Revision of AP Microeconomics Exam and Analysis of the 2012 Long FRQ

文/陈翘伊

作者简介：长沙新航道学校托福听力主讲、长郡AP课程中心经济学主讲、毕业于新加坡国立大学。

 

What's going to change in this year's exam?

According to one of the AP microeconomics test writers, Margret Ray, the test committee has been trying to reform the exam format so that memorizing without understanding will no longer get the student a decent score in AP Microeconomics. The bad news for us is that past year questions will never be repeated. Yet, the good news is it is possible for students to get full score on a long free response question with a 20-word answer.  The implication of such a reform is that this year's paper is going to be more demanding on the students ability to grasp and apply economics concepts, while  at the same time lowering its demand for the command of English, especially in terms of writing skills.

Essentially, AP Microeconomic courses have a strong focus on various models.  Hence, we are expected to see more questions which test students’ ability to apply models to a scenario and  to perform analysis on a given model. In order to excel in the AP microeconomics exam, students should make sure they know how to draw all the major graphs and what can be interpreted from variations of the graphs.

List of graphs that students must know how to draw:

1.Simple Demand and Supply model:

•Understand the difference between a change in demand and a change in quantity demanded graphically. The same goes for supply.

• Given any factor that might result in a change in demand or supply, students must know how to shift the demand and supply curve in the right direction.

2. Welfare Analysis model: draw a graph representing consumer surplus, producer surplus and deadweight loss for policies like taxes, price controls and quantity controls.

3. Cost diagram: able to draw MC, ATC, AVC, AFC curves on the same graph and make sure MC goes through the minimal points of ATC and AVC.

4. Perfect Competition model: 

•Draw the perfect competition model for both the industry and firm side by side, including MC, ATC, AVC, MR=D=AR=P.

•Know how a change in demand and supply in the industry can be represented graphically on both graphs.

•Know how to draw various versions of the model including when the PC firm is making a economic profit, normal profit (long term), and economic loss.

5. Monopoly model:

•draw a graph representing a monopoly's market structure, including D, MR, MC, ATC.

•Correctly label the profit maximizing price and quantity as well as the area of profit/loss

•Know how to draw various versions of the model including when the Monopolist  is making a economic profit, normal profit (long term), and economic loss.

•Shade the area of consumer surplus, producer surplus and deadweight loss on the diagram

•Label on the diagram the government enforced pricing strategies: AC and MC pricing

6. Monopolist Competition model: this model is very similar to monopoly's model in the short run except the demand curve is more elastic. In the long run, however, firms in monopolist competition are making normal profit just like the Perfectly competitive firms.

7. Competitive Factor Market model: draw a graph representing a competitive factor market including MFC and MRP curves.

8. Positive Externality graph: 

•draw a graph with MPB, MSB, MSC

•label socially optimal quantity, socially optimal price as well as market price and market quantity

•Show on the diagram the effect of a corrective subsidy

9. Negative Externality graph: 

•draw a graph with  MSB, MSC, MPC

•label socially optimal quantity, socially optimal price as well as market price and market quantity

•Show on the diagram the effect of a corrective tax

2012 AP Microeconomics Free-Response question and sample answer

1. Steverail, the only provider of train service operating between two cities, is currently incurring economic losses.

(a) Using a correctly labeled graph, show each of the following. [3]

(i) Steverail's Loss-minimizing price and quantity, labeled Pm and Qm, respectively

(ii)  The area of economic losses, shaded completely

(iii) The allocatively efficient quantity, labeled Qe

(b) If Steverail raised the price above Pm identified in part (a)(i), would total revenue increase, decrease, or not change? Explain. [1]

Total revenue decrease because the demand is price elastic in that range of the demand curve where MR>0.

comments: These three points are almost given away if you know model 5. So make sure you don't lose any points on graph drawing and labeling questions.  FRQ is easy in the sense that the examiner has made it very explicit about what you need to write about and has listed out all the pointers for you.

(c) Assume a per-unit subsidy is provided to Steverail.

(i) Will Steverail's quantity increase, decrease, or not change? Explain. [1]

Quantity will increase because the subsidy will cause the MC curve to shift downward

Comments: This question tests your understanding of Model 1. A subsidy shift supply curve downward, and you must also be able to recall that in a PC market, MC curve represents firm's short run supply

(ii) Will consumer surplus increase, decrease, or not change? [1]

Consumer surplus will increase

Comments: This question tests your understanding of Model 2. Because subsidy would increase the quantity, which in turn increases consumer surplus

(d) Assume instead that a lump-sum subsidy is provided or Steverail. For the short run, answer the following:

(i) Will the deadweight loss increase, decrease, or not change? Explain.

deadweight loss will not change because the lump-sum subsidy does not change the profit-maximizing quantity

Comments: This question tests  your understanding of the concept of lump sum tax, which is an amount of money given to the producer one time, and regardless of their quantity of production.

(ii) Will Steverail's economic losses increase, decrease, or not change?

economic losses will decrease

Comments: This question tests your understanding of economic loss, as the government has given the producer an amount of subsidy, the producer will be able to use it to offset its loss.

As you can see,  the entire question has 8 points on economic models and 2 points on economic concepts. So even if you don't know how to answer part (d), you still have high chance of getting a 5 in your AP microeconomics.  I cannot emphasize enough the importance of models.