FRQ 1: Determinants of Demand and Supply
FRQ 2: Market Equilibrium
FRQ 3: Changes in Market Conditions
Production, Cost, and the Perfect Competition ModelFRQ 4: Costs of Production
FRQ 5: Perfect Competition in the Short Run
FRQ 6: Long-Run Equilibrium in Perfect Competition
- (a) Explain how a change in consumer income impacts the demand for normal goods and inferior goods. Use a correctly labeled demand curve to illustrate your explanation.
- (b) Identify two non-price determinants of supply and explain how a change in each affects the supply curve.
FRQ 2: Market Equilibrium
- (a) Define market equilibrium and explain how it is achieved in a perfectly competitive market.
- (b) Using a correctly labeled supply and demand graph, show the effects of an increase in consumer preferences for a good. Indicate the new equilibrium price and quantity.
- (c) Describe the potential effects of government-imposed price floors or ceilings on market equilibrium.
FRQ 3: Changes in Market Conditions
- (a) Assume the government provides subsidies to producers of electric vehicles. Use a supply and demand diagram to show the impact on equilibrium price and quantity in the market for electric vehicles.
- (b) Explain how the elasticity of demand would affect the total revenue for producers after the subsidy is implemented.
Production, Cost, and the Perfect Competition ModelFRQ 4: Costs of Production
- (a) Distinguish between fixed costs and variable costs, providing an example of each in the context of a bakery.
- (b) Explain the relationship between marginal cost (MC) and average total cost (ATC) in determining a firm's cost structure. Use a graph to support your answer.
FRQ 5: Perfect Competition in the Short Run
- (a) Define a perfectly competitive market and list its key characteristics.
- (b) Assume a firm in a perfectly competitive market is currently incurring losses. Explain, using a graph, whether the firm should continue to operate in the short run or shut down.
FRQ 6: Long-Run Equilibrium in Perfect Competition
- (a) Explain the process by which a perfectly competitive market achieves long-run equilibrium after a change in demand.
- (b) Using a graph, show the long-run equilibrium for a firm in a perfectly competitive market, labeling the firm's average total cost, marginal cost, and market price.
- (c) Discuss the implications of productive and allocative efficiency in a perfectly competitive market in the long run.