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AP Microeconomics 5.1 Introduction to Factor Markets Questions

Review factors and factor prices, derived labor demand, marginal revenue product, marginal factor cost, competitive wages and employment, and economic rent.

Syllabus
Effective Fall 2022
Course
AP Microeconomics

Exam points

  • classify factors of production and connect labor, capital and land to their factor prices
  • explain labor demand as derived from worker productivity and demand for the firm's output
  • define or calculate marginal revenue product and marginal factor cost
  • use labor demand and supply to find the competitive equilibrium wage and employment
  • identify economic rent by comparing factor income with the next-best opportunity

Covered syllabus points

PRD-4.A—a. Define (using graphs where appropriate) key terms and concepts relating to factor markets. b. Explain (using graphs where…

Question 1

[Maximum number: 1]

RKB is a profit-maximizing monopoly that produces a new, patented electronic device. RKB is earning positive economic profit.

Assume that RKB hires workers in a perfectly competitive labor market.

Draw a correctly labeled graph for the labor market, showing the equilibrium wage and quantity of labor, labeled WE\mathrm{W}_{\mathrm{E}} and QE\mathrm{Q}_{\mathrm{E}}, respectively.

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