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 -