explain using the relative percentage changes in price and quantity.
(d) Are movie tickets a normal good or an inferior good? Explain.
(e) Given the increase in the price of movie tickets in part (a), what would be the impact on the demand for
good X? Use the appropriate graph for good X to illustrate your answer.

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3. In the small country of AgroIsland, the equilibrium price of wheat is $10 per bushel. Wheat is produced in
a competitive industry. The world market price of wheat is $20 per bushel.
(a) Assume that AgroIsland currently does not engage in international trade in wheat. Draw a correctly labeled
graph to illustrate the market for wheat in AgroIsland and indicate the following.
(i) The equilibrium price, labeled $10
(ii) The equilibrium quantity, labeled Q*
(iii) The domestic producer surplus, shaded completely and labeled PS
(b) On the graph from part (a), show each of the following for AgroIsland if it engages in free trade in the world
wheat market.
(i) The world price of a bushel of wheat, labeled $20
(ii) The quantity of wheat supplied by domestic producers, labeled Qp
(iii) The domestic consumer surplus after trade, shaded completely and labeled CS
(c) Given your answers in part (b), how does each of the following change if AgroIsland engages in
international trade in the wheat market?
(i) The domestic consumer surplus
(ii) The domestic producer surplus

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END OF EXAM

THE FOLLOWING INSTRUCTIONS APPLY TO THE COVERS OF THE

SECTION II BOOKLET.

• MAKE SURE YOU HAVE COMPLETED THE IDENTIFICATION

INFORMATION AS REQUESTED ON THE FRONT AND BACK
COVERS OF THE SECTION II BOOKLET.

• CHECK TO SEE THAT YOUR AP NUMBER LABEL APPEARS IN

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Answer Key for AP Micreconomics

Practice Exam, Section I

Question 1: A Question 31: E

Question 2: D Question 32: E
Question 3: E Question 33: C
Question 4: D Question 34: A
Question 5: E Question 35: B
Question 6: E Question 36: B
Question 7: E Question 37: E
Question 8: C Question 38: E
Question 9: A Question 39: A
Question 10: D Question 40: D
Question 11: D Question 41: C
Question 12: D Question 42: E
Question 13: B Question 43: E
Question 14: A Question 44: C
Question 15: C Question 45: C
Question 16: A Question 46: E
Question 17: B Question 47: D
Question 18: A Question 48: B
Question 19: E Question 49: C
Question 20: B Question 50: D
Question 21: C Question 51: C
Question 22: C Question 52: E
Question 23: A Question 53: C
Question 24: A Question 54: E
Question 25: D Question 55: A
Question 26: E Question 56: D
Question 27: C Question 57: D
Question 28: B Question 58: A
Question 29: A Question 59: C
Question 30: C Question 60: D

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Multiple-Choice Section for Microeconomics

2019 Course Framework Alignment and Rationales

Question 1

Skill Learning Objective Topic

Resource Allocation and

1.A MKT-1.B
Economic Systems
(A) Correct. In a market economy, there is a reliance on signals provided
by market prices for the allocation of resources. Private ownership of
resources (or well-defined property rights—the right to own and use
resources) is an important feature that provides incentives to
producers and consumers to respond effectively to economic signals.
Thus private ownership of resources is an essential element for
markets to function well in allocating resources efficiently.
(B) Incorrect. In a market economy, the production, distribution, and
consumption of goods and services are based on the ownership of
resources, and the resulting market distribution of income is not
necessarily equitable.
(C) Incorrect. Income taxes are not unique to a market economy. Other
economic systems also have some form of an income tax system, by
which governments collect taxes to finance public sector spending.
(D) Incorrect. In a market economy, buyers and sellers interact through
competitive markets to determine what will be produced, who will
produce goods and services, and who will consume goods and
services. Therefore, in a market system there is primarily a reliance
on private goods, not public goods.
(E) Incorrect. Government-guided resource allocation is a defining
characteristic of a command economy, not a market economy. In a
market economy, resources are allocated by competitive markets.

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Question 2

Skill Learning Objective Topic

Production Possibilities
2.C MKT-1.C
Curve
(A) Incorrect. The opportunity cost increases (not decreases) because as
the production of good X increases, the production of good Y
decreases by greater amounts. Producing the first 20 units of good X
requires giving up 5 units of good Y, producing the next 20 units of
good X requires giving up 10 units of good Y, producing the next 20
units of good X requires giving up 20 units of good Y, producing the
next 20 units of good X requires giving up 30 units of good Y, and
producing the last 20 units of good X requires giving up 35 units of
good Y. Thus, the opportunity cost increases (not decreases) as more
of X is produced.
(B) Incorrect. The opportunity cost increases (not decreases) because as
the production of good X increases, the production of good Y
decreases by greater amounts (not increases by smaller amounts).
Producing the first 20 units of good X requires giving up 5 units of
good Y, producing the next 20 units of good X requires giving up 10
units of good Y, producing the next 20 units of good X requires
giving up 20 units of good Y, producing the next 20 units of good X
requires giving up 30 units of good Y, and producing the last 20 units
of good X requires giving up 35 units of good Y. Thus, the
opportunity cost increases (not decreases) as more of X is produced.
(C) Incorrect. The opportunity cost increases (it does not remain
constant) because as the production of good X increases, the
production of good Y decreases by greater amounts. Producing the
first 20 units of good X requires giving up 5 units of good Y,
producing the next 20 units of good X requires giving up 10 units of
good Y, producing the next 20 units of good X requires giving up 20
units of good Y, producing the next 20 units of good X requires
giving up 30 units of good Y, and producing the last 20 units of good
X requires giving up 35 units of good Y. Thus, the opportunity cost
increases (it does not remain constant) as more of X is produced.
(D) Correct. The opportunity cost increases because as the production of
good X increases, the production of good Y decreases by greater
amounts. Producing the first 20 units of good X requires giving up 5
units of good Y, producing the next 20 units of good X requires
giving up 10 units of good Y, producing the next 20 units of good X
requires giving up 20 units of good Y, producing the next 20 units of
good X requires giving up 30 units of good Y, and producing the last
20 units of good X requires giving up 35 units of good Y. Thus, the
opportunity cost increases as more of X is produced.

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Question 2 (continued)

(E) Incorrect. The opportunity cost increases because as the production

of good X increases, the production of good Y decreases by greater
amounts (it does not increase by smaller amounts). Producing the
first 20 units of good X requires giving up 5 units of good Y,
producing the next 20 units of good X requires giving up 10 units of
good Y, producing the next 20 units of good X requires giving up 20
units of good Y, producing the next 20 units of good X requires
giving up 30 units of good Y, and producing the last 20 units of good
X requires giving up 35 units of good Y. Thus, the opportunity cost
increases as more of X is produced.

Question 3

Skill Learning Objective Topic

Market Disequilibrium
2.A MKT-4.B and Changes in
Equilibrium
(A) Incorrect. From the given information it is not possible to determine
whether a good is inferior or normal. One needs to know the income
elasticity of demand for good Y to determine whether the good is
inferior or normal. The income elasticity of demand for an inferior
good is negative, implying that as income increases the demand for
the good decreases.
(B) Incorrect. From the given information it is not possible to determine
whether a good is a luxury or a necessity good.
(C) Incorrect. From the given information it is not possible to determine
whether a good is inferior or normal. One needs to know the income
elasticity of demand for good Y to determine whether the good is
inferior or normal. The income elasticity of demand for a normal
good is positive, implying that as income increases the demand for
the good decreases.
(D) Incorrect. Goods are complements of one another if a decrease in the
price of one good leads to an increase in demand for the other good.
An increase in the supply of good X will cause the price of good X to
decrease. The result of this change is an increase in the price and
quantity of good Y, which would be caused by an increase in the
demand for good Y. Therefore, goods X and Y are complements (not
substitutes).
(E) Correct. Goods are complements of one another if a decrease in the
price of one good leads to an increase in demand for the other good.
An increase in the supply of good X will cause the price of good X to
decrease. The result of this change is an increase in the price and
quantity of good Y, which would be caused by an increase in the
demand for good Y. Therefore, goods X and Y are complements.

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Question 4

Skill Learning Objective Topic

2.A MKT-3.D Supply

(A) Incorrect. An increase in consumer income is a determinant of the
demand for apples, not the supply. Therefore, the supply curve will
not be affected.
(B) Incorrect. An increase in the price of apples causes a movement up
along the given supply curve (not a shift of the supply curve). The
quantity supplied of apples is directly related to the price of apples.
(C) Incorrect. An increase in the wages of apple pickers will raise the cost
of production, causing the supply curve for apples to shift to the left
(not to the right).
(D) Correct. A decrease in the rental price for apple harvesting
equipment will increase the productivity of workers and lower the
cost of production, causing the supply curve for apples to shift to the
right.
(E) Incorrect. A decrease in the demand for oranges lowers the price of
oranges. If oranges and apples are substitutes for each other, the
decrease in the price of oranges will result in a decrease in the
demand for apples, causing the demand curve to shift to the left
along the given market supply curve; it does not shift the supply
curve.

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Question 9

Skill Learning Objective Topic

Short-Run Production
2.C PRD-1.A
Costs
(A) Correct. The variable cost for the first unit is $130 − $60 = $70.
The variable cost for the second unit is $180 − $60 = $120.
Therefore, the marginal cost of producing the second unit is
( $120 − $70 ) / 1 =$50.
(B) Incorrect. The response uses the fixed cost as the marginal cost. The
variable cost for the first unit is $130 − $60 =$70. The variable cost
for the second unit is $180 − $60 = $120. Therefore, the marginal
cost of producing the second unit is ( $120 − $70 ) / 1 = $50.
(C) Incorrect. The response uses the variable cost, which is also equal to
the marginal cost of the first unit. The variable cost for the first unit
is $130 − $60 = $70. The variable cost for the second unit is
$180 − $60 = $120. Therefore, the marginal cost of producing the
second unit is ( $120 − $70 ) / 1 = $50.
(D) Incorrect. The response uses the average total cost of producing two
units as the marginal cost. The variable cost for the first unit is
$130 − $60 = $70. The variable cost for the second unit is
$180 − $60 = $120. Therefore, the marginal cost of producing the
second unit is ( $120 − $70 ) / 1 =$50.
(E) Incorrect. The response uses the total cost of producing two units as
the marginal cost. The variable cost for the first unit is
$130 − $60 = $70. The variable cost for the second unit is
$180 − $60 = $120. Therefore, the marginal cost of producing the
second unit is ( $120 − $70 ) / 1 =$50.

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Question 10

Skill Learning Objective Topic

2.A PRD-3.A Perfect Competition

(A) Incorrect. The profit-maximizing quantity occurs at the output
quantity at which marginal revenue equals marginal cost. The firm
depicted in the graph operates in a perfectly competitive market; its
price is the same as marginal revenue and equal to the horizontal
demand curve. To maximize profit the firm should produce where
MR = MC, which occurs at Q3 , not zero.
(B) Incorrect. The profit-maximizing quantity occurs at the output
quantity at which marginal revenue equals marginal cost. The firm
depicted in the graph operates in a perfectly competitive market; its
price is the same as marginal revenue and equal to the horizontal
demand curve. To maximize profit the firm should produce where
MR = MC, which occurs at Q3 , not Q1.
(C) Incorrect. The profit-maximizing quantity occurs at the output
quantity at which marginal revenue equals marginal cost. The firm
depicted in the graph operates in a perfectly competitive market; its
price is the same as marginal revenue and equal to the horizontal
demand curve. To maximize profit the firm should produce where
MR = MC, which occurs at Q3 , not Q 2 .
(D) Correct. The profit-maximizing quantity occurs at the output
quantity at which marginal revenue equals marginal cost. The firm
depicted in the graph operates in a perfectly competitive market; its
price is the same as marginal revenue and equal to the horizontal
demand curve. To maximize profit the firm should produce where
MR = MC, which occurs at Q3 .
(E) Incorrect. The profit-maximizing quantity occurs at the output
quantity at which marginal revenue equals marginal cost. The firm
depicted in the graph operates in a perfectly competitive market; its
price is the same as marginal revenue and equal to the horizontal
demand curve. To maximize profit the firm should produce where
MR = MC, which occurs at Q3 , not Q 4 .

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Question 11

Skill Learning Objective Topic

Long-Run Production
2.C PRD-1.A
Costs
(A) Incorrect. Returns to scale is a long-run concept that describes what
happens to output when all inputs are increased or decreased by the
same proportion. With constant returns to scale, proportional
changes in all inputs result in an equal proportional increase in
output. A change of 40 workers, 8 units of capital and 100 units of
output is not consistent with constant returns to scale, because the
number of workers doubled, the amount of capital remained
constant, and output increased to 100. This is a short-run
phenomenon in which one input is fixed, in this case, capital.
(B) Incorrect. Returns to scale is a long-run concept that describes what
happens to output when all inputs are increased or decreased by the
same proportion. With constant returns to scale, proportional
changes in all inputs result in an equal proportional increase in
output. A change of 40 workers, 16 units of capital and 90 units of
output is not consistent with constant returns to scale, because the
number of inputs doubled, and output less than doubled. The
situation is known as decreasing returns to scale, not constant
returns to scale.
(C) Incorrect. Returns to scale is a long-run concept that describes what
happens to output when all inputs are increased or decreased by the
same proportion. With constant returns to scale, proportional
changes in all inputs result in an equal proportional increase in
output. The response does not show an equal proportional change in
the inputs and output, and therefore it is not consistent with
constant returns to scale.
(D) Correct. Returns to scale is a long-run concept that describes what
happens to output when all inputs are increased or decreased by the
same proportion. With constant returns to scale, proportional
changes in all inputs result in an equal proportional increase in
output. A change of 10 workers, 4 units of capital and 25 units of
output is consistent with constant returns to scale, because the
amount of inputs changed by 50 percent each (i.e., the number of
workers changed by 10 from 20 and the units of capital changed by 4
from 8), and the amount of output also changed by 50 percent (i.e., a
change of 25 units of output from 50).
(E) Incorrect. Returns to scale is a long-run concept that describes what
happens to output when all inputs are increased or decreased by the
same proportion. With constant returns to scale, proportional
changes in all inputs result in an equal proportional increase in
output. The response does not show equal proportional changes in
the inputs and output, and therefore it is not consistent with
constant returns to scale.

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Question 17 (continued)

(E) Incorrect. The tax creates a wedge between the price paid by buyers
and the price received by sellers. The per-unit tax shifts the supply
curve to the left by the amount of the tax, raising the price to $8 and
decreasing the quantity exchanged to 100 units. Thus, the price paid
by buyers rises to $8 (not $4), and the price received by sellers falls to
$4 (not $8). The deadweight loss is given by the area of the triangle
between the price of $8 and $4 and the quantity of 100 units and 200
units. That is, the deadweight loss is equal to
( ( $8 − $4 ) × ( 200 − 100 ) ) / 2 =
$200.

Question 18

Skill Learning Objective Topic

Short-Run Production
2.C PRD-1.A
Costs
(A) Correct. When ATC is greater than MC, the marginal cost is rising
and the ATC is falling with increases in output. Producing one less
unit of output raises ATC; therefore, the ATC of producing the
ninth unit is greater than $150.
(B) Incorrect. When ATC is greater than MC, the marginal cost is rising
and the ATC is falling with increases in output. Producing one less
unit of output raises ATC; therefore, the ATC of producing the
ninth unit is greater than $150 (not less than $150).
(C) Incorrect. When ATC is greater than MC, the marginal cost is rising
and the ATC is falling with increases in output. Producing one less
unit of output lowers the MC (not raises it); thus the MC of
producing the ninth unit is less than $130 (not greater).
(D) Incorrect. The average variable cost (AVC) is less than the ATC at all
output levels. Therefore, the AVC of producing the tenth unit is less
than $150 (not greater than $150).
(E) Incorrect. From the given information it is not possible to determine
the value of the AVC as $20 However, given the ATC is $150 and
the MC is $130 the AVC is less than the ATC, but not as low as $20.

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Question 19

Skill Learning Objective Topic

3.A MKT-3.A Demand

(A) Incorrect. The substitution effect is one of the factors that explains
why the demand curve slopes downward. It explains a movement
down along the demand curve for a normal good when the price of
the good increases, not a shift of the demand curve.
(B) Incorrect. The substitution effect is one of the factors that explains
why the demand curve slopes downward. It explains a movement
down along the demand curve for a normal good when the price of
the good increases, not a change in the demand for a complementary
good.
(C) Incorrect. The substitution effect is one of the factors that explains
why the demand curve slopes downward. It explains a movement
down along the demand curve for a normal good when the price of
the good increases. It is not a price change that makes the demand
for a good more elastic.
(D) Incorrect. When the price of a normal good increases, the demand
for the substitute good increases, which is a shift of the demand
curve, not a movement down along the demand curve for the good
whose price has increased.
(E) Correct. The substitution effect is one of the factors that explains
why the demand curve slopes downward. It explains a movement
down along the demand curve for a normal good when the price of
the good increases. When the price of a normal good increases,
buyers will substitute the higher-priced good for a lesser-priced
substitute, and therefore buyers will decrease the quantity demanded
of the good whose price has increased.

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Question 28

Skill Learning Objective Topic

Marginal Analysis and

2.C CBA-2.B
Consumer Choice
(A) Incorrect. The total cost is rising with cleaning up pollution, while
the total benefit is decreasing. Cleanup efforts should be undertaken
as long as the marginal benefit of additional cleanup exceeds the
marginal cost. At level 1, the marginal benefit of cleanup ($45)
exceeds the marginal cost ($7), but at level 2, the marginal benefit of
cleanup ($35) also exceeds the marginal cost ($30), so cleanup should
proceed to level 2. Beginning with the third level of cleanup, the
marginal cost ($55) exceeds the marginal benefit ($25). Thus, the
optimal level is 2.
(B) Correct. The total cost is rising with cleaning up pollution, while the
total benefit is decreasing. Clean up efforts should be undertaken as
long as the marginal benefit of additional cleanup exceeds the
marginal cost. The optimal level of cleanup is 2 because the marginal
benefit of the second cleanup ($35) exceeds the marginal cost ($30)
Beginning with the third level of cleanup, the marginal cost ($55)
exceeds the marginal benefit ($25). Thus, the optimal level is 2.
(C) Incorrect. The total cost is rising with cleaning up pollution, while
the total benefit is decreasing. Cleanup efforts should be undertaken
as long as the marginal benefit of additional cleanup exceeds the
marginal cost. The optimal level of cleanup is 2 because the marginal
benefit of the second cleanup ($35) exceeds the marginal cost ($30)
Beginning with the third level of cleanup the marginal cost ($55)
exceeds the marginal benefit ($25).
(D) Incorrect. The total cost is rising with cleaning up pollution, while
the total benefit is decreasing. Cleanup efforts should be undertaken
as long as the marginal benefit of additional cleanup exceeds the
marginal cost. The optimal level of cleanup is 2 because the marginal
benefit of the second cleanup ($35) exceeds the marginal cost ($30)
Beginning with the third level of cleanup the marginal cost ($55)
exceeds the marginal benefit ($25).
(E) Incorrect. The total cost is rising with cleaning up pollution, while
the total benefit is decreasing. Cleanup efforts should be undertaken
as long as the marginal benefit of additional cleanup exceeds the
marginal cost. The optimal level of cleanup is 2 because the marginal
benefit of the second cleanup ($35) exceeds the marginal cost ($30)
Beginning with the third level of cleanup the marginal cost ($55)
exceeds the marginal benefit ($25).

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Question 32

Skill Learning Objective Topic

3.C MKT-3.E Price Elasticity of Supply

(A) Incorrect. The price elasticity of supply is defined as the percentage
change in the quantity supplied of a good divided by the percentage
change in the price of the good. Given the value for the elasticity and
the percentage change in the price, the resulting percentage change
in the quantity supplied can be determined as follows: percentage
change in quantity supplied = (elasticity of supply × the percentage
change in price) = ( 2 × 10% ) = 20%.
(B) Incorrect. The price elasticity of supply is defined as the percentage
change in the quantity supplied of a good divided by the percentage
change in the price of the good. Given the value for the elasticity and
the percentage change in the price, the resulting percentage change
in the quantity supplied can be determined as follows: percentage
change in quantity supplied = (elasticity of supply × the percentage
change in price) = ( 2 × 10% ) = 20%.
(C) Incorrect. The price elasticity of supply is defined as the percentage
change in the quantity supplied of a good divided by the percentage
change in the price of the good. Given the value for the elasticity and
the percentage change in the price, the resulting percentage change
in the quantity supplied can be determined as follows: percentage
change in quantity supplied = (elasticity of supply × the percentage
change in price) = ( 2 × 10% ) = 20%.
(D) Incorrect. The price elasticity of supply is defined as the percentage
change in the quantity supplied of a good divided by the percentage
change in the price of the good. Given the value for the elasticity and
the percentage change in the price, the resulting percentage change
in the quantity supplied can be determined as follows: percentage
change in quantity supplied = (elasticity of supply × the percentage
change in price) = ( 2 × 10% ) = 20%.
(E) Correct. The price elasticity of supply is defined as the percentage
change in the quantity supplied of a good divided by the percentage
change in the price of the good. Given the value for the elasticity and
the percentage change in the price, the resulting percentage change
in the quantity supplied can be determined as follows: percentage
change in quantity supplied = (elasticity of supply × the percentage
change in price) = ( 2 × 10% ) = 20%.

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Question 33

Skill Learning Objective Topic

2.C MKT-3.E Other Elasticities

(A) Incorrect. The cross-price elasticity between good X and Y ( CRXY )
can be calculated as the ratio of the percentage change in the quantity
of good Y to the percentage change in the price of good X. Thus,
CRXY = ( −20% /10% ) = −2 (not −0.5 ).
(B) Incorrect. The cross-price elasticity between good X and Y ( CRXY )
can be calculated as the ratio of the percentage change in the quantity
of good Y to the percentage change in the price of good X. Thus,
CRXY = ( −20% /10% ) = −2 (not +2 ).
(C) Correct. The cross-price elasticity between good X and Y ( CRXY )
can be calculated as the ratio of the percentage change in the quantity
of good Y to the percentage change in the price of good X. Thus,
CRXY = ( −20% /10% ) = −2. The cross-price elasticity between
good X and good Y is negative implying that X and Y are
complementary goods.
(D) Incorrect. There is no information given in the question to calculate
the income elasticity or to determine whether X and Y are normal
goods.
(E) Incorrect. The cross-price elasticity between good X and Y ( CRXY )
can be calculated as the ratio of the percentage change in the quantity
of good Y to the percentage change in the price of good X. Thus,
CRXY = ( −20% /10% ) = −2. The cross-price elasticity between
good X and good Y is negative implying that X and Y are
complementary goods (not substitute goods).

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Question 34

Skill Learning Objective Topic

Market Disequilibrium
2.A MKT-4.B and Changes in
Equilibrium
(A) Correct. Two goods are substitutes if an increase in the price of one
increases the demand for the other. In this situation, the increase in
the price of strawberries will cause an increase in the demand for
blueberries, shifting the demand curve to the right. The result will be
a higher equilibrium price and quantity in the blueberry market.
(B) Incorrect. An increase in the supply of strawberries shifts the supply
curve to the right, resulting in a decrease in the equilibrium price
(not an increase in the equilibrium price) and an increase in the
quantity.
(C) Incorrect. An increase in the price of farmland used to grow
blueberries raises the cost of growing strawberries, causing a leftward
shift of the supply curve. The result will be a higher equilibrium price
and lower equilibrium quantity (not a higher equilibrium quantity).
(D) Incorrect. A decrease in the price of blueberry harvesting equipment
lowers the cost of producing strawberries and causes a rightward
shift of the supply curve, resulting in a decrease in equilibrium price
(not an increase in the equilibrium price) and an increase in
equilibrium quantity.
(E) Incorrect. An imposition of a price floor in the market for
blueberries causes a movement along the given supply curve. If the
price floor is binding, it will result in an increase in the quantity
supplied and in a decrease in quantity demanded. The result will be a
surplus of blueberries.

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Question 35

Skill Learning Objective Topic

Marginal Analysis and

2.C CBA-2.A
Consumer Choice
(A) Incorrect. Given his limited budget, Kyle should consume the
combination of video games and comic books such that the marginal
utility (MU) of the last dollar spent on video games is equal to the
MU of the last dollar spent on comic books. The MU per dollar
spent on comic books ( 50 / $10 ) is greater than the MU per dollar
spent on video games ( 50 / $25 ) . Therefore, to maximize his utility,
Kyle should have bought more (not fewer) comic books and fewer
(not more) video games.
(B) Correct. Given his limited budget, Kyle should consume the
combination of video games and comic books such that the marginal
utility (MU) of the last dollar spent on video games is equal to the
MU of the last dollar spent on comic books. The MU per dollar
spent on comic books ( 50 / $10 ) is greater than the MU per dollar
spent on video games ( 50 / $25 ) . Therefore, to maximize his utility,
Kyle should have bought more comic books and fewer video games.
(C) Incorrect. Given his limited budget, Kyle should consume the
combination of video games and comic books such that the marginal
utility (MU) of the last dollar spent on video games is equal to the
MU of the last dollar spent on comic books. The MU per dollar
spent on comic books ( 50 / $10 ) is greater than the MU per dollar
spent on video games ( 50 / $25 ) . Therefore, to maximize his utility,
Kyle should have bought more (not fewer) comic books and fewer
(not more) video games.
(D) Incorrect. Given his limited budget, Kyle should consume the
combination of video games and comic books such that the marginal
utility (MU) of the last dollar spent on video games is equal to the
MU of the last dollar spent on comic books. The MU per dollar
spent on comic books ( 50 / $10 ) is greater than the MU per dollar
spent on video games ( 50 / $25 ) . Therefore, to maximize his utility,
Kyle should have bought more (not fewer) comic books and fewer
(not more) video games.
(E) Incorrect. Given his limited budget, Kyle should consume the
combination of video games and comic books such that the marginal
utility (MU) of the last dollar spent on video games is equal to the
MU of the last dollar spent on comic books. The MU per dollar
spent on comic books ( 50 / $10 ) is greater than the MU per dollar
spent on video games ( 50 / $25 ) . Therefore, to maximize his utility,
Kyle should have bought more comic books and fewer video games
(not more of both goods). In addition, given his limited budget, it
would not be possible for Kyle to buy more of both goods.

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Question 36

Skill Learning Objective Topic

Profit-Maximizing
2.C PRD-4.C Behavior in Perfectly
Competitive Factor Markets
(A) Incorrect. To minimize its costs or maximize its profits, a firm should
use the combination of labor and capital such that the last dollar spent
on each input yields the same amount of marginal product. From the
given data, the marginal product of the last dollar spent on labor
( 8 / $40 ) is greater than the marginal product of the last dollar spent on
capital (10 / $100 ) . Therefore, the firm can produce more than 1,000
units of output by using more labor and less capital. The firm is not
maximizing its profit at the current output.
(B) Correct. To minimize its costs, a firm should use the combination of
labor and capital such that the marginal product of the last dollar spent
on labor is equal to the marginal product of the last dollar spent on
capital. From the given data, the marginal product of the last dollar
spent on labor ( 8 / $40 ) is greater than the marginal product of the last
dollar spent on capital (10 / $100 ) . Therefore, the firm can produce
more than 1,000 units of output by using more labor and less capital.
(C) Incorrect. To minimize its costs, a firm should use the combination of
labor and capital such that the marginal product of the last dollar spent
on labor is equal to the marginal product of the last dollar spent on
capital. From the given data, the marginal product of the last dollar
spent on labor ( 8 / $40 ) is greater than the marginal product of the last
dollar spent on capital (10 / $100 ) . Therefore, the firm can produce
more than 1,000 units of output by using more labor (not less labor) and
less capital (not more capital).
(D) Incorrect. To minimize its costs, a firm should use the combination of
labor and capital such that the marginal product of the last dollar spent
on labor is equal to the marginal product of the last dollar spent on
capital. From the given data, the marginal product of the last dollar
spent on labor ( 8 / $40 ) is greater than the marginal product of the last
dollar spent on capital (10 / $100 ) . Therefore, the firm can produce
more than 1,000 units of output by using more labor (not the same
amount of labor) and less capital.
(E) Incorrect. To minimize its costs, a firm should use the combination of
labor and capital such that the marginal product of the last dollar spent
on labor is equal to the marginal product of the last dollar spent on
capital. From the given data, the marginal product of the last dollar
spent on labor ( 8 / $40 ) is greater than the marginal product of the last
dollar spent on capital (10 / $100 ) . Therefore, the firm can produce
more than 1,000 units of output by using more labor (not less labor) and
less capital (not the same amount of capital).

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Question 37

(A) Incorrect. The firm is producing where marginal cost is greater than
marginal revenue and therefore is not maximizing profit. To
maximize profit, the firm should reduce its output to where marginal
revenue equals marginal cost.
(B) Incorrect. The firm’s profit will decrease (rather than increase) by
increasing the quantity sold because each additional output adds
more to the firm’s cost than it does to the firm’s revenue.
(C) Correct. The firm is producing where marginal cost is greater than
marginal revenue. Profit is maximized when marginal revenue equals
marginal cost, so the firm will increase its profits by decreasing
output to where marginal revenue equals marginal cost.
(D) Incorrect. It is not possible to determine the type of profit the firm is
currently earning without knowing its average total cost.
(E) Incorrect. It is not possible to determine whether the firm’s
accounting profit is positive, negative, or zero without knowing its
average total cost (or explicit and implicit costs).

Question 42

Skill Learning Objective Topic

2.A PRD-4.D Monopsonistic Markets

(A) Incorrect. In a monopsonistic labor market when the firm hires
additional workers, the marginal factor (resource) cost is greater
than the supply price of labor. Therefore, the supply curve is
upward-sloping, not horizontal.
(B) Incorrect. In a monopsonistic labor market when the firm hires
additional workers, the marginal factor (resource) cost is greater
than the supply price of labor. Therefore, the marginal factor cost
curve is upward-sloping and lies above the supply curve; it is not the
same as the supply curve for labor.
(C) Incorrect. At its optimal level of employment, the firm pays a wage
rate lower (not higher) than the competitive market wage rate.
(D) Incorrect. In a monopsonistic labor market, the imposition of a
minimum wage may result in larger, smaller, or the same
employment as in the competitive market.
(E) Correct. In a monopsonistic labor market when the firm hires
additional workers, the marginal factor (resource) cost is greater
than the supply price of labor. Therefore, the marginal factor cost
curve is upward-sloping and lies above the labor supply curve.

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Question 49

Skill Learning Objective Topic

3.C MKT-3.A Demand

(A) Incorrect. At $12, Adey buys 2 units and Sarah buys 0 units for a
total quantity of 2 units in the market. At $6, Adey buys 5 units and
Sarah buys 3 units for a total market quantity of 8 units. Thus, when
the price decreases from $12 to $6, the quantity demanded along the
market demand curve increases from 2 to 8 units (not from 2 to 4
units).
(B) Incorrect. At $12, Adey buys 2 units and Sarah buys 0 units for
a total quantity of 2 units in the market. At $6, Adey buys 5 units
and Sarah buys 3 units for a total market quantity of 8 units.
Thus, when the price decreases from $12 to $6, the quantity
demanded along the market demand curve increases from
2 to 8 units (not from 2 to 5 units).
(C) Correct. At $12, Adey buys 2 units and Sarah buys 0 units for a total
quantity of 2 units in the market. At $6, Adey buys 5 units and Sarah
buys 3 units for a total market quantity of 8 units. Thus, when the
price decreases from $12 to $6, the quantity demanded along the
market demand curve increases from 2 to 8 units.
(D) Incorrect. At $12, Adey buys 2 units and Sarah buys 0 units for
a total quantity of 2 units in the market. At $6, Adey buys 5 units
and Sarah buys 3 units for a total market quantity of 8 units.
Thus, when the price decreases from $12 to $6, the quantity
demanded along the market demand curve increases from
2 to 8 units (not from 0 to 14 units).
(E) Incorrect. At $12, Adey buys 2 units and Sarah buys 0 units for
a total quantity of 2 units in the market. At $6, Adey buys 5 units
and Sarah buys 3 units for a total market quantity of 8 units.
Thus, when the price decreases from $12 to $6, the quantity
demanded along the market demand curve increases from
2 to 8 units (not from 8 to 14 units).

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Question 50

Skill Learning Objective Topic

Question 55

Skill Learning Objective Topic

Monopolistic
2.A PRD-3.B
Competition
(A) Correct. In long-run equilibrium, firms produce the profit-
maximizing quantity by equating marginal cost to marginal revenue.
The price set is greater than marginal cost, creating deadweight loss.
Therefore, monopolistically competitive firms are not allocatively
efficient.
(B) Incorrect. At the profit-maximizing quantity, marginal cost is not
greater than minimum average total cost. Monopolistically
competitive firms are allocatively inefficient because price is greater
than marginal cost, not because marginal cost is greater than
minimum average total cost.
(C) Incorrect. Firms do not maximize profit by producing where
marginal revenue is greater than marginal cost. Monopolistically
competitive firms are allocatively inefficient because price is greater
than marginal cost, not because they produce where marginal
revenue is greater than marginal cost.
(D) Incorrect. Firms produce where marginal revenue equals marginal
cost to maximize profit. There is no overallocation of resources.
(E) Incorrect. Firms in monopolistic competition produce differentiated,
not homogenous, products.

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Question 56

Skill Learning Objective Topic

2.C PRD-3.A Perfect Competition

(A) Incorrect. The firm is currently producing where marginal cost ($7)
is greater than marginal revenue (which is equal to price, $5).
The firm can increase profit by decreasing output (not increasing
output) to where marginal cost equals price, not to where price
equals average total cost.
(B) Incorrect. The firm is currently producing where marginal cost ($7)
is greater than marginal revenue (which is equal to price, $5).
The firm can increase profit by decreasing output (not increasing
output) to where marginal cost equals price.
(C) Incorrect. The firm is currently producing where marginal cost ($7)
is greater than marginal revenue (which is equal to price, $5).
The firm can increase profit by decreasing output, (not by keeping
output at its current level) to where marginal cost equals price.
(D) Correct. The firm is currently producing where marginal cost ($7)
is greater than marginal revenue (which is equal to price, $5).
The firm can increase profit by decreasing output to where marginal
cost equals price.
(E) Incorrect. The firm is currently producing where marginal cost ($7)
is greater than marginal revenue (which is equal to price, $5).
The firm can increase profit by decreasing output to where marginal
cost equals price, not to where price is equal to average total cost.

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Question 57

Skill Learning Objective Topic

2.A POL-5.B Inequality

(A) Incorrect. Both accountants and teachers require academic training
and education to practice. Both have identical marginal revenue
schedules. Therefore, the difference in earnings cannot be explained
by the differences in human capital.
(B) Incorrect. Earning differentials are not based on differences in
opportunity cost.
(C) Incorrect. Whether or not the job provides a pleasant work
environment does not explain why accountants earn more than
school teachers.
(D) Correct. If the supply of accountants is low relative to the supply of
teachers, accountants will receive higher starting salaries than school
teachers.
(E) Incorrect. If fewer school teachers graduate each year than
accountants, that will imply teachers’ salaries will be higher (not
lower) than accountants’ salaries.

Question 58

Skill Learning Objective Topic

Changes in Factor
3.A PRD-4.B Demand and Factor
Supply
(A) Correct. An increase in the number of older people in a country will
increase the demand for healthcare workers.
(B) Incorrect. An increase in the number of older people in a country
will increase the demand for healthcare workers, which will increase
the wages of the healthcare workers. An increase in wages means that
the marginal factor cost will increase, not decrease.
(C) Incorrect. An increase in the number of older people in a country
will increase the demand for healthcare workers. As the demand for
healthcare workers increases along the supply curve, the wages of the
healthcare workers will increase and the quantity of healthcare
workers supplied will increase, not decrease.
(D) Incorrect. The quality of healthcare services cannot be determined
from the given information.
(E) Incorrect. An increase in the number of older people in a country
will increase the demand for healthcare workers, which will increase
(not decrease) the wages of the healthcare workers.

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Question 59

Skill Learning Objective Topic

The Effects of
Government
2.A POL-4.A Intervention in
Different Market
Structures
(A) Incorrect. If City Cable operates as a natural monopoly, setting price
equal to marginal cost will make it operate at a loss. In order for City
Cable to earn zero economic profit, the government should set its
price equal to average total cost.
(B) Incorrect. The marginal revenue is less than the demand curve, and
setting price equal to marginal revenue would lead City Cable to
operate at a loss. In order for City Cable to earn zero economic
profit, the government should set its price equal to average total cost.
(C) Correct. If the price is equal to average total cost, City Cable will
earn zero economic profit.
(D) Incorrect. Setting price equal to average variable cost will be a price
below average total cost, and therefore, City Cable will operate at a
loss. In order for City Cable to earn zero economic profit, the
government should set its price equal to average total cost.
(E) Incorrect. To set price equal to total cost is not feasible; price will
exceed all per-unit costs to the level where no quantity will be
purchased. In order for City Cable to earn zero economic profit, the
government should set its price equal to average total cost.

Question 60

Skill Learning Objective Topic

(b) 2 points
• One point is earned for showing the world price of a bushel of wheat on the graph at $20 and
for showing the quantity of wheat produced domestically, labeled Qp, from original supply curve.
• One point is earned for completely shading the correct area of consumer surplus and labeling
it CS.

(c) 1 point
• One point is earned for stating that the domestic consumer surplus decreases and the domestic
producer surplus increases.

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2019 AP Microeconomics Scoring Worksheet

Section I: Multiple Choice

× 1.0000 =
Number Correct Weighted Section I Score
(out of 60) (Do not round)

Section II: Free Response

Question 1 × 1.6666 =
(out of 9) (Do not round)

Question 2 × 1.5000 =
(out of 5) (Do not round)

Question 3 × 1.5000 =
(out of 5) (Do not round)

Sum =
Weighted
Section II
Score
(Do not round)

Composite Score

+ =
Weighted Weighted Composite Score
Section I Score Section II Score (Round to nearest
whole number)

AP Score Conversion Chart

Microeconomics
Composite
Score Range AP Score
66-90 5
51-65 4
41-50 3
32-40 2
0-31 1

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2019 AP Microeconomics
Question Descriptors and Performance Data

Multiple-Choice Questions

Question Skill Learning Objective Topic Key % Correct

1 1.A MKT-1.B Resource Allocation and Economic Systems A 73
2 2.C MKT-1.C Production Possibilities Curve D 67
Market Disequilibrium and Changes
3 2.A MKT-4.B E 75
in Equilibrium
4 2.A MKT-3.D Supply D 76
5 3.A MKT-3.E Price Elasticity of Demand E 52
6 2.A CBA-2.A Marginal Analysis and Consumer Choice E 59
7 1.A CBA-2.B Marginal Analysis and Consumer Choice E 13
Market Equilibrium and Consumer
8 1.A MKT-4.A C 77
and Producer Surplus
9 2.C PRD-1.A Short-Run Production Costs A 51
10 2.A PRD-3.A Perfect Competition D 73
11 2.C PRD-1.A Long-Run Production Costs D 70
12 1.C PRD-3.C Oligopoly and Game Theory D 81
13 2.A PRD-3.B Monopolistic Competition B 52
Profit-Maximizing Behavior in Perfectly
14 2.C PRD-4.C A 22
Competitive Factor Markets
15 3.A POL-3.A Externalities C 36
16 1.A MKT-1.C Production Possibilities Curve A 84
The Effects of Government Intervention
17 3.C POL-1.A B 73
in Markets
18 2.C PRD-1.A Short-Run Production Costs A 37
19 3.A MKT-3.A Demand E 54
20 2.C PRD-1.A The Production Function B 79
21 2.A PRD-3.B Monopoly C 71
22 1.C PRD-3.C Oligopoly and Game Theory C 73
23 1.A PRD-3.B Price Discrimination A 78
Firms' Short-Run Decisions to Produce and
24 2.C PRD-2.A A 57
Long-Run Decisions to Enter or Exit a Market
25 1.C PRD-1.A The Production Function D 92
Profit-Maximizing Behavior in Perfectly
26 2.C PRD-4.C E 39
Competitive Factor Markets
Profit-Maximizing Behavior in Perfectly
27 1.C PRD-4.C C 59
Competitive Factor Markets
28 2.C CBA-2.B Marginal Analysis and Consumer Choice B 39
29 1.A POL-5.A Inequality A 60
The Effects of Government Intervention
30 2.A POL-4.A C 47
in Different Market Structures
31 2.C MKT-2.A Comparative Advantage and Trade E 66
32 3.C MKT-3.E Price Elasticity of Supply E 54
33 2.C MKT-3.E Other Elasticities C 59
Market Disequilibrium and Changes
34 2.A MKT-4.B A 61
in Equilibrium
35 2.C CBA-2.A Marginal Analysis and Consumer Choice B 81
Profit-Maximizing Behavior in Perfectly
36 2.C PRD-4.C B 44
Competitive Factor Markets

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2019 AP Microeconomics
Question Descriptors and Performance Data

Question Skill Learning Objective Topic Key % Correct

37 2.A PRD-3.C Oligopoly and Game Theory E 68
38 2.A PRD-3.B Monopoly E 48
39 2.A PRD-3.B Monopoly A 21
40 2.A PRD-3.B Monopoly D 64
41 2.C CBA-2.D Profit Maximization C 39
42 2.A PRD-4.D Monopsonistic Markets E 39
Profit-Maximizing Behavior in Perfectly
43 2.A PRD-4.C E 71
Competitive Factor Markets
44 2.A POL-3.A Externalities C 66
45 2.A POL-3.C Public and Private Goods C 67
46 1.A MKT-3.A Demand E 47
Market Disequilibrium and Changes
47 2.A MKT-4.B D 60
in Equilibrium
The Effects of Government Intervention
48 3.A POL-1.A B 44
in Markets
49 3.C MKT-3.A Demand C 57
50 2.A PRD-1.A The Production Function D 33
Firms' Short-Run Decisions to Produce and
51 2.A PRD-2.A C 43
Long-Run Decisions to Enter or Exit a Market
52 2.A PRD-3.A Perfect Competition E 45
53 3.A PRD-3.A Perfect Competition C 78
54 1.C CBA-2.C Types of Profit E 38
55 2.A PRD-3.B Monopolistic Competition A 48
56 2.C PRD-3.A Perfect Competition D 39
57 2.A POL-5.B Inequality D 80
58 3.A PRD-4.B Changes in Factor Demand and Factor Supply A 85
The Effects of Government Intervention
59 2.A POL-4.A C 64
in Different Market Structures
60 1.A POL-5.B Inequality D 85

Free-Response Questions

Question Skill Learning Objective Topic Mean Score

1 2.A PRD-3.B Monopoly 4.27
2 1.C CBA-2.A Marginal Analysis and Consumer Choice 1.75
3 1.A PRD-3.C Oligopoly and Game Theory 3.24

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