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#Unit 5 Study Guide Blank

This document outlines key concepts in AP Microeconomics related to factor markets, including the differences between factor and product markets, derived demand, and the characteristics of labor supply and demand. It also discusses changes in factor demand and supply, the implications of minimum wage laws, and the dynamics of perfectly competitive and monopsonistic markets. Additionally, it includes graphical representations and examples to illustrate these concepts.

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Abhishek
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45 views2 pages

#Unit 5 Study Guide Blank

This document outlines key concepts in AP Microeconomics related to factor markets, including the differences between factor and product markets, derived demand, and the characteristics of labor supply and demand. It also discusses changes in factor demand and supply, the implications of minimum wage laws, and the dynamics of perfectly competitive and monopsonistic markets. Additionally, it includes graphical representations and examples to illustrate these concepts.

Uploaded by

Abhishek
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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AP® Microeconomics Unit 5: Factor Markets

Topic 5.1- Introduction


1. What is the difference between the factor 3. What is derived demand?
market and the product market?

4. Why is the demand for labor downward-sloping?

2. What are the four factors of production?


5. Why is the supply for labor upward-sloping?
3. What are the four factor payments?

Topic 5.2- Changes in Factor Demand and Supply


1. Draw a competitive market for plumbers. 3. What shifts the demand for labor?
Label the equilibrium wage and quantity

4. What shifts the supply for labor?

5. If the equilibrium wage for electricians is $15 an


hour and the government established a minimum
2. Assume the government establishes a wage of $10 an hour, what will happen to the wage
certification process that makes it harder to be a and quantity? Explain.
plumber. Show what happens on the graph.

6. Draw the results of a minimum wage. Label 7. If the demand for houses increases, the wage of
the quantity supplies (Qs) and the quantity carpenters will ____ and the quantity will ____.
demanded (Qd) 8. Assume bricks and wood are substitute resources.
Wage If the price of bricks increases, the price of wood
_____ and the quantity _____.
9. If the government removes all regulations for
becoming a dentist. The wages for dentists will
____ and the quantity will _____.
10. If demand for accountants falls at the same time
that the supply increases, the wage will ____ and
the quantity will ______________.
11. Will a binding minimum wage lead to relatively
less unemployment when the demand for labor is
inelastic or when it is elastic? Explain.

Quantity of Labor

Do not post online. © Copyright Jacob Clifford, Ultimate Review Packet 2020
Topic 5.3- Perfectly Competitive Factor Markets
1. Define marginal revenue product (MRP) 2. Define marginal resource cost (MRC)

3. Assume perfectly competitive product and labor Marginal


Number of Total Marginal
markets. If the price of the product is $5 and the Revenue
Workers Product Product
wage is $20, how many workers should be Product
hired? 0 0 - -
4. How much is the profit or loss? 1 5
5. Assume that this firm develops a process that 2 13
makes only their workers more productive. The 3 18
wage will ______________ and the quantity will 4 21
_______________. 5 20
6. Draw side-by-side graphs showing a perfectly competitive market and firm hiring workers
Wage Market Wage Firm

Quantity Quantity
Topic 5.4- Monopsonistic Markets 7. If the government sets a binding minimum
1. Draw a monopsony and label the unregulated wage, will the MRP of the last worker hired
wage and quantity increase, decrease, or stay the same?

Wage 8. What is the least cost rule when combing


resources?

9. Assume the firm hires the cost-minimizing


combination of labor and capital. The marginal
product of the last worker is 60 units and the
marginal product of the last unit of capital is 20
units. If the wage rate is $30 per hour, what is the
price of capital?
Quantity
2. What are the characteristics of a monopsony? 10. Assume that the price of labor falls to $10 per
hour. The company should ____ the number of
workers and ____ the amount of capital.

Do not post online. © Copyright Jacob Clifford, Ultimate Review Packet 2020

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