Good Luck

Good Luck

Things to remember.

1. You have 1 hour and 10 minutes for the multiple choice section,,, pencil only,, no calculators,, plenty of time.,, draw graphs in the margins to help you answer the questions,, do not get hung up on one question,,, do the easy ones first and come back and ponder (SAT people) the hard ones. You know all of this so breathe and be brilliant.

2. You have 1 hour for the FRQs, this includes a ten minute reading section. Plan well,read the questions and underline the important parts,, but you can start writing during the 10 minute reading period,,, you do not have to wait to start writing.   ((((use a pen only))) no coloured markers,, highlighters or white out.... If you start and then figure out that you have  done something wrong,,,, quickly put a big X through it and start again.... Remember,, you know much more than they will be asking,,, show them what you know. Underline the important parts of the question,,, reread the questions to make sure you know what they are asking. 

EXPLAIN Underline anytime you see the word  EXPLAIN and EXPLAIN = WHY,,, Do not state,,, EXPLAIN, Complete sentences,, arrows on graphs,, but arrows in explanations need to be written out. Don't make them look and hunt for the answers,,, clearly labeled and underlined and/or circled the answer.

3. Eyes on your own paper 

4. During the break,, do not touch anything related to economics,, or electronics.

5. The night before,,, (((( do not study until late))) Go to bed after a good bit of studying ,, but sleep and a clear head is better than cramming the night before.

6. The morning of the exam,,, eat breakfast and, then some kind of light snack before... Snacks and water are technically not allowed but almost all proctors allow it.

7. Study a bit more the morning of the exam,, you should be doing things you know well (Graphs),,, do not try and learn anything new the might before or the morning of the exam,,, do what you know and show yourself all you know.

8. Be confident,,, enjoy being tested and knowing that you will do well.

Mr w

Helpful and Nice review from Mr. Clifford,, Good Work. Mr. Clifford

2006 AP Micro FRQ #2

2006 AP Micro FRQ #2

Watch me answer it on youtube 

https://youtu.be/HMjZFLz1IiY

(a) What is the dollar value of the firm's total fixed cost?

Understand that Total Cost = Variable Cost + Fixed Costs,,, Variable costs (think labor) only exist when there is actual production. If costs are ($20) and there is no production then the cost of $20 must be a fixed cost.

Answer - 

(b) Calculate the marginal cost of producing the first unit of output.

If Fixed Costs are ($20) and the Total Costs are ($27) then the Variable Costs/ Marginal Cost must be ($7).

Answer - 

(c) If the price the firm receives for its product is $20, indicate the firms profit-maximising quantity of output and explain how you determined the answer.

If $20 is the products price, and it is a perfectly competitive firm, then the 

Marginal Revenue = Price,, as the perfectly competitive firm's (MR. DARP) is perfectly elastic.

For every unit sold the revenue increases by $20 = the MR = P.

Profit Maximising quantity is where MR = MC, which is closest with the fourth unit.

Understand that just saying the 4th unit does not explain,,, to explain you must clearly explain WHY?

EXPLAIN - Using marginal analysis we compare where a firm's MR = MC, this is where profit is maximised. The 4th unit of production the MR $20 > MC $19. We are as close to Profit Max as possible, if we produce the 5th unit MR $20 < MC $23 (a loss). The firm profit max is to produce a quantity of 4.

Answer - 

(d) Given your results in part (c), Explain what will happen to the number of firms in the industry in the long-run.

Understand that the firm is making a profit of $8 with a production of 4 units. This is positive/abnormal/super economic profit in the short-run. Profits attract firms and therefore firms will enter the market hunting for profits. 

Number of firms will increase

Answer - 

(e) Assume that this firms operates in a constant cost industry (clue), and has reached long-run equilibrium. If the government imposes a per-unit tax of $2, indicate what will happen to the firm's profit maximising output in the long-run.

If in the Long-run firms are making zero economic profit, and the government imposes a $2 tax, it is fair to assume that the marginal costs will shift to the left as input costs increase. 

Answer - 

Thanks, Linh Nguyen

Last AP Economic Bootcamp

Last AP Economic Bootcamp 2015-2016

2003 AP MICRO EXAM (Question 3)

2003 AP MICRO EXAM (Question 3)

watch me answr it here

https://youtu.be/EKR_lKZNdQo

watch me anser it here

https://youtu.be/EKR_lKZNdQo

(a) Define the marginal revenue product of labor (MRPL)

MRP of labor is the additional revenue obtained by adding an additional input of labor (extra worker). It is in essence derived demand and is calculated by multiplying the marginal product and the price (of the good) together. It is downward sloping. MP X P = MRPL

Answer - 

(b) Using a correctly side by side graph show each of the following.

  (i) Equilibrium wage in the labor market

 (ii) Labor supply curve the firm faces

(iii) Number of workers the firm will hire

Answer - 

(c) Company XYZ develops a new technology that increases its labor productivity. Currently this technology is not available to any other firm (the market). For company XYZ explain how the increased productivity will effect each of the following.

 (i) Wage rates

(ii) Number of workers hired

If the Company XYZ, has use of technology that only affects its workers then it would have no reason to pay its workers more. Remember that they are price takers so they don't get to change the wage only the market can do that. So if the market demand or supply is not effected then there is no change in the firms wage rate. 

If Company XYZ's workers  are more productive then the firm will be able to make more profit per worker and therefore will hire more worker. 

Answer - 

2003 AP MICRO EXAM (Question 2)

2003 AP MICRO EXAM (Question 2)

(a) Draw a CLG showing a typical monopoly that is maximising profit and indicate each of the following.

 (i) Price

(ii) Quantity

(iii) Profit

Answer - 

(b) Explain the relationship between the demand curve and the MR curve.

The MR curve is below the Demand curve for a monopolist. Monopolists must lower their price to sell more quantity and they loose the revenue on the previous units they would have made at the higher price.

Answer - 

(c) Label each of the following on your graph in part (a)

(i) Consumer surplus

(ii) Deadweight loss

2003 AP MICRO EXAM FRQ #1

2003 AP MICRO EXAM (Question 1)

Watch me answer it here

https://youtu.be/eGYGxPDjqHs

(a) Using a correctly labeled side-by-side graphs for the smoke alarm market and J & P is currently earning  short-run positive economic profits.

(i) Price

(ii) Output

(b) In the graph in part (a) for J & P, indicate the area of iconic profits that J&P Company is earning in the short-run.

(c) Using a new set of correctly labelled side-by-side graphs for the smoke alarm market and J&P Company, show what will happen in the long-run to each of the following.

(i) Long-run equilibrium price & quantity in the market.

(ii) Long-run equilibrium price & quantity for J&P Company

Answer - 

(d) Assume that the purchase of smoke alarms create positive externalities. Draw a CLG of the smoke alarm market.

 I like my graph better,, positive consumption externalities 

Answer -

Answer - 

(e) Identify one government policy that would be implemented to encourage the industry to produce the socially optimal quantity.

Subsidy...

Answer -

2002 AP Macro Exam (Question 3)

2002 AP Macro Exam (Question 3)

 Go to Learn, I'm talking to you Jayne/Jane.

(a) How & why will capital flows be affected by this change in Real Interest Rates?

If the RIR increases in the US then the Japanese will want to buy US dollars in the FOREX market to be able to purchase the higher interest rate assets. Capital will flow toward the US in hopes of gaining profits from being paid the higher interest rates.

Answer - 

(b) Using a CLG for the Yen market, show an explain how the value of the yen will change relative to the value of the dollar.

As the RIR in the US increases, the Japanese hunting higher profits and better returns will sell their Yen in the FOREX market for US dollars. This causes their to be an increase in the supply of ¥ in the FOREX market. A larger supply of ¥ will cause the value of the ¥ to decrease in value relative to the US dollar.

Answer -

(c) Explain how a change in the value of the Yen (¥) will affect each of the following in the US.

(i) Imports from Japan

(ii) Exports to Japan

If the RIR's in the US are increasing then the Japanese are dumping their ¥ in the FOREX market and buying  US $, and therefore the demand for the US $ is increasing the value of the US dollar. A strong (appreciating value) dollar means that Americans citizens can purchase more Japanese imports. The increasing value of the dollar makes Japanese goods seem relatively less expensive than US goods. (Imports increase)

A strong $ would make US goods appear relatively more expensive to the Japanese and therefore less exports will be bought by the Japanese. (Exports Decrease)

Answer - 

Sherlock!!

What did I get on the AP exam?

2002 AP Macro Exam FRQ #2

2002 AP Macro Exam (Question 2)

I love this question as it is one of the best FRQ's to further your 

understanding of the LRAS Curve.

KNOW THIS!!

1^st. Understand that (potential real gross domestic production) is the boundary of the production possibility curve. (on the curve)

2^nd. Understand that what increases/decreases the PPC does the same to the LRAS curve. (Population, Trade, Resources, Human Capital ,Technology (productivity, capital formation))

Past Blog Post on this subject/topic

(a) A decrease in the labor force participation rate. (Population)

If the population decreases there are less people to work (overall) and therefore LRAS will decrease. This is not to be confused with unemployment, which is a short-run view of idle resources and is inefficiency, not a reduction in potential)

Answer - 

(b) An increase in the government deficit following a reduction in personal income taxes. (Technology)

A reduction in personal income taxes is contractionary fiscal policy.

The increase in government deficits implies an increase in government spending which is expansionary.

Which one is more powerful and why?

A decrease in taxes will increase disposable income and increase consumption and investment and thus aggregate demand but some of that tax decrease will be saved and not spent and therefore will have a less of an effect than government spending.

Government spending will be consumed in its entirety and has a larger multiplier.

More importantly, government spending implies that some of that increase in investment will be toward capital formation, (ports, technology, equipment and factories) and therefore will increase the long-run aggregate supply/potential real gross domestic production.

Government spending will increase potential real gross domestic production thus increasing long-run aggregate supply.

Answer - 

(c) A decrease in the quantity of inputs needed to produce a unit of output. (productivity/technology)

A decrease in the quantity of inputs needed to produce a unit of output implies there has been an increase in technology/productivity. An increase in technology allows the production possibility curve boundary to shift outward and LRAS curve shifts rightward.

Answer - 

(d) An increase in the quality and quantity of education. (human capital)

Increases in the quality/quantity of education is an increase in human capital is a shifter of the PPC curve (outward) and therefore would cause the LRAS curve to shift rightward.

Answer - 

(e) An increase in the rate of savings.

An increase in the rate of savings means that the supply of loanable funds has increased which lowers the Real Interest Rate and spurs investment. Some of that investment will be capital formation and will shift the LRAS curve to the right.

Answer -