Free AP Microeconomics Practice Exam (PDF)

This free AP Microeconomics practice exam covers all six AP units — from scarcity and comparative advantage through market structures to market failure — in the real exam format: multiple choice plus free-response. Every question has a worked solution in the answer key, so you can grade yourself and see exactly where the marks come from. View it online below or download the print-ready PDF; no account needed.

1. Question 12 marks · Scarcity & opportunity cost
   Maria can spend her Saturday afternoon working a shift that pays 60 dollars, studying for an exam, or hiking with friends. She chooses to study. The opportunity cost of studying is:
   • A.
     the 60 dollars plus the enjoyment of the hike
   • B.
     whichever single alternative Maria values most highly
   • C.
     the 60 dollars, because money is measurable
   • D.
     zero, because studying improves her exam score
   • E.
     the sum of the values of all alternatives forgone
2. Question 22 marks · Comparative advantage
   In one hour, Ann can produce 4 loaves of bread or 2 sweaters, while Ben can produce 3 loaves of bread or 1 sweater. Which of the following is true?
   • A.
     Ann has a comparative advantage in both goods
   • B.
     Ben has a comparative advantage in sweaters
   • C.
     Ann has a comparative advantage in sweaters, Ben in bread
   • D.
     Ben has an absolute advantage in bread
   • E.
     Neither can gain from specialization and trade
3. Question 32 marks · Elasticity & total revenue
   A cinema raises ticket prices by 5 percent and finds that the quantity of tickets sold falls by 10 percent. Total revenue and the price elasticity of demand are:
   • A.
     revenue rises; demand is elastic
   • B.
     revenue rises; demand is inelastic
   • C.
     revenue falls; demand is elastic
   • D.
     revenue falls; demand is inelastic
   • E.
     revenue is unchanged; demand is unit elastic
4. Question 42 marks · Normal & inferior goods
   During a recession, household incomes fall and the demand for store-brand instant noodles increases. For these consumers, instant noodles are:
   • A.
     a normal good
   • B.
     an inferior good
   • C.
     a complementary good
   • D.
     a Giffen good, because quantity demanded rose
   • E.
     a substitute good
5. Question 52 marks · Simultaneous shifts
   In the market for coffee, a health study increases consumer preference for coffee while a frost destroys part of the harvest. Equilibrium price and quantity will change as follows:
   • A.
     price rises; quantity rises
   • B.
     price rises; quantity is indeterminate
   • C.
     price is indeterminate; quantity rises
   • D.
     price falls; quantity is indeterminate
   • E.
     both price and quantity are indeterminate
6. Question 62 marks · Price floors
   A binding minimum wage set above the equilibrium wage in a competitive labor market will most likely cause:
   • A.
     a shortage of labor
   • B.
     a surplus of labor (unemployment)
   • C.
     no change, because wages are sticky
   • D.
     an increase in the quantity of labor demanded
   • E.
     a rightward shift of the labor supply curve
7. Question 72 marks · Diminishing marginal returns
   A bakery adds workers one at a time and finds that total output continues to rise, but by less with each additional worker. The bakery is experiencing:
   • A.
     diseconomies of scale
   • B.
     negative marginal product
   • C.
     diminishing marginal returns
   • D.
     falling total product
   • E.
     increasing marginal returns
8. Question 82 marks · Cost curves
   The marginal cost curve intersects:
   • A.
     ATC and AVC at their minimum points
   • B.
     ATC and AFC at their minimum points
   • C.
     AVC at its maximum point
   • D.
     ATC where AFC equals AVC
   • E.
     the demand curve at the profit-maximizing quantity
9. Question 92 marks · Shutdown rule
   A perfectly competitive firm faces a market price of 6 dollars. At its best possible output, average variable cost is 7 dollars and average total cost is 9 dollars. In the short run the firm should:
   • A.
     produce at a loss, because price covers part of fixed cost
   • B.
     shut down, because price is below minimum AVC
   • C.
     raise its price above 9 dollars
   • D.
     produce, because in the short run firms never shut down
   • E.
     exit the industry immediately
10. Question 102 marks · Monopoly & marginal revenue
    For a single-price monopolist, marginal revenue is less than price at every output beyond the first unit because:
    • A.
      the monopolist faces a perfectly elastic demand curve
    • B.
      to sell an additional unit it must lower the price on all units sold
    • C.
      marginal cost rises as output expands
    • D.
      monopolists always produce where demand is inelastic
    • E.
      price is set by the government regulator
11. Question 112 marks · Monopolistic competition
    In long-run equilibrium, a firm in monopolistic competition earns zero economic profit and produces where:
    • A.
      $P = MC =$ minimum ATC
    • B.
      $P = ATC > MC$, with excess capacity
    • C.
      $P > ATC > MC$
    • D.
      $P = MC < ATC$
    • E.
      $MR = MC$ and $P =$ minimum ATC
12. Question 122 marks · Game theory
    Two rival firms each choose whether to advertise. If both advertise, each earns 4 million dollars; if neither advertises, each earns 6 million dollars; if only one advertises, the advertiser earns 8 million dollars and the other earns 2 million dollars. The Nash equilibrium of this game is:
    • A.
      neither firm advertises, because joint profit is highest
    • B.
      both firms advertise, because advertising is a dominant strategy
    • C.
      exactly one firm advertises
    • D.
      there is no Nash equilibrium in this game
    • E.
      both firms advertise only if they can collude
13. Question 132 marks · Factor markets
    A profit-maximizing firm hires labor in a competitive labor market at a wage of 90 dollars per day. It should hire additional workers up to the point where:
    • A.
      the marginal product of labor equals 90
    • B.
      the marginal revenue product of labor equals 90 dollars
    • C.
      the average product of labor is maximized
    • D.
      total output is maximized
    • E.
      the marginal revenue product of labor equals zero
14. Question 142 marks · Negative externalities
    The production of paper pollutes a river, imposing costs on downstream users that the paper mill does not pay. Relative to the socially optimal outcome, the unregulated market for paper produces:
    • A.
      too little paper at too high a price
    • B.
      too much paper, because marginal social cost exceeds marginal private cost
    • C.
      the efficient quantity, because pollution is a fixed cost
    • D.
      too much paper, because demand overstates marginal social benefit
    • E.
      too little paper, because the externality raises production costs
15. Question 152 marks · Public goods
    A public good is underprovided by private markets primarily because it is:
    • A.
      rival and excludable, so firms overcharge for it
    • B.
      non-rival and non-excludable, so consumers can free-ride
    • C.
      always produced by natural monopolies
    • D.
      subject to diminishing marginal returns
    • E.
      non-rival but excludable, like a toll road
16. Question 1610 marks · Monopoly
    Monopoly. A single-price monopolist faces the market demand curve $P = 20 - Q$, where $P$ is the price in dollars and $Q$ is output in thousands of units. Marginal cost is constant at $MC = 4$, and there are no fixed costs.
    $P = 20 - Q, \qquad MC = 4$
    (a)

    Calculate the profit-maximizing quantity and price. Show your work.

    [3]
    (b)

    Calculate the monopolist's profit at this output.

    [2]
    (c)

    Identify the allocatively efficient level of output and explain why the monopolist does not produce it.

    [2]
    (d)

    Calculate the deadweight loss caused by the monopoly.

    [3]
17. Question 176 marks · Negative externalities
    Externality. The market demand for a chemical is $P = 16 - Q$ and the industry's marginal private cost is $MPC = 4 + Q$ ($P$ in dollars, $Q$ in tons). Production releases fumes that impose a constant marginal external cost of 2 dollars per ton on nearby residents.
    $P = 16 - Q, \qquad MPC = 4 + Q, \qquad MEC = 2$
    (a)

    Calculate the unregulated market equilibrium quantity and price.

    [2]
    (b)

    Calculate the socially optimal quantity. Show your work.

    [2]
    (c)

    The government imposes a per-unit tax on producers to correct the externality. State the efficient tax and the new equilibrium price paid by consumers.

    [2]
18. Question 186 marks · Perfect competition: short run vs long run
    Perfect competition. Wheat is produced in a perfectly competitive industry. The market price is 10 dollars per bushel. A representative farm is producing its profit-maximizing output, at which its average total cost is 8 dollars and rising marginal cost equals price.
    (a)

    Is the representative farm earning positive, zero, or negative economic profit in the short run? Explain.

    [2]
    (b)

    Explain what happens in this industry in the long run, and state the resulting market price relative to average total cost.

    [2]
    (c)

    A farmer complains that "zero economic profit means farming isn't worth doing." Briefly evaluate this claim.

    [2]