Micro 2017 FRQ #1- Perfect Competition, Long-run, Supply, Demand, Price Ceiling

Jacob Clifford guides students through the 2017 microeconomics free response question, focusing on perfect competition. He explains how to draw side-by-side graphs, the short-run effects of increased ethanol demand on the corn market, and the long-run market adjustments. The video also covers the impact of a binding price ceiling on the corn market, emphasizing the importance of labeling and explaining graphs for AP exams.

What is the primary focus of the 2017 microeconomics free response question discussed in the video?

• Consumer behavior analysis

• Perfect competition and graph labeling

• Oligopoly market structures

• Monopoly pricing strategies

In a side-by-side graph for perfect competition, what does the firm take from the market?

• The market's quantity

• The market's supply curve

• The market's demand curve

• The market's price

When demand for ethanol increases, what happens to the demand for corn in the short run?

• It shifts to the right

• It becomes perfectly elastic

• It remains unchanged

• It shifts to the left

What is the expected long-run effect on the corn market when firms enter due to profit opportunities?

• Price increases and quantity decreases

• Price decreases and quantity increases

• Price and quantity both decrease

• Price and quantity both increase

How does an increase in corn prices affect the supply of soybeans?

• Supply of soybeans increases

• Supply of soybeans decreases

• Demand for soybeans increases

• Demand for soybeans decreases

What is a binding price ceiling and where is it placed relative to equilibrium?

• Above equilibrium, causing shortage

• Below equilibrium, causing shortage

• Above equilibrium, causing surplus

• At equilibrium, causing no effect

In the context of a price ceiling, what determines the quantity purchased by consumers?

• Quantity demanded

• Quantity supplied

• Market equilibrium quantity

• Consumer preference