<p>It’s okay to state the answer when it doesn’t ask for an explanation. Trust the collegeboard grading guidelines. But be sure to provide explanations when they do ask you to.</p>
<p>Do you guys think that there will be a game theory (Nash equilibrium, dominant strategy, etc.) FRQ question this year? There was one on the 2007 exam but not the 2008 exam. I dislike these a great deal …</p>
<p>^my teacher does not think so</p>
<p>he usually goes 2/3 on guessing FRQ</p>
<p>micro was pretty straightforward, dont u think?</p>
<p>TIME UP!!</p>
<p>Discuss FRQ!!!</p>
<p>for prob 3 i remember saying i think it was called Red Shop should work in the South. and if they colluded Red Shop would be in the South and Blue Mart in the </p>
<p>Question 1</p>
<ol>
<li>Draw a Phillips Curve a short run (hyperbolic) then a long run(vertical at full employment which is 5%) which they both intersect at 5% unemployment and 6% inflation. </li>
<li>i think this was asking for the real interest rate which was nom- inflation which i want to say was like 8-6= 2 % real
i forgot the rest if someone can remind me but for part F i put lower inflation means HIGHER unemployment and the natural rate is unaffected !</li>
</ol>
<p>Question 2. (negative externality)</p>
<p>I remember stating 135 for the tax
60 i believe i put twice
6 dollars for which the producer pay or something like that
elastic was a answer
I am missing something</p>
<p>Question 3. (payoff matrix)</p>
<p>i remember saying i think it was called Red Shop should work in the South. and if the 2 could colluded Red Shop would be in the South and Blue Mart in the North. Hmm then the last part i believe you just would had the 2000 dollar subsidy to all the prices when one was in the south! Which seemed almost to easy!!!</p>
<p>There are more answers its just I can’t seem to remember them at the moment!</p>
<p>i honeslty found redrawing the matrix with the $2000 was the EASIEST part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I then proceeded to write “PORQUE TAN SERIO?” using like 5 lines :)</p>
<p>so for #1 i put that quanityt would increase when a subsidy was given and that zero economic profit was at a quantity where the demand curve intersected the average cost curve
and number two i got $120 tax revenue , $6 tax price, and $60 concumer surplus post-tax
and i puit allocative efficiency was lost</p>
<h1>3 was pretty easy i think</h1>
<p>but can anyone tell me if i did the first two right?</p>
<p>
</p>
<p>I’m not sure if all my answers are completely correct because I ** taught myself microeconomics in 2 days **. Let me know if I’m wrong.</p>
<p>Number 1 Answers</p>
<p>(a) Graph</p>
<p>(b) No change because it’s a lump-sum subsidy.</p>
<p>(c) Where demand intersects ATC</p>
<p>(d) Accounting profits are positive because ATC/Demand intersection indicates zero economic profits. Economic profits account for implicit costs, which accounting profits ignore; as such, accounting profits are positive here.</p>
<p>(e) Quantity would be larger because it’s a positive externality–it’s desirable.</p>
<p>** Number 2 Answers **</p>
<p>(a) Producer surplus = 135</p>
<p>(b)
i. Tax revenue = $120
ii. $4–they get $6, but they have to pay $2 to taxes.
iii. Producer surplus = 60</p>
<p>(c) Elastic–you can do the annoying calculations or you can note that it’s on the left part of the demand curve.</p>
<p>(d) Harms allocative efficiency because of deadweight loss. In addition, both consumer and producer surplus are reduced. (No idea about explanation here)</p>
<p>Question 3 Answers</p>
<p>(a) North because Blue Mart makes more money that way.</p>
<p>(b) Yes, South is the dominate strategy for Red Shop because they make more money that way–Blue Mart is clearly stronger in the North. (No idea about explanation here)</p>
<p>(c) Red Shop will locate South, and Blue Mart will locate North.</p>
<p>(d) $900, $1800; $3000, $5500; $7000, $4000; $3500, $3000.</p>
<p>Please do check my answers. Thanks.</p>
<p>o crap i just realized the question one i typed was for macro haha ok i am pretty sure i got most of number 1 right on micro if not all ! I remember about the social optimal level and that is where price is equal to MC. So if they produce there the firm incurs a loss. The accounting profit is equal to zero and this is because when p=atc the firm is only earning a normal profit. can someone fill me in on what the rest of the question was?!</p>
<p>(d) Harms allocative efficiency because of deadweight loss. In addition, both consumer and producer surplus are reduced. (No idea about explanation here)</p>
<p>I think I remember putting they will become more allocatively efficient because they moved to where MSB=MSC which mean they are more allocatively effcient! correct me if i am wrong!!</p>
<p><a href=“d”>QUOTE</a> Harms allocative efficiency because of deadweight loss. In addition, both consumer and producer surplus are reduced. (No idea about explanation here)</p>
<p>I think I remember putting they will become more allocatively efficient because they moved to where MSB=MSC which mean they are more allocatively effcient! correct me if i am wrong!!
[/QUOTE]
</p>
<p>Perhaps you’re correct, but when I hear “taxes,” I automatically associate it with inefficiency because it disrupts the free market. That’s just me.</p>
<p>i am pretty sure i am right here! because the allocatively efficient output is where MSB=MSC</p>
<p>Allocative efficiency is when producer and consumer surplus is maximized. The original graph without a tax had a greater producer + consumer surplus, then the market with a tax. This means that allocative efficiency has been lowered.</p>
<p>^yeap! btw, hello fellow dukie! 
haha</p>
<p>hi ill probably see you in the fall! Go Blue Devils!</p>
<p>Me too. Blue Devils FTW.</p>
<p>Problem 1
A) Monopoly Graph
i. Q* where MR=MC
ii. Price on the demand curve at Q*
iii. easier to show on the graph
iv. I’m not entirely sure but i think Q is where MB (demand curve)= MC
B) Does not change quantity because lump-sum does not change the MC curve
C) where ATC=demand
D) Positve b/c economic profit = accounting profit-opportunity cost, assuming there is an opportunity cost accounting profit is positive
E)Greater than</p>
<p>Problem 2
A) (5-2)90/2=$135
B) i. 2<em>60=$120
ii. $6
iii. (4-2)</em>60/2=$60
C) I think I remember it being elastic, i don’t want to calculate it right now
D) Allocative efficiency is not achieved because consumer and producer surplus is lost and there is dead weight loss</p>
<p>Problem 3
A) North, b/c Blue Mart would make $4000 if it goes North but only $1000 if it goes south
B) No, b/c if the Blue Mart goes south, Red shop would make more money going north
C) Blue Mart goes North and Red Shop goes south
D) Redraw the payoff matrix</p>
<p>This free response section was so easy compared to ones of past years.</p>
<p>Well, damn, I never knew the definition of “dominant strategy.” That would’ve helped.</p>
<p>Wow, yeah this was easy, got everything Brahms has and pretty sure all corrrect.</p>