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(i) The new short-run industry equilibrium price and quantity, labeled Pm2 and Qm2, respectively
(ii) The new short-run profit-maximizing price and quantity for the typical firm, labeled Pf2 and Qf2,
(d) As the industry adjusts to a new long-run equilibrium,
(i) what will happen to the number of firms in the industry? Explain.
(ii) will the firm’s average total cost curve shift upward, shift downward, or remain unchanged?
(e) In the long run, compare the firm’s profit-maximizing price to each of the following.
(i) Pf in part (a)(ii)
(ii) Pf2 in part (c)(ii) © 2011 The College Board.
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-2- 2011 AP® MICROECONOMICS FREE-RESPONSE QUESTIONS (Form B)
2. Suppose research shows that the more college education individuals receive, the more responsible citizens they
become and the less likely they are to commit crimes.
(a) Draw a correctly labeled graph for the college education market and show each of the following.
(i) Private market equilibrium quantity and price of college education, labeled Qm and Pm, respectively
(ii) Socially optimal quantity of education, labeled Qs
(iii) Deadweight loss at the market equilibrium, completely shaded
(b) Assume that the government imposes an effective (binding) price ceiling on the price of college education.
(i) Show the price ceiling on your graph in part (a), l...
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