Mill A and Mill B in Northgate pay the same competitive wage and have identical marginal product schedules, but Mill A sells its paper at a higher price than Mill B. Which of the following is correct about the two mills' hiring?
perfectly competitive labor markets
Review perfectly competitive labor markets for AP Microeconomics and try 2 free AP-style practice questions. 20 questions on this topic in AP Micro · Unit 5 · Factor Markets.
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In Westfall's competitive market for dairy processing workers, the government sets a minimum wage exactly equal to the prevailing equilibrium wage. Which of the following describes the change in employment?
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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."