Past free-response questions

2026

• Question 1 · Long · 10 points Steel duopoly game that becomes a monopoly Use a payoff matrix for two steel makers to find a best response, test for a dominant strategy, and name the Nash equilibrium, then redraw the matrix after a cost increase. After the firms merge, graph the profitable monopoly with its deadweight loss and predict how a lump-sum tax affects its price. Unit 4, Unit 6
• Question 2 · Short · 5 points Helmet maker's costs and profit From a cost schedule for a price-taking helmet producer, name the market structure, calculate average variable cost and profit, and find the profit-maximizing output with marginal reasoning. Then predict how market price moves as the industry reaches long-run equilibrium. Unit 3
• Question 3 · Short · 5 points Cucumber market with free trade and a tariff Draw a domestic cucumber market, then show what happens when the country trades at a lower world price and whether total surplus changes. Add an import tariff to the graph and explain its effect on domestic producer surplus. Unit 2

2025, Set 1

• Question 1 · Long · 10 points Bottled water monopoly taking a loss Graph a single seller of bottled water that is losing money, shade deadweight loss, and mark the socially optimal output. Then predict the effects of a per-unit subsidy and of new competitors, and explain how product demand and a stricter hiring age affect the labor market. Unit 4, Unit 6, Unit 5, Unit 2
• Question 2 · Short · 5 points Rice market, price floor, and world trade From a graph of a rice market, calculate total surplus and decide if a low price floor causes a surplus or shortage. Then open the country to trade at a world price, decide whether it exports or imports, and calculate consumer surplus and farm revenue. Unit 2
• Question 3 · Short · 5 points Jewelry makers in a payoff matrix Use a payoff matrix for two jewelry firms to check a best response and a dominant strategy and to list every Nash equilibrium. Then find how much one payoff must rise to create a dominant strategy and the maximum joint profit after a merger. Unit 4

2025, Set 2

• Question 1 · Long · 10 points Desk maker in a competitive market Draw market and firm graphs at long-run equilibrium, explain whether higher rent changes short-run output, and show a per-unit subsidy's effect and cost on the market graph. Then decide what a binding price floor causes and use cost figures to calculate average cost and classify scale economies. Unit 3, Unit 2
• Question 2 · Short · 5 points Quartz mine as the town's only employer Read a monopsony labor graph to find how many miners the firm hires and compare its wage to a given figure. Then calculate the wage bill under a minimum wage and explain how higher demand for quartz affects marginal revenue product and marginal factor cost. Unit 5
• Question 3 · Short · 5 points Choosing goods to maximize utility Use a marginal utility table to find the best quantities when goods are free and to add up total utility. Then apply prices and a budget to find what is affordable and the best bundle, and use elasticity values to say how the two goods are related. Unit 1, Unit 2

2024, Set 1

• Question 1 · Long · 10 points Soybean farm in long-run equilibrium Draw side-by-side graphs for a competitive soybean market and one farm at long-run equilibrium, explain what happens if the farm alone raises its price, and show how rising demand for a product made from soybeans changes things now and over time. Finish with an elasticity and a cross-price elasticity calculation. Unit 3, Unit 2
• Question 2 · Short · 5 points Fixing a market with an external benefit Read a market graph to find equilibrium and calculate deadweight loss. Then choose between a tax and a subsidy to reach the efficient quantity, give its size, and judge whether a price ceiling would get there instead. Unit 6, Unit 2
• Question 3 · Short · 5 points Game theory between two car makers Use a payoff matrix for two vehicle producers to find a best response, check for a dominant strategy, and test whether a pair of choices is a Nash equilibrium. Then find combined profit after a merger and the new equilibrium when one payoff falls. Unit 4

2024, Set 2

• Question 1 · Long · 10 points Drug patent monopoly and price discrimination Graph a monopoly drug maker earning profit and shade consumer surplus, then mark the output that would maximize revenue and name demand elasticity there. Show what perfect price discrimination does to price and consumer surplus, and explain how losing the patent changes demand elasticity. Unit 4, Unit 2
• Question 2 · Short · 5 points Cat food firm's production and costs From a short-run production table, calculate average fixed cost and marginal cost, identify where diminishing returns begin, and find how many workers maximize profit. Then use a rival's long-run cost figures to classify its returns to scale. Unit 3, Unit 5
• Question 3 · Short · 5 points Price ceiling versus subsidy for backpacks Calculate total surplus from a supply and demand graph, decide how a price ceiling changes the quantity bought, and then work out the price buyers pay, the cost to the government, and the deadweight loss effect of a per-unit subsidy to sellers. Unit 2

2023, Set 1

• Question 1 · Long · 10 points Monopoly on a patented gadget and its workers Graph a profitable monopoly with its deadweight loss, pick the policy that would push it to the efficient output, and predict how news of a health risk changes its output. Then graph the competitive labor market it hires from, show the effect of more workers arriving, and use the least-cost input rule to find the wage. Unit 4, Unit 6, Unit 5
• Question 2 · Short · 5 points Two countries trading wheat and cloth Read two production possibilities curves to decide who has the comparative advantage in each good and name trade terms that help both countries. Then judge whether a polluting competitive market is efficient and predict what a lump-sum tax does to price and quantity. Unit 1, Unit 6
• Question 3 · Short · 5 points Competitive firm's costs, profit, and long-run price Use a cost-curve graph for a price-taking firm to calculate fixed cost and profit and find its best output. Then predict where price heads in the long run and use a cross-price elasticity sign to say what happens to a related good. Unit 3, Unit 2

2023, Set 2

• Question 1 · Long · 10 points Profitable competitive firm with a positive externality Compare accounting and economic profit, then draw side-by-side market and firm graphs showing short-run profit and the move to long-run equilibrium. Finally decide how a spillover benefit compares market output to the efficient level and what fixing it does to total surplus. Unit 3, Unit 6
• Question 2 · Short · 5 points Hiring workers at a rain jacket maker Work from a production table to find a worker's marginal revenue product, spot where diminishing returns start, and decide how many workers earn the most profit. Then calculate profit and decide whether a higher fixed cost changes hiring. Unit 5, Unit 3
• Question 3 · Short · 5 points Regulating a natural monopoly Using a labeled monopoly graph, decide whether the firm is a natural monopoly and name the deadweight loss area. Then compare a fair-return price with a socially optimal price, saying what each does to deadweight loss and to the firm's profit. Unit 4, Unit 6

2022, Set 1

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3, and the scoring guidelines label Question 1 long and Questions 2 and 3 short. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · Long · 10 points Patented carbon-capture monopoly and its regulation Graph a profit-making monopoly with its output, price and consumer surplus, then judge whether a per-unit tax or a price ceiling can reach the socially optimal output and what happens to profit. Finish by reasoning about marginal revenue and demand elasticity at the revenue-maximizing output. Unit 4, Unit 6, Unit 2
• Question 2 · Short · 5 points Guava market externality and hiring workers Read a graph of private and social curves to name the market failure and the size of the external benefit, then use a wage and marginal product to find the profit change from one worker. Explain how a consumer subsidy shifts the firm's MRP and how monopsony changes hiring. Unit 6, Unit 5
• Question 3 · Short · 5 points Market demand from four buyers' schedules Add individual demand schedules to graph a market with perfectly elastic supply at a given price, then compute and classify price elasticity over a price rise. Decide whether a stated marginal benefit fits one buyer's choices. Unit 2, Unit 1

2022, Set 2

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3, and the scoring guidelines label Question 1 long and Questions 2 and 3 short. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · Long · 10 points Competitive sugar market, demand shift, health externality Draw side-by-side market and firm graphs at zero profit, show a short-run demand increase, and explain the long-run price in a constant-cost industry. Then graph the overconsumption caused by underestimated health harm and pick the tax or subsidy that best fixes it. Unit 3, Unit 6
• Question 2 · Short · 5 points New Zealand wool exports at a world price Use a domestic supply and demand graph to compute consumer surplus without trade, then find exports at the world price and judge the changes in consumer and total surplus. Predict how higher domestic demand affects exports. Unit 2
• Question 3 · Short · 5 points Regulating a natural monopoly with a subsidy Read a natural monopoly graph to identify the returns to scale and the zero-profit price and output. Under a price ceiling at the socially optimal output, compute revenue, explain why a subsidy is needed, and compute the lump-sum subsidy. Unit 4, Unit 3, Unit 6

2021, Set 1

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3, and the scoring guidelines label Question 1 long and Questions 2 and 3 short. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · Long · 10 points Island airline monopoly: price ceiling versus open entry Graph a profitable monopoly with its output, price and profit, then show output under a price ceiling that removes deadweight loss. Predict how removing barriers to entry changes the firm's output, demand elasticity, profit and the deadweight loss in the long run. Unit 4, Unit 6
• Question 2 · Short · 5 points Parking firm's hiring decision from a product table Use a table of workers and output with a given price and wage to compute marginal revenue product, choose the profit-maximizing number of workers using marginal reasoning, and compute daily profit. Then predict how a required worker insurance cost affects the wage and hiring. Unit 5, Unit 3
• Question 3 · Short · 5 points Corn price floor with a government purchase program Use a corn market graph to compute total revenue at equilibrium, then analyze a price floor: quantity traded, deadweight loss, and producer surplus when the government buys the surplus. Predict the long-run change in government purchases. Unit 2

2021, Set 2

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3, and the scoring guidelines label Question 1 long and Questions 2 and 3 short. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · Long · 10 points Patented heart drug monopoly and an entry game Graph a profitable monopoly, judge demand elasticity at its output, and show the largest output that still covers total cost along with whether it leaves deadweight loss. Then use a payoff matrix to check for a dominant strategy, a best response and the Nash equilibrium. Unit 4, Unit 2
• Question 2 · Short · 5 points Copper mining pollution and corrective taxes Graph a market with a constant external cost showing the market and socially efficient quantities, then shade the deadweight loss after demand falls. Name the per-unit tax that reaches the efficient output and explain why a one-time flat tax would not. Unit 6
• Question 3 · Short · 5 points Choosing the number of advertisements by marginal analysis Use a table of total cost and benefit to compute net benefit and marginal net benefit, find the optimal number of ads with marginal reasoning, and redo it after marginal benefit rises. Name the market structure the firm is in. Unit 1, Unit 4

2019, Set 1

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 9 points Small-town gas station monopoly Graph a profitable monopoly with its output, price, deadweight loss and the largest zero-profit output. Predict how a fixed cost increase affects deadweight loss and profit, and what a demand drop means for staying open and for price and output. Unit 4, Unit 3, Unit 6
• Question 2 · 5 points Spending a budget on water and another good Use marginal benefit tables to find total benefit and consumer surplus, then use marginal benefit per dollar to show a bundle is not optimal and find the best one. Compute a cross-price elasticity after a price drop and classify the goods. Unit 1, Unit 2
• Question 3 · 6 points Pizzeria advertising and entry game Use a payoff matrix to find the jointly best outcome, test each firm's incentive to cheat, check for a dominant strategy and find the Nash equilibrium. Rebuild the matrix after a side payment and find the new equilibrium. Unit 4

2019, Set 2

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 9 points Drug patent monopoly, warehouse labor and entry Graph a profitable monopoly with its output, price, average total cost and consumer surplus. Explain how higher drug demand changes the firm's demand for workers in a competitive labor market, and how a rival's entry after the patent ends changes producer and consumer surplus. Unit 4, Unit 5
• Question 2 · 5 points Per-unit tax on hats and tax incidence Use a labeled graph to identify the after-tax consumer price, quantity and tax revenue. Compare price and revenue when demand is perfectly inelastic, and predict how cutting the tax changes producer surplus. Unit 2
• Question 3 · 6 points Florists' closing time and delivery game Use a payoff matrix to check for a dominant strategy, test a best response, and find the Nash equilibrium payoff and the merged firm's choice. Rebuild the matrix with a penalty for breaking an agreement and decide whether one firm would accept it. Unit 4

2018

This exam had three free-response questions in a 60 minute section (10 minutes of reading and 50 of writing), with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 9 points Loss-making cinema monopoly Graph a monopoly earning a loss with its price, output and the loss area, and explain why it keeps operating in the short run. Predict how selling one fewer ticket changes total revenue, and how a smaller labor supply changes the wage and the last worker's MRP. Unit 4, Unit 3, Unit 5, Unit 2
• Question 2 · 6 points Word processing software and a positive externality Read a graph of private and social curves to name the market failure, the market price and quantity, and the deadweight loss area. Find the per-unit subsidy that reaches the efficient output and judge whether a price floor would fix the problem. Unit 6, Unit 2
• Question 3 · 5 points Splitting study hours between two exams Use tables of expected scores to compute the gain and opportunity cost of an hour of study, explain how that cost changes as time shifts, and find the split that maximizes the total score. Use marginal reasoning to place one extra hour. Unit 1

2017

This exam had three free-response questions to answer in a 50 minute writing period after a 10 minute reading period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Corn farmers, ethanol demand and a price ceiling Draw side-by-side graphs of the corn market and a typical farmer in long-run equilibrium, show the short-run effect of higher ethanol demand and the long-run adjustment, reason about soybean prices, then graph a binding price ceiling. Unit 3, Unit 2
• Question 2 · 5 points Production table with capital and labor Use an output table to judge returns to scale, find the marginal product of a worker, check for diminishing returns, compute average total cost, and find the lowest output price that justifies hiring a worker. Unit 3, Unit 5
• Question 3 · 7 points Monopoly with a negative externality and tax Read a monopoly graph with private and social cost curves to find the profit-maximizing output and price, spot the externality, find the social optimum, and judge how a corrective per-unit tax changes deadweight loss. Unit 6, Unit 4

2016

This exam had three free-response questions to answer in a 50 minute writing period after a 10 minute reading period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Banana price floor, muffins and coffee Decide whether a banana price floor causes a surplus and compute supply elasticity, graph how a costlier input shifts the muffin market and changes consumer surplus, then use a cross-price elasticity to classify coffee and muffins and find the new coffee quantity. Unit 2
• Question 2 · 7 points Martha's budget and total benefit table Find a marginal benefit and consumer surplus from a benefit table, use marginal benefit per dollar to show a bundle is not best and find the best one, then predict how price and income changes move her purchases of Y. Unit 1, Unit 2
• Question 3 · 6 points Dessert cafe in monopolistic competition Graph a monopolistically competitive cafe in long-run equilibrium with its profit-maximizing output and price, mark the output that maximizes total revenue, and decide whether firms have economies of scale there. Unit 4, Unit 3, Unit 2

2015

This exam had three free-response questions to answer in 50 minutes of writing after 10 minutes of planning, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Profitable perfectly competitive firm and a subsidy Compare market and firm price, draw side-by-side market and firm graphs showing profit and total cost, explain what happens if one firm raises its price, and predict short-run and long-run effects of a lump-sum subsidy. Unit 3
• Question 2 · 5 points Two sandwich shops choosing high or low prices Find each shop's dominant strategy and the outcome without cooperation, then rebuild the payoff matrix with a subsidy for low prices and explain how choices and profits change. Unit 4
• Question 3 · 6 points Widget market with price controls and a quota Use a given supply and demand graph to compute producer surplus, judge whether a price floor or ceiling causes a shortage or surplus, find the deadweight loss of an output limit, and compute and classify demand elasticity. Unit 2

2014

This exam had three free-response questions to answer in 50 minutes of writing after 10 minutes of planning, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Monopolist graph with long-run average cost Read a monopoly graph to find output, price and the efficient quantity, judge economies of scale, compute profit, consumer surplus and deadweight loss at a set output, find where demand is unit elastic, and analyze perfect price discrimination. Unit 4, Unit 3, Unit 2
• Question 2 · 6 points Stable hiring unskilled labor, minimum wage Draw side-by-side graphs of a competitive labor market and one hiring firm, compare the firm's marginal factor cost to the wage, then show an effective minimum wage, the resulting labor supplied, and what it does to the MRP of the final worker hired. Unit 5, Unit 2
• Question 3 · 6 points Per-unit tax on gasoline Graph a gasoline market with inelastic demand and elastic supply, show the buyer price, seller price and quantity after a per-unit tax on sellers, explain how to find tax revenue, and decide who bears more of the tax. Unit 2

2013

This exam had three free-response questions to answer in 50 minutes of writing after 10 minutes of planning, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Labeled monopoly graph and regulation Use a lettered monopoly graph to identify output, price, profit and deadweight loss, then the results under perfect price discrimination and under regulation to the efficient quantity, and judge profit and elasticity at a point. Unit 4, Unit 6, Unit 2
• Question 2 · 5 points Pizza shops deciding whether to advertise Use a payoff matrix to find one shop's best response, check the other shop for a dominant strategy, find the Nash equilibrium profits, and rebuild the matrix when advertising costs rise. Unit 4
• Question 3 · 6 points Backyard fireworks and externalities Graph the fireworks market, add social cost and benefit curves and shade the deadweight loss when noise bothers neighbors, then compare market and optimal output when neighbors enjoy the show and judge the effect of a ban. Unit 6, Unit 2

2012

This exam had three free-response questions to answer in 50 minutes of writing after 10 minutes of planning, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Train monopoly running at a loss Graph a monopolist minimizing losses with the loss area and efficient quantity, predict how a price increase changes total revenue, and analyze how per-unit and lump-sum subsidies affect output, consumer surplus, deadweight loss and losses. Unit 4, Unit 3, Unit 2, Unit 6
• Question 2 · 6 points Theresa's bagels and toy cars Find total utility and the utility-maximizing bundle with marginal utility per dollar, explain whether an input price change shifts her demand, classify bagels from an income elasticity, and compute a cross-price elasticity. Unit 1, Unit 2
• Question 3 · 5 points Sugar imports and a tariff in Loriland Use a domestic sugar market graph with a world price to find imports, then the domestic production, consumer surplus and tariff revenue after a tariff, and name the tariff that maximizes total domestic surplus. Unit 2

2011

This exam had three free-response questions to answer in 50 minutes, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Monopolist graph, regulation and price discrimination Read a monopoly graph to find price and per-unit profit, judge efficiency and elasticity, then analyze profit under a regulated output, output under a price ceiling, and outcomes under perfect price discrimination. Unit 4, Unit 6, Unit 2
• Question 2 · 6 points Avocado farm and a rising wage Graph a profitable competitive firm in the short run, show how a higher wage shifts its marginal cost, and graph the firm's labor hiring before and after the wage rises. Unit 3, Unit 5
• Question 3 · 5 points Good X with a production externality Graph a competitive market with private and social cost curves, the market and efficient quantities and the deadweight loss, then explain how a lump-sum tax on producers affects the deadweight loss. Unit 6

2011, Form B

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Rose industry demand rise in increasing-cost competition Draw side-by-side market and firm graphs for a competitive industry in long-run equilibrium, then show a demand increase. Explain how entry changes the number of firms and the firm's costs, and compare the new long-run price with the old prices. Unit 3, Unit 2
• Question 2 · 6 points College education as a positive externality Graph the education market with a gap between private and social benefit, mark the efficient quantity and shade the deadweight loss. Add a binding price ceiling and say how it changes the loss, then predict the effect of a per-unit subsidy on quantity. Unit 6, Unit 2
• Question 3 · 5 points Monopsony lumber firm hiring from a graph Read a provided monopsony labor graph to find how many workers the firm hires and the wage it pays. Then find employment under a competitive labor market and under a minimum wage, and explain the minimum wage result. Unit 5

2010

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Corn farmer and ethanol demand shift Draw side-by-side graphs for a competitive corn market and one farmer earning zero profit, and describe the elasticity of demand the farmer faces. Show how rising ethanol demand changes the corn market and the farmer's output and costs, and trace the effect on the cereal market. Unit 3, Unit 2
• Question 2 · 5 points Firm renting machines in a competitive factor market Draw the machine rental market next to one firm's hiring of machine hours. Explain how falling demand for the firm's output affects marginal product and marginal revenue product, and use the least-cost input rule to find the machine rental price. Unit 5
• Question 3 · 5 points Candy market surplus and externality tax Use labeled points on a provided graph to name consumer and producer surplus at equilibrium. Find the socially optimal quantity when production causes a negative externality, then identify consumer surplus and deadweight loss after a corrective per-unit tax. Unit 6, Unit 2

2010, Form B

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Toll bridge pricing under different goals Use a cost and revenue diagram for a bridge to find the output and toll for a profit-maximizing owner and an allocatively efficient public owner, judge profit and elasticity at break-even, predict what a ferry competitor does, and decide whether a second bridge makes sense. Unit 4, Unit 6, Unit 3, Unit 2
• Question 2 · 6 points Marginal revenue product table for a competitive firm Work from a table of marginal revenue product to find a worker's marginal product, define diminishing marginal returns and spot where they begin, find the most the firm would pay a given worker, and explain how a higher output price affects labor demand. Unit 5, Unit 3
• Question 3 · 5 points Elasticity, tax burden and an inferior good Use a price and quantity table to classify demand and supply elasticity and decide who bears a per-unit tax. Then graph a market for a good with negative income elasticity and show what a large rise in income does to its price. Unit 2

2009

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 11 points Unregulated cable monopoly and government policy Draw a monopoly graph showing profit-maximizing price and quantity, shaded profit and the socially optimal quantity. Explain whether a lump-sum subsidy changes output, mark the zero-profit quantity, judge accounting profit there, and say how external benefits move the optimal quantity. Unit 4, Unit 6, Unit 3
• Question 2 · 6 points Per-unit tax in the calculator market Read a provided supply and demand graph to compute producer surplus before and after a per-unit tax, the tax revenue and the price sellers keep. Classify demand elasticity over a price range and explain how the tax affects allocative efficiency. Unit 2
• Question 3 · 6 points Two retailers choosing store locations Work through a two-firm payoff matrix to find a best response, test whether one firm has a dominant strategy, and find the cooperative outcome. Then rebuild the matrix after a daily subsidy for locating in one area. Unit 4

2009, Form B

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 11 points Monopolistically competitive firm operating at a loss Graph a monopolistically competitive firm producing at a loss and shade the loss, and state the short-run condition for staying open. Explain long-run changes after demand rises, and whether the firm reaches allocative efficiency or still has economies of scale. Unit 4, Unit 3
• Question 2 · 6 points Utility maximizing with peanuts and bananas Use marginal utility per dollar to find a missing price and predict a response to a price change. Then use cross-price elasticity to trace a supply shock to a related good, and describe the substitution effect and real income after a price rise. Unit 1, Unit 2
• Question 3 · 6 points Two bus companies deciding on fares Use a payoff matrix for two bus companies to find a best response, check for a dominant strategy, find the noncooperative outcome and the cooperative one, and rebuild the matrix after a subsidy offered only for lowering fares. Unit 4

2007

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 12 points Patent monopoly with a tax or subsidy Draw a graph for a firm with a patent earning economic profit. Explain how a lump-sum tax and, separately, a per-unit subsidy change output, price and profit, and what happens to profit in the long run once the patent ends. Unit 4, Unit 6
• Question 2 · 6 points Radio maker hiring unskilled labor From a production table, a product price and a wage, graph the firm's labor supply curve and find the profit-maximizing output. Explain how a productivity-raising technology affects the number of workers hired and the wage the firm pays. Unit 5, Unit 3
• Question 3 · 6 points Bus departure times as a game Name the market structure of two interdependent bus firms, then use their payoff matrix to find a best response, each firm's dominant strategy if any, and the profit one firm earns without cooperation. Unit 4

2006

This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 11 points Island art museum setting admission Use a provided demand and cost graph for a museum to find price and quantity under four goals, judge elasticity at a given attendance, and decide on accounting profit at a set price. Then find attendance with free admission and judge whether that is allocatively efficient. Unit 4, Unit 6, Unit 2, Unit 3
• Question 2 · 7 points Short-run cost table for a competitive firm From a total cost table, find fixed cost and a marginal cost, choose the profit-maximizing output at a given price, and explain what happens to the number of firms. Then predict a long-run output change after a per-unit tax in a constant-cost industry. Unit 3
• Question 3 · 6 points Land converted to housing Redraw a supply and demand graph for land to show the effect of higher income and of smaller farm subsidies. Then compare social and private costs when lost open space harms the public and judge whether the market quantity is efficient. Unit 2, Unit 6

2006, Form B

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 11 points Monopolist operating at a short-run loss Explain why a money-losing monopoly keeps producing, graph its price, output and loss, use elasticity to predict the revenue effect of a price rise, and trace a demand increase through output and total cost. Unit 4, Unit 3, Unit 2
• Question 2 · 7 points Price ceiling on home security systems Graph a competitive market with its surpluses, add a binding price ceiling and shade the remaining total surplus, then say how a fall in demand changes each surplus while the ceiling still binds. Unit 2
• Question 3 · 7 points Towel maker hiring in a competitive labor market State the hiring rule for labor, back out the product price from the wage and marginal product, graph the firm's labor market, and explain how a higher towel price changes hiring. Unit 5

2005

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 12 points Dairy firm after a drop in consumer income Draw side-by-side industry and firm graphs in long-run equilibrium, show the short-run effect of lower income on a normal good including the firm's loss, state the condition for staying open, and compare the new long-run outcome to the old one. Unit 3, Unit 2
• Question 2 · 9 points Reading a per-unit tax from a graph Use the lettered areas on a given graph to find the pre-tax equilibrium and surpluses, decide whether buyers bear the whole tax, and identify the seller's price, tax revenue, consumer surplus and deadweight loss after the tax. Unit 2
• Question 3 · 8 points Shirt factory hiring from a production table Decide the market structure in both the output and labor markets from the given price and wage, compute one worker's marginal revenue product, and choose the profit-maximizing number of workers. Unit 5, Unit 3

2005, Form B

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 13 points Patented pet vaccine monopoly and its workers Graph a profitable monopoly, state and graph its hiring rule in a competitive labor market, show how a lower wage changes labor supply and hiring, and say how fixed cost, marginal cost and price respond. Unit 4, Unit 5, Unit 3
• Question 2 · 8 points Naming short-run cost curves on a graph Identify three cost curves on a given graph, explain the shape of marginal cost using returns to labor, name and explain the shrinking gap between two average cost curves, and pick points on the firm's supply curve. Unit 3
• Question 3 · 5 points Wheat subsidy spilling into bread and butter Graph how a subsidy on wheat moves price and quantity in the wheat, bread and butter markets, then use elasticity to decide what happens to bread sellers' revenue. Unit 2

2004

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 12 points Externality under monopoly and competition Use a given graph to decide whether the externality is positive or negative, find the socially optimal output, and for both a monopoly and a competitive industry find unregulated output and the per-unit tax or subsidy that fixes it. Unit 6, Unit 4
• Question 2 · 8 points US oil market opening to imports Use a given graph to find the domestic price and output before trade, the import quantity at the world price, consumer and producer surplus before and after trade, and the net gain from trade. Unit 2
• Question 3 · 8 points Monopolistic competitor loses a license fee Graph a monopolistically competitive firm in long-run equilibrium, then explain how removing a fixed fee affects its short-run output and economic profit. Unit 4, Unit 3

2004, Form B

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 9 points Monopoly from a new technology Explain why marginal revenue sits below demand, graph profit-maximizing and revenue-maximizing output and price, judge allocative efficiency, and predict the demand change as rivals copy the technology. Unit 4, Unit 2, Unit 6
• Question 2 · 6 points Sales tax burden and demand elasticity For perfectly inelastic, perfectly elastic and ordinary downward-sloping demand, graph the effect of a per-unit tax and say who bears it, then shade tax revenue in the last case. Unit 2
• Question 3 · 6 points Placonia's trade and a tariff Use a given graph to decide whether the country imports or exports at the world price and how much, find the change in each surplus when a tariff raises the price, and say how domestic employment responds. Unit 2

2003

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 12 points Smoke alarm firm, long run and externality Draw side-by-side market and firm graphs for a profitable competitive firm, show the long-run adjustment, graph the market with a positive consumption externality, and name a policy that reaches the efficient quantity. Unit 3, Unit 6
• Question 2 · 7 points Monopoly profit, surplus and deadweight loss Graph a profit-maximizing monopoly with its price, output and profit, explain why marginal revenue lies below demand, and mark consumer surplus and deadweight loss on the same graph. Unit 4, Unit 6
• Question 3 · 7 points Firm with a productivity edge hiring labor Define marginal revenue product, draw side-by-side labor market and firm graphs showing the wage and hiring, and explain how a technology only this firm has changes its wage and workforce. Unit 5

2003, Form B

This exam had three free-response questions in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 14 points Profitable competitive firm versus monopoly Graph a perfectly competitive firm and a monopoly each earning profit, compare price and marginal revenue for each, predict long-run profit for each, and mark and explain the monopoly's deadweight loss. Unit 3, Unit 4, Unit 6
• Question 2 · 8 points Grain imports and a tariff in Country X Use a lettered graph to find the no-trade equilibrium and surpluses, the import quantity at the world price, and the changes in production, consumption and surpluses after a tariff. Unit 2
• Question 3 · 5 points Pencil factory hiring from a production table State the marginal hiring rule, find how many workers maximize profit at the given price and wage, then redo the choice after the wage falls and after the price falls too. Unit 5, Unit 3

2002

This exam had three free-response questions to answer in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 10 points Patented product: monopoly, labor hiring, then competition Graph a patent holder's profit-maximizing output, price and profit, show her wage and hiring in a competitive labor market with side-by-side graphs, then show the long-run competitive outcome once the patent runs out. Unit 4, Unit 5, Unit 3
• Question 2 · 6 points Pollution and national defense as market failures Use marginal benefit and marginal cost reasoning to explain why a polluting industry and a nonexcludable good like defense end up at inefficient output, and name a government fix for each. Unit 6
• Question 3 · 6 points Utility table: apples and oranges choices From a total utility table, find the consumer's best bundle using marginal utility per dollar, then redo the choice and total utility after income rises and after the orange price rises. Unit 1

2002, Form B

This exam had three free-response questions to answer in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 15 points Perfect versus monopolistic competition in the long run Graph long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm with the same costs, compare their prices, outputs and profits, and judge the elasticity of each firm's demand at its output. Unit 4, Unit 3, Unit 2
• Question 2 · 8 points Policy to cut chemical industry pollution Pick a government policy to reduce pollution from a competitive industry, explain how it changes the firms' marginal cost, output and price, and explain what it does to allocative efficiency. Unit 6, Unit 3
• Question 3 · 9 points Plant closings and a minimum wage in a town Graph how a factory closing changes wages, employment and unemployment in a competitive town labor market, then explain the effect of a binding minimum wage and of rising demand for the town's goods. Unit 5, Unit 2

2001

This exam had three free-response questions to answer in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 12 points Competitive firm: profits, entry, and a price ceiling Graph a competitive firm earning economic profit, show with side-by-side graphs how entry moves the market and firm to long-run equilibrium, then explain how a government price set below equilibrium changes the firm's revenue, output and cost. Unit 3, Unit 2
• Question 2 · 4 points Negative externality in a competitive market On one graph, show the market price and quantity when the industry ignores an external cost and when it produces the socially best amount, then name a policy that would get the market there. Unit 6
• Question 3 · 5 points Car wash workers and marginal product Use a table of workers and cars washed to find where marginal product peaks, name and define the reason it later falls, explain why a sixth worker is never hired, and find the most the firm would pay the fourth worker. Unit 3, Unit 5

2000

This exam had three free-response questions to answer in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 11 points Reading a monopoly graph: profit, surplus, efficiency Use a given monopoly graph to find the profit-maximizing price and output, the elastic part of demand, the competitive outcome and consumer surplus in each case, then define allocative efficiency and say whether a tax or subsidy would get the monopolist there. Unit 4, Unit 2, Unit 6
• Question 2 · 6 points Hiring with marginal revenue product from a table From a production schedule with a given output price and wage, identify the firm's output and labor market structures, use marginal revenue product to choose how many workers to hire, and decide whether the firm earns a profit. Unit 5, Unit 3
• Question 3 · 5 points Tariff on imported shoes and domestic substitutes Graph the effect of a tariff on price and quantity in the imported shoe market and in the market for domestic shoes, then use elasticity to say what happens to spending on imported shoes. Unit 2

1999

This exam had three free-response questions to answer in 50 minutes of writing time after a 10 minute planning period, with about half the time suggested for Question 1 and the rest split evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.

• Question 1 · 9 points Textile markets: tariffs and rising wages Explain what shifts domestic textile supply, graph how a tariff affects the imported and domestic textile markets, then graph how higher textile wages change the domestic market and a firm's labor demand and labor supply. Unit 2, Unit 5
• Question 2 · 5 points Wheat and cloth: absolute and comparative advantage Using two countries' production possibilities, identify absolute and comparative advantage in each good, say which country imports wheat, and explain why a given trading ratio benefits that importer. Unit 1
• Question 3 · 5 points Demand and marginal revenue: monopoly versus competition Draw demand and marginal revenue for a monopolist and a competitive firm, then explain why the two curves line up for the price taker and separate for the monopolist. Unit 4, Unit 3