2015, 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.
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.
1 Read the question
The question is College Board's, from the 2015 exam. It starts on page 2 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on December 22, 2025.
2 Write your answer
Answer each part the way you would on the exam, in full sentences, with your work shown. Your writing saves as you type.
3 Score it
Score your answer against College Board's scoring guidelines, one point at a time. Give yourself a point only when your answer says what the guideline asks for.
Scoring guidelines (PDF, page 2) What the exam readers saw (Student Performance Q&A)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.