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AP Microeconomics Prd 4 B Explain Using Graphs Where Appropriate Firms and Factors Responses to Changes in Incentives and Constraints Questions

Analyze how output demand, productivity, input prices, immigration, skills, preferences, regulation, and wage policies change labor demand, supply, wages, and employment.

Syllabus
Effective Fall 2026
Course
AP Microeconomics

Exam points

  • shift labor demand when output demand or price, worker productivity or the price of another input changes
  • connect an increase or decrease in marginal revenue product to a shift in the firm's labor-demand curve
  • shift labor supply for immigration, certification, education, working conditions or preference for leisure
  • predict the new equilibrium wage and employment after a labor-demand or labor-supply shift
  • distinguish a market labor-demand shift from a single firm's change in employment at an unchanged market wage
  • trace worker substitution across occupations or locations into supply, wage and employment changes
  • distinguish a shift in labor supply or demand from movement along a curve caused by a wage change
  • analyze a binding minimum wage using labor supplied, labor demanded and unemployment
  • use labor-demand elasticity to predict employment and total-earnings effects of a minimum wage
  • trace a targeted wage subsidy through demand for substitute worker groups, wages and hours

AP Microeconomics Prd 4 B Explain Using Graphs Where Appropriate Firms and Factors Responses to Changes in Incentives and Constraints Questions question 1

[Maximum number: 2]

Voda Reservoir is a profit-maximizing firm and the only producer of bottled water in a country.

Currently, Voda Reservoir is earning negative economic profit.

Question (a)

(a)

Voda Reservoir hires workers in a perfectly competitive labor market.

[ 2 ]

Question (i)

(i)

If the demand for bottled water increases, what will happen to Voda Reservoir's demand for labor? Explain.

[ 1 ]

Question (ii)

(ii)

The government implements a new regulation that increases the minimum age required for a worker to be employed in a bottled-water factory. What will happen to the market wage in the short run? Explain.

[ 1 ]
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