For this perfectly competitive bottled water firm, the profit-maximizing output level lies directly below the point where
profit maximization (MR = MC) and economic vs accounting profit
Review profit maximization (MR = MC) and economic vs accounting profit for AP Microeconomics and try 2 free AP-style practice questions. 21 questions on this topic in AP Micro · Unit 3 · Production, Cost, and the Perfect Competition Model.
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Suppose Marisol quits her salaried job and uses her own savings and her own building rent-free to open a car-tyre shop, then sets output where MR equals MC. Which of the following costs is implicit rather than explicit?
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Answer, then see why
The price of gasoline rises 10% and the quantity demanded falls 5%. What happens to total revenue?
Not quite. The answer is B.
Why the other options are wrong
AI grading for free-response
Write your FRQ answer and get it scored point by point against the AP rubric, with the line from your answer that earned or missed each point.
Question 13 / 4 pts
Part a1 / 1 pts
Point 1: Earned
Grader confidence 94% sureReason: Correctly identifies demand for gasoline as inelastic.
Evidence: "The price of gasoline rises and the quantity falls only a little."
Part b2 / 3 pts
Point 1: Earned
Grader confidence 91% sureReason: Graph shows relatively inelastic demand.
Evidence: Draws a steep demand curve.
Point 2: Earned
Grader confidence 88% sureReason: Correct new equilibrium price.
Evidence: Shifts supply left, P1 → P2.
Point 3: Not earned
Grader confidence 82% sureReason: With inelastic demand, a price increase raises total revenue.
Evidence: "Revenue goes down."