Official 2011 AP Economics Thread

Bigpapi I have the 2008 College Board practice exam for Macro. Would you be interested in trading?</p>

I have the 95, 2005, and 2008 Audit Exams for macro and micro. Looking to trade.</p>

Do you think game theory will be on the FRQ this year for Micro?</p>

I hope it is,the FRQs for game theory are really easy …</p>

I really just want a 3 on my Micro exam…</p>

I sort of suck at Micro, and I never want to take it again. It’s the only economic class i need to be an science major at my college. Also, I really don’t want to take economics in college. I think Micro is the most boring class ever.</p>

look at PR…they make game theory make sense</p>

<a href=“ap10_frq_macroecon.pdf”>ap10_frq_macroecon.pdf;

For number 1 question c part i, can someone explain to me why AS shifts to the left?</p>

If you could explain question three while you’re at it that would be helpful too… thanks!</p>

<ol>
<li>Assume a consumer finds that his total expenditure on compact disks stays the
same after the price of compact disks declines, other things being equal. Which
of the following is true for this price change?
(a) Compact disks are inferior goods to this consumer.
(b) The consumer’s demand for compact disks increased in response to the
price change.
(c) The consumer’s demand for compact disks is perfectly price elastic.
(d) The consumer’s demand for compact disks is perfectly price inelastic.
(e) The consumer’s demand for compact disks is unit price elastic.</li>
</ol>

Can someone explain to me why the answer is E and not D?</p>

^ because he’s spending a constant amount.
Someoe please explain 3b from the 2010 ap prompt for me if you could.
<a href=“Supporting Students from Day One to Exam Day – AP Central | College Board”>Supporting Students from Day One to Exam Day – AP Central | College Board;

Assume that the production of each unit of candy creates a negative externality equal to (p5-p2). Using the labeling on the graph, identify the socially optimal quantity.</p>

What does the p5 - p2 mean??? I don’t understand why the MPC curve shifts the amount it does to create a consumer surplus equal to p5kj</p>

@staller, because the aggregate price level increases then the rise in nominal wages will eventually shift the aggregate supply to the left.</p>

Staller:
1.c: when the economy is operating above full employment, it is operating at an unemployment rate below the natural rate. this means that there are fewer people for suppliers to recruit to work for them. this means it is harder to hire work, and those who have work often have to increase their wages to retain the workers they have. this increase in wages results in an increase in production costs, shifting the LRAS to the left. this happens on its own in the long run and is known as the wage-price spiral.</p>

3.a: when argentina imports the 10 million dollars in goods from the united states, it decreases their net exports, which is a component of GDP and also of aggregate demand, resulting in decreased aggregate demand in argentina.
3.b: current account includes the balance of trade (imports - exports). by exporting more goods, the current account will increase as a result of the increase in balance of trade.
3.c: the decreased aggregate demand and real gdp will lower interest rates in argentina as a result of decreased money demand. this will lower financial investment in argentina by us citizens. the less investment means fewer us dollars will be in argentina, shifting the supply curve to the left. this means you will need more pesos for the same dollar, appreciating the value of the USD
3.d: because the us has less inflation, their goods will appear less expensive. this means more people will demand USD to buy these cheaper us goods, increasing demand, appreciating the value of the USD, and depreciating the value of the peso against the dollar.</p>

hope that helps!</p>

Thank you!</p>

can anyone give me some macro econ exams? I’ll maybe be able to trade. Thanks.</p>

^^^bigpapai think you could explain my question too? Completely lost on the whole p5 - p2… I would really appreciate it!</p>

thes1tuation: sorry, i’m not taking micro, i’m a macro guy</p>

@thes1tuation, if the negative externality is from P5-P2 that means that the marginal social cost covers that area (because remember, negative externalities are overproduced and underpriced, the price should really be at P5 or above), so this means that your MSC curve would cross point K. Meaning that you would produce at Q1.
Using this new MSC curve, the consumer surplus would be the triangle below the demand curve and above the price, which is P5JK. There’s no deadweight loss either because the market is producing at the socially optimal point.</p>

wait so why should it cross at point K? i’m getting that the msc covers krm, but how do you determine how much to shift the supply/msc curve to get the consumer surplus p5jk.</p>

MSC is just another supply curve but graphs the supply that would be beneficial to society. It’s not an area of the curve. So basically you just draw a new supply curve (labeling it MSC). It’s the same line you would draw for the per-unit tax. KRM is the deadweight loss using the MPC curve.</p>

ok thanks a lot i’m getting it now! We completely skipped externalities in my class =/ .</p>

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

1c. im confused.</p>

c. i. monopoly output is where MR crosses MC, and it would be when MR crosses MPC. So where the Quantity is when those meet so Q1.</p>

ii. so the socially optimal output is Q2 (where MSC and MB meet), but as you can see they are producing too little. so you need to subsidize the firm (it just turned into a positive externality b/c of monopoly)</p>

iii. at Q1, MR=MPC. at Q2 MR is 3 less than MPC. So you need to subsidize them 3 dollars per unit.</p>

That is like the hardest question ever.</p>