AP MICROECONOMICS Test Booklet
Unit 2 FRQ Test
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must
have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate,"
you must show how you arrived at your final answer.
A movie theater company obtains the following estimated elasticities of demand.
• The absolute value of the short-run price elasticity of demand for movie tickets is .
• The absolute value of the long-run price elasticity of demand for movie tickets is .
• The cross-price elasticity of demand for good X, another product sold by the theater, with respect to the price
of movie tickets is .
• The income elasticity of demand for movie tickets is .
Answer each of the following by referring to the given elasticities.
(a) If the theater raises movie ticket prices by percent, by what percentage and in what direction will the quantity
demanded for movie tickets change in the short run?
(b) Explain why the short-run price elasticity of demand for movie tickets differs from the long-run price elasticity of
demand for movie tickets.
(c) What will happen to total revenue from movie ticket sales in the long run if movie ticket prices increase? Explain
using the relative percentage changes in price and quantity.
(d) Are movie tickets a normal good or an inferior good? Explain.
(e) Given the increase in the price of movie tickets in part (a), what would be the impact on the demand for good X? Use
the appropriate graph for good X to illustrate your answer.
1. Respond to all parts of the question.
AP Microeconomics Page 1 of 3
Test Booklet
Unit 2 FRQ Test
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must
have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate,"
you must show how you arrived at your final answer.
In the small country of AgroIsland, the equilibrium price of wheat is per bushel. Wheat is produced in a competitive
industry. The world market price of wheat is per bushel.
(a) Assume that AgroIsland currently does not engage in international trade in wheat. Draw a correctly labeled graph to
illustrate the market for wheat in AgroIsland and indicate the following.
(i) The equilibrium price, labeled
(ii) The equilibrium quantity, labeled
(iii) The domestic producer surplus, shaded completely and labeled
(b) On the graph from part (a), show each of the following for AgroIsland if it engages in free trade in the world wheat
market.
(i) The world price of a bushel of wheat, labeled
(ii) The quantity of wheat supplied by domestic producers, labeled
(iii) The domestic consumer surplus after trade, shaded completely and labeled
(c) Given your answers in part (b), how does each of the following change if AgroIsland engages in international trade in
the wheat market?
(i) The domestic consumer surplus
(ii) The domestic producer surplus
2. Respond to all parts of the question.
Page 2 of 3 AP Microeconomics
Test Booklet
Unit 2 FRQ Test
The graph above illustrates the market for calculators. S denotes the current supply curve, and D denotes the demand
curve.
a. Calculate the producer surplus before the tax.
b. Now assume a per-unit tax of $2 is imposed whose impact is shown in the graph above.
i. Calculate the amount of tax revenue.
ii. What is the after-tax price that the sellers now keep?
iii. Calculate the producer surplus after the tax.
c. Is the demand price elastic, inelastic, or unit elastic between the prices of $5 and $6 ? Explain.
d. Assuming no externalities, how does the tax affect allocative efficiency? Explain.
3. Respond to all parts of the question.
AP Microeconomics Page 3 of 3
