Econ Q's (Ask your own Q's too!)

Test Preparation AP History & Social Sciences
1

If you have econ questions, feel free to ask here. If you have answers, please answer! It might be a good review for you.</p>

I’m self-studying, and my school doesn’t have anybody I can ask - so that’s why I’m making this thread. I really appreciate the help. I’ll do my best to answer anybody else’s questions if I can as well.</p>

[Micro</a> 2004 FRQ](<a href=“http://www.collegeboard.com/prod_downloads/ap/students/economics/ap04_frq_micro.pdf]Micro”>http://www.collegeboard.com/prod_downloads/ap/students/economics/ap04_frq_micro.pdf) 1. part (c) (iii) I thought the subsidy amount would be $1 to lower the price from $13 to $12, but the answer key says $3. Why?</p>

I’ll probably post more questions later.</p>

2

<p>Keep in mind that Q2 is the socially optimal output (where MSC = P) and that all firms will maximize profit where MR=MC. Giving this firm a subsidy of $3 will lower the firm’s MC to $4 at Q2. Thus, MR=MC=$4 at the socially optimal output (also known as the point of allocative efficiency).</p>

3

<p>Thanks ao200, that makes sense. Even seems obvious now.</p>

4

<p>For that same year (2004), how do you answer 2(e)? The answer is triangle JGH, but I don’t really understand the wording of the question…</p>

5

<p>The total welfare (consumer surplus + producer surplus) was K,G,P1 when they were operating as a closed economy (prior to international trade). Once you open the economy to the lower world price, the triangle J,G,H is added to total welfare.</p>

<p>This graph shows the rationale for free trade. Free trade hurts domestic producers but helps consumers even more, thus increasing “total welfare.”</p>

6

<p>An increase in which of the following is most likely to promote economic growth?
(A) Consumption spending
(B) Investment tax credits
…
Increase in C = Increase in rGDP. Increase in I = Increase in rGDP. Why is (B) the better answer over (A)?</p>

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<p>“Economic growth” specifically refers to a rightward shift of LRAS. Investment tax credits will increase the capital stock, which increases LRAS.</p>

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<p>Here, why would 1 d be what it is?</p>

<p><a href=“College Board - SAT, AP, College Search and Admission Tools”>College Board - SAT, AP, College Search and Admission Tools;

<p>answers
<a href=“College Board - SAT, AP, College Search and Admission Tools”>College Board - SAT, AP, College Search and Admission Tools;

9

<p>when you’re doing double shifts, why is either p or q indeterminate, my teacher always says it doesn’t change…</p>

10

<p>how much time is between the ap macro and micro exams, approx?</p>

11

<p>p or q is indeterminate when you are doing double shifts because it depends on how big the shift is. A large increase in supply and a minor increase in demand will definitely increase quantity but also decrease price slightly. But the price could increase if it was a minor increase in supply and major increase in demand. There is a possibility that it doesn’t change, but that is usually not the case.</p>

<p>Well considering that AP Macro is about 2 hours and 10 minutes and starts at 8, we should have a little over an hour between the tests. But that can be less because of filling out the other information on the sheet.</p>

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<p>I had enough time in between to review my sheets for my micro a little :D</p>