Nov 21 2009

AP and IB Exam Questions of the Week

AP Question of the week:

Refer to the graph to answer the questions that follow:

  1. The graph above shows the short-run costs faced by a firm in a perfectly competitive industry. Identify the cost curves that are denoted by each of the following:
    1. Curve 1
    2. Curve 2
    3. Curve 3
  2. Explain why Curve 1 intersects Curves 2 and 3 at the precise points that it does.
  3. Identify and explain the economic “law” that determines and HOW it determines the shape of Curve 1.
  4. At which price(s) would this firm be earning economic profits when producing at quantity Q1? Explain.
  5. At which price(s) would this firm shut down when producing at Q1? Explain

IB Question of the week:

  1. Explain how, in theory, a flexible exchange rate system should lead to the automatic stabilization of a nation’s current account balance. Use supply and demand diagrams to illustrate your answer
  2. Referencing the Marshal Lerner Condition, explain the possible effects of a depreciation of a nation’s currency on its current account balance.

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

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