1. AP Microeconomics: Relay Race
The following activity will be split into 3 legs: 1.) perfectly competitive markets/firms,
2.) imperfectly competitive firms, and 3.) factor markets.
All answers will be recorded on the answer key provided in class.
In order to move onto the next leg, students must have their answers checked off by Mr. Davey.
The first team to complete all 3 legs of the race will be crowned the champions and have the right to 3 extra credit points on our final assessment of the year.

2. Leg 1: Perfectly Competitive Markets/Firms
Go on to the next slide.

3. Question 1: What is the firm’s profit maximizing output? P Q S D P1 Q1
MR=D MC
ATC
AVC Q2
Q3 Q Q6 Q7 Q5
What is the firm’s profit maximizing output?

4. Question 2: P Q S D P1 Q1
MR=D MC
ATC
AVC Q2
Q3 Q Q6 Q7 Q5
What happens to the market’s price and the firm’s profit in the long-run?

5. . . . . . . . . Question 3: P Q S D P1 Q1 MR=D MC ATC A AVC P3 B P2 CF G
Q2 Q3Q Q5
(Select one) This firm is currently experiencing profits/losses.
The area of profits/losses are _____________________ (use points/prices above)

6. Question 4:
(Choose One) Between the prices of $9 and $11, is the demand for corn relatively elastic, relatively inelastic, unit elastic, perfectly elastic, or perfectly inelastic.
EXPLAIN USING SPECIFIC VALUES.

7. Question 5:
If the government estabilshes a price floor at $11, how much corn will be purchased by consumers?

8. Question 6:
Suppose the government guarantees a market price of $11 buy purchasing all of the surplus corn. How much corn will the government need to purchase?

9. Question 7:
Suppose the government successfully markets corn as an export.
How could successfully marketing corn achieve an equilibrium price of $11?
Calculate producer surplus if corn is successfully marketed as an export.

10. Question 8:
Identify the area that represents the net gain from trade.

11. Question 9:
Identify the quantity imported by this domestic economy. .

12. Question 10: What is the value of the excise tax?
What is the amount of tax revenue created from the tax?
What is the area representing deadweight loss?

13. End of Leg I.
Please have Mr. Davey check your answers up to this point.
If correct: move on to next leg of relay.
If incorrect: go back and try again!

14. Imperfectly Competitive Firms. 8 Questions.
Leg II.
Imperfectly Competitive Firms. 8 Questions.
Go on to the next slide.

15. Question 1: What is the profit maximizing quantity?
What price will the monopolist charge?
Identify the fair return quantity.

16. Question 2: Assume the monopoly is a first-degree price discriminator:
Identify the area of total revenue for the monopolist.
Identify the area of consumer surplus.

17. Question 3: Identify the following points for the monopolist:
Socially optimal quantity.
Allocatively efficient quantity.
Fair return price.

18. Question 4:
A monopolistically competitive firm at a short-run equilibrium.
(Choose One) The firm illustrated above is experiencing economic gains/losses in the short-run.

19. Question 5:
A monopolistically competitive firm at a short-run equilibrium.
Fill in the blanks:
In the long run, the demand for this firms output will ______________________ and the firms will have an economic profit of __________________________.

20. Question 6:
What is the dominant strategy, if any, in the payoff matrix above?
What are the profits of the Nash equilibrium?

21. Question 7: In what market structure do these 2 firms operate?
If these firms could collude, what actions would each firm take?

22. Question 8: Identify the productively efficient point.
Identify the value of excess capacity. A P2 B P3 C
Q2 Q3

23. End of Leg II.
Please have Mr. Davey check your answers up to this point.
If correct: move on to next leg of relay.
If incorrect: go back and try again!

24. Factor Markets. 5 Questions.
Leg III. Final Leg!!!
Factor Markets. 5 Questions.
Go on to the next slide.

25. Question 1:
Use a set of side-by-side graphs illustrate a perfectly competitive labor market and a firm hiring labor from the perfectly competitive labor market.
i. Identify wage rate in the labor market (W), MRP, and MRC.

26. Question 2: Illustrate a monopsonist’s labor market.
i. Identify the profit maximizing quantity of labor (Q) and the wage the monopsonist will pay its employees (W)

27. Question 3:
Identify the profit maximizing quantity of workers for Leadmill Co.
If wage rate decreased to $6/hr, how many workers would Leadmill Co. hire?

28. Perfectly Competitive Labor Market
Question 4:
Wage QL
SL = MRC
DL = MRP WE QE
Perfectly Competitive Labor Market
Suppose the demand for the output the firm is selling increases.
How does the value of MRP change: increase, decrease, or stay the same?
How does the quantity of workers hired in the labor market change: increase, decrease, or stay the same?

29. Question 5:
MRC
Wage SL
Identify the quantity of workers hired under the following market conditions for the monopsonist:
Profit maximizing quantity.
Perfectly competitive quantity.
Suppose the government imposed a minimum wage at W2. What quantity of workers would the firm hire? W4 W3 W2 W1
D = MRP QL
Q1 Q2 Q3 Q4

30. Congratulations!!!
You have completed the first annual AP Micro Relay Race… Please take your answer sheet to Mr. Davey to check your answers and to see if you have won the race. Once all answers have been checked you should start your homework for tonight: FRQ Packet #s 3 & 4