AP Micro 2018 – pracite test

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APMicroeconomics

Practice Exam

From the 2018 Administration

Thisexammaynotbepostedon schoolorpersonalwebsites,nor electronicallyredistributedfor anyreason.This Released Exam is provided by the College Board for AP Exam preparation. Teachers are permitted to download the materials and make copies to use with their students in a classroom setting only. To maintain the security of this exam, teachers should collect all materials after their administration and keep them in a secure location. Furtherdistributionofthese materialsoutsideofthesecure CollegeBoardsitedisadvantages teacherswhorelyonuncirculated questionsforclassroomtesting. Any additional distribution is in violation of the College Board’s copyright policies and may result in the termination of Practice Exam access for your school as well as the removal of access to other online services such as the AP Teacher Community and Online Score Reports. © 2018 The College Board. College Board, Advanced Placement Program, AP, AP Central, and the acorn logo are registered trademarks of the College Board. Visit the College Board on the Web: collegeboard. APCentralistheocialonlinehomefortheAPProgram:apcentral.collegeboard

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Contents Exam Instructions Student Answer Sheet for the Multiple-Choice Section Section I: Multiple-Choice Questions Section II: Free-Response Questions Multiple-Choice Answer Key Free-Response Scoring Guidelines Scoring Worksheet Question Descriptors and Performance Data Note: This publication shows the page numbers that appeared in the 2017 18 AP Exam Instructionsbook and in the actual exam. This publication was not repaginated to begin with page 1. © 2018 The College Board. College Board, Advanced Placement Program, AP, SAT and the acorn logo are registered trademarks of the College Board. All other products and services may be trademarks of their respective owners. Permission to use copyrighted College Board materials may be requested online at: collegeboard/request-form. —

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AP Macroeconomics Exam

Regularly Scheduled Exam Date: Wednesday afternoon, May 16, 2018 Late-Testing Exam Date: Friday afternoon, May 25, 2018

AP Microeconomics Exam

Regularly Scheduled Exam Date: Friday morning, May 18, 2018 Late-Testing Exam Date: Wednesday morning, May 23, 2018 Section I Total Time: 1 hour and 10 minutes Calculator not permitted Number of Questions: 60 (The number of questions may vary slightly depending on the form of the exam.) Percent of Total Score: 66% Writing Instrument: Pencil required Section II Total Time: 1 hour (10-minute reading period, 50-minute writing period) Calculator not permitted Number of Questions: 3 required free-response questions Percent of Total Score: 33% Writing Instrument: Pen with black or dark blue ink What Proctors Need to Bring to This Exam Exam packets Answer sheets AP Student Packs 2017-18 AP Coordinator’s Manual This book—2017-18 AP Exam Instructions AP Exam Seating Chart template School Code and Homeschool/Self-Study Codes – Pencil sharpener – Container for students’ electronic devices (if needed) Extra No. 2 pencils with erasers Extra pens with black or dark blue ink Lined paper Stapler Watch Signs for the door to the testing room “Exam in Progress” “Cell phones are prohibited during the test administration, including breaks”

76 AP Economics Exam Macroeconomics Before Distributing Exams: Check that the title on exam covers is Macroeconomics, and is printed in blue on the Section I exam booklet covers. (On any large-type or photo-enlarged exams, the exam title will be printed in black.) If there are any exam bookletswithadierenttitle,contacttheAPcoordinatorimmediately. Microeconomics Before Distributing Exams: Check that the title on all exam covers is Microeconomics, and is printed in black.Ifthereareanyexambookletswithadierenttitle,contactthe AP coordinator immediately. SECTION I: Multiple Choice Donotbegintheexaminstructionsbelowuntilyouhavecompletedthe appropriateGeneralInstructionsforyourgroup. Make sure you begin the exam at the designated time. Remember, you must complete a seating chart for this exam. See pages 303–304 for a seating chart template and instructions. See the 2017-18 AP Coordinator’s Manual for exam seating requirements (pages 55–58). Macroeconomics If you are giving the regularly scheduled exam, say: It is Wednesday afternoon, May 16, and you will be taking the AP Macroeconomics Exam. If you are giving the alternate exam for late testing, say: It is Friday afternoon, May 25, and you will be taking the AP Macroeconomics Exam. Microeconomics If you are giving the regularly scheduled exam, say: It is Friday morning, May 18, and you will be taking the AP Microeconomics Exam. If you are giving the alternate exam for late testing, say: It is Wednesday morning, May 23, and you will be taking the AP Microeconomics Exam. Macroeconomics If you are giving a regular format AP Macroeconomics Exam, say: Look at your exam packet and conrm that the exam title is “AP Macroeconomics, and is printed in blue on the Section I booklet cover. Raise your hand if your exam packet contains any title other than “AP Macroeconomics, and I will help you. If you are giving a large-type or photo-enlarged AP Macroeconomics Exam, say: Look at your exam packet and conrm that the exam title is “AP Macroeconomics, and is printed in black. Raise your hand if your exam packet contains any title other than “AP Macroeconomics, and I will help you. Microeconomics Say: Look at your exam packet and conrm that the exam title is “AP Microeconomics, and is printed in black. Raise your hand if your exam packet contains any title other than “AP Microeconomics, and I will help you.

78 AP Economics Exam Collect an answer sheet from each student. Check that each answer sheet has an AP number label and an AP Exam label. After all answer sheets have been collected, say: Now you must seal your exam booklet using the white seals you set aside earlier. Remove the white seals from the backing and press one on each area of your exam booklet cover marked “PLACE SEAL HERE. Fold each seal over the back cover. When you have nished, place the booklet on your desk, faceup. I will now collect your Section I booklet…. Collect a Section I booklet from each student. Check that each student has signed the front cover of the sealed Section I booklet. There is a 10-minute break between Sections I and II. When all Section I materials have been collected and accounted for and you are ready for the break, say: Please listen carefully to these instructions before we take a 10-minute break. All items you placed under your chair at the beginning of this exam must stay there, and you are not permitted to open or access them in any way. Leave your shrinkwrapped Section II packet on your desk during the break. You are not allowed to consult teachers, other students, notes, or textbooks during the break. You may not make phone calls, send text messages, check email, use a social networking site, or access any electronic or communication device. Remember, you may never discuss the multiple-choice exam content with anyone, and if you disclose the content through any means, your AP Exam score will be canceled. Are there any questions?… You may begin your break. Testing will resume at. SECTION II: Free Response After the break, say: May I have everyone’s attention? Place your Student Pack on your desk…. You may now remove the shrinkwrap from the Section II packet, but do not open the exam booklet until you are told to do so…. Read the bulleted statements on the front cover of the exam booklet. Look up when you have nished…. Now take an AP number label from your Student Pack and place it on the shaded box. If you don’t have any AP number labels, write your AP number in the box. Look up when you have nished…. Read the last statement…. Using your pen, print the rst, middle, and last initials of your legal name in the boxes and print today’s date where indicated. This constitutes your signature and your agreement to the statements on the front cover…. Turn to the back cover and, using your pen, complete Item 1 under “Important Identication Information. Print the rst two letters of your last name and the rst letter of your rst name in the boxes. Look up when you have nished…. In Item 2, print your date of birth in the boxes…. In Item 3, write the school code you printed on the front of your Student Pack in the boxes…. Read Item 4…. @

AP Economics Exam 79 Are there any questions?… If this is your last AP Exam, you may keep your Student Pack. Place it under your chair for now. Otherwise I will collect all Student Packs…. Read the information on the back cover of the exam booklet. Do not open the booklet until you are told to do so. Look up when you have nished…. Collect the Student Packs. Then say: Are there any questions?… The total Section II time is 1 hour. This includes a 10-minute reading period. The reading period is designed to provide you with time to develop thoughtful, well-organized responses. You are advised to take advantage of the reading period to plan what you will write. You may begin writing your exam responses before the reading period is over. You may make notes on page 3 and the pages that contain the exam questions, but your responses must be written on the designated lined pages. Are there any questions?… You are responsible for pacing yourself and may proceed freely from one question to the next. You must write your answers in the Section II booklet using a pen with black or dark blue ink. You are not permitted to use other colored pens or pencils to draw graphs or diagrams. If you need more paper to complete your responses, raise your hand. At the top of each extra sheet of paper you use, write only: your AP number, and the question number you are working on. Make sure to begin your response on the lined page directly following the rst appearance of the question and continue your response on the additional lined pages that follow. Remember to write your answers on the lined pages provided for each question; only responses written on the lined pages will be scored. You may now open the Section II booklet and begin the 10-minute reading period. Note Start Time . . After 10 minutes, say: The reading period is over. You have 50 minutes remaining to complete Section II. Note Start Time . . Check that students are using pens and that they are writing their answers in their exam booklets. After 40 minutes, say: There are 10 minutes remaining. After 10 minutes, say: Stop working and close your exam booklet. Place it on your desk, faceup…. If any students used extra paper for a question in the free-response section, have those studentsstapletheextrasheet(s)totherstpagecorrespondingtothatquestionin their exam booklets. Complete an Incident Report after the exam (see page 67 of the 2017-18 AP Coordinator’s Manual for complete details). Then say: Remain in your seat, without talking, while the exam materials are collected…. @ @ E w = tn u ·-E 0 C 0 u w A. cc

SectionI:Multiple-ChoiceQuestions This is the multiple-choice section of the 2018 AP Exam. It includes cover material and other administrative instructions to help familiarize students with the mechanics of the exam. (Note that future exams may differ in look from the following content.)

AP®Microeconomics Exam SECTION I: Multiple Choice 2018 DONOTOPENTHISBOOKLETUNTILYOUARETOLDTODOSO. At a Glance TotalTime 1 hour and 10 minutes Numberof Questions 60 Percentof TotalScore 66% WritingInstrument Pencil required ElectronicDevice None allowed Instructions Section I of this exam contains 60 multiple-choice questions. Fill in only the circles for numbers 1 through 60 on your answer sheet. Indicate all of your answers to the multiple-choice questions on the answer sheet. No credit will be given for anything written in this exam booklet, but you may use the booklet for notes or scratch work. After you have decided which of the suggested answers is best, completely fill in the corresponding circle on the answer sheet. Give only one answer to each question. If you change an answer, be sure that the previous mark is erased completely. Here is a sample question and answer. Sample Question Sample Answer Chicago is a (A) state (B) city (C) country (D) continent (E) village @ e @@® Use your time effectively, working as quickly as you can without losing accuracy. Do not spend too much time on any one question. Go on to other questions and come back to the ones you have not answered if you have time. It is not expected that everyone will know the answers to all of the multiple-choice questions. Your total score on the multiple-choice section is based only on the number of questions answered correctly. Points are not deducted for incorrect answers or unanswered questions. Form I Form Code 40BP4-S

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MICROECONOMICS Section I Time-1 hour and 10 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best in each case and then fill in the corresponding circle on the answer sheet.

  1. The study of economics exists because people are confronted with the basic problem of (A) elasticity (B) negative externality (C) scarcity (D) overabundance (E) monopoly Quantity of Pollution Reduction (in tons) 0 1 2 3 4 5 Total Benefit (in dollars) 0 300 550 650 725 775
  2. The table above shows the total benefit associated with reducing different levels of pollution on a small island. The cost of eliminating one ton of pollution is $150. Which of the following is the optimal quantity of pollution to eliminate? (A) 5 tons (B) 4 tons (C) 3 tons (D) 2 tons (E) 1 tons Unauthorized copying or reuse of any part of this page is illegal. -3-
  3. If a hurricane reduced the crab population, the price of crabs and quantity sold would change in which of the following ways? Price Quantit)'. (A) Increase Increase (B) Increase Decrease (C) Decrease Increase (D) Decrease Decrease (E) No change Decrease
  4. To determine whether two goods are complements, one would calculate the (A) price elasticity of demand (B) price elasticity of supply (C) income elasticity of demand (D) cross-price elasticity of demand (E) input-price elasticity of supply GO ON TO THE NEXT PAGE.

Supply I J I i 1K PE __Q1:______JH I I I I I I II I I I I I I Demand 0 Q 3 Quantity of Good Y 5. The diagram above depicts the demand and supply curves for good Y. The perfectly competitive market is initially in equilibrium, but the government decides to institute a price floor program by setting the price of good Y at Pp and agrees to purchase all unsold units of good Y from the producers. The cost of this program to the government is represented by which of the following areas? (A) 0PpJQ 2 (B) 0PpKQ 3 (C) GIKH (D) Q1IJQ (E) Q 1 IKQ 3 6. For a normal good, the income effect of a price change refers to the change in the consumption of the good that occurs because of the change in (A) consumers' purchasing power (B) the demand for a substitute good (C) the supply of the good (D) relative price (E) marginal utility Unauthorized copying or reuse of any part of this page is illegal. -4- Questions 7-8 are based on the table below, which shows a firm's average variable cost and average total cost. Average Average Variable Total Output Cost Cost 1 $40 $ 2 35 95 3 40 80 4 45 75 5 50 74 6 55 75 7. The average fixed cost of producing four units of output is equal to (A) $ (B) $ (C) $ (D) $ (E) $ 8. In the short run, the lowest price at which the firm will continue to produce is (A) $ (B) $ (C) $ (D) $ (E) $ GO ON TO THE NEXT PAGE.

  1. If the demand for product X is perfect!y elastic and the supply of product X decreases, which of the following will occur in the market for X? (A) Total revenue will increase. (B) Total revenue will decrease. (C) Total revenue will remain the same. (D) Quantity demanded will exceed quantity supplied. (E) Quantity supplied will exceed quantity demanded. $ $ $ $ $ $ 0 Mary's Demand

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1 2 3 4 5 6 7 8 Quantity 19. All of the following cause a rightward shift in the demand schedule for a normal good EXCEPT (A) a decrease in the price of the good (B) a decrease in the price of a complementary good (C) an increase in the price of a substitute good (D) an increase in consumers' income (E) an increase in consumers' preference for the good $ $ $ $ $ $ 0 Mark's Demand "- ~ I"-.. ………… "- r——.. ""–..

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Quantity 20. The graphs above show Mary's demand for hamburgers and Mark's demand for hamburgers. Suppose Mary and Mark are the only two consumers in the market. Which of the following is a point on the market demand curve for hamburgers? Price Quantity (A) $2 12 (B) $4 7 (C) $6 6 (D) $8 4 (E) $10 8 Unauthorized copying or reuse of any part of this page is illegal. GO ON TO THE NEXT PAGE. -6-

  1. A firm is currently employing a cost-minimizing combination of labor and capital for a given level of output. The firm is employing 20 workers, and the marginal product of the last worker is 40 units of output. The firm is employing 100 units of capital, and the marginal product of the last unit of capital is 10 units of output. If the wage rate is $20 per hour, what is the price of capital? (A) $2 per hour (B) $5 per hour (C) $10 per hour (D) $100 per hour (E) $200 per hour

  2. If a firm's production function exhibits diminishing marginal product of the variable input in the short run, which of the following about the firm's short-run marginal cost (MC) curve must be true? (A) As output increases, the MC curve slopes upward. (B) As output increases, the MC curve slopes downward and becomes flatter. (C) As output increases, the MC curve slopes downward and becomes steeper. (D) The MC curve is horizontal. (E) The MC curve is vertical.

  3. Catering, Inc., which provides catering services in a perfectly competitive market, was maximizing profits at the market price of $22 per meal. The market price has recently increased to $28 per meal. Which of the following short-run adjustments will increase profits for Catering, Inc.? (A) Increasing output until the marginal cost equals the new price (B) Increasing output until the average total cost equals the new price (C) Decreasing output because of the increase in market price (D) Increasing the wage rate paid to its workers (E) Increasing advertising to increase demand for the meals Unauthorized copying or reuse of any part of this page is illegal. -7-

  4. Monopolistically competitive product markets are inefficient because (A) price equals the marginal value to the buyer of the last item produced (B) price is greater than marginal cost (C) excessive competition prevents other firms from entering the market (D) homogeneous goods are usually overpriced (E) short-run economic profit-making opportunities exist

  5. North Springs and South Springs are two firms that serve the local market for bottled water. Each firm must choose to either maintain or increase its current output. The first entry in each cell in the payoff matrix below shows the profits for North Springs, and the second entry in each cell shows the profits for South Springs. South Springs Maintain Increase Output Output Maintain $15,$30 $15,$ North Output Springs Increase $30,$26 $27,$ Output If the two firms do not cooperate, which of the following represents the payoff North Springs and South Springs receive in the dominant-strategy equilibrium and the Nash equilibrium? Dominant Strategy Nash Equilibrium (A) None (B) ($27, $28) (C) ($30, $26) (D) ($27, $28) (E) ($30, $26) ($27, $28) ($15, $45) ($15, $45) ($27, $28) ($27, $28) GO ON TO THE NEXT PAGE.

  6. Both Amy and Brad produce and consume apple pie and ice cream. In one hour, Brad makes five apple pies or ten gallons of ice cream while Amy makes fifteen apple pies or fifteen gallons of ice cream. Based on the above information, one can correctly conclude that (A) Brad has an absolute advantage in making ice cream and will sell ice cream to Amy (B) Brad has a comparative advantage in making ice cream and will sell ice cream to Amy (C) Brad does not have a comparative advantage in making either good and will not trade with Amy (D) Brad has an absolute advantage in making apple pies but a comparative advantage in making ice cream (E) Brad's opportunity cost of making ice cream is higher than Amy's

  7. If the government imposes a per-unit tax on personal computers, consumer surplus in the personal computer market will (A) decrease, because the price paid by consumers for personal computers will have increased (B) decrease, because there will be more personal computers on the market (C) increase, because personal computer manufacturers will pass the tax on to consumers (D) increase, because consumers will buy more imported personal computers (E) not change because the demand is unit elastic Unauthorized copying or reuse of any part of this page is illegal. -9-

  8. Assume that the supply of com is relatively price inelastic, while the demand for com is relatively price elastic. If the government imposes a per-unit excise tax on the production of com, the incidence of the tax will fall (A) entirely on buyers (B) more on buyers than on sellers (C) entirely on sellers (D) more on sellers than on buyers (E) equally on both buyers and sellers

  9. Assume the following utility schedule for Aaliyah's ice cream consumption. If she consumes 6 units, what is the value of her total utility from consuming ice cream? Quantity_Consumed (A) 22 (B) 20 (C) 18 (D) 0 (E) – 1 2 3 4 5 6 Marginal Utility_ 8 6 4 2 0

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  1. Economies of scale can be illustrated by (A) an increasing short-run marginal cost curve as a firm produces more output (B) a decreasing short-run average total cost curve as a firm produces more output (C) a downward-sloping long-run supply curve for an industry (D) a decreasing long-run average total cost curve as a firm produces more output (E) an increasing long-run average total cost curve as a firm produces more output
  2. In a monopsonistic labor market, a firm will continue to hire workers until the marginal revenue product of labor (A) equals marginal factor (resource) cost, resulting in more workers being hired at a lower wage compared with a perfectly competitive labor market (B) equals marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market (C) equals marginal factor (resource) cost, resulting in fewer workers being hired at a higher wage compared with a perfectly competitive labor market (D) is less than marginal factor (resource) cost, resulting in more workers being hired at a lower wage compared with a perfectly competitive labor market (E) is less than marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market
  3. Assume that a monopolistically competitive firm is currently maximizing profit with an output of 100 units and a price of $50. Which of the following is true? (A) Total revenue is maximized when the firm produces 100 units of output. (B) Marginal revenue equals $50 when the firm produces 100 units of output. (C) Marginal cost is greater than marginal revenue when the firm produces 150 units of output. (D) Marginal cost is minimized when the firm produces 100 units of output. (E) Average total cost is minimized when the firm produces 100 units of output. Unauthorized copying or reuse of any part of this page is illegal. -10-
  4. There are four firms in an oligopolistic industry. The four firms agree to collude and act like a monopoly. If one of the firms violates the agreement and charges a lower price or sells a larger quantity than what was agreed to, what will happen in the short run? (A) The firm that cheats will earn higher profits, and industry profits will be lower. (B) The firm that cheats will earn higher profits, and industry profits will be higher. (C) The firm that cheats will earn lower profits, and industry profits will be lower. (D) The firm that cheats will earn lower profits, and industry profits will be higher. (E) The firms that do not cheat will earn higher profits.
  5. Which of the following can give a firm market power? (A) Having access to common information (B) Producing a standardized or homogeneous product (C) Lacking barriers to entry or exit (D) Having a large number of competitors in the market (E) Having economies of scale in production over the range of market output
  6. In monopolistic competition, a goal of advertising is to (A) reduce a firm's short-run average total cost (B) minimize a firm's long-run average total cost (C) make a firm's demand curve more elastic (D) make a firm's demand curve less elastic (E) shift a firm's demand curve to the left GO ON TO THE NEXT PAGE.

AP Micro 2018 – pracite test

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