5 Steps to a 5 AP Microeconomics, 2014-2015 Edition

TIP 3: Draw your graphs large enough for you to clearly identify the area of profit/loss. If

your graph is the size of a postage stamp, it becomes more difficult for you to identify all

relevant parts. It is also very tough for the reader to find all of the points.

When completing graphs, label everything and indicate direction of change and you

will lose fewer points.

Part (B): 4 points

i. 1 point: Showing the leftward shift in market supply due to exit of firms.

1 point: Showing how the decreased supply increases the market price and decreases

market quantity.

TIP: You can lose points if you do not indicate, somehow, that the supply curve has shifted

leftward. Do this with arrows or with a clear numbering system like S1 and S2.

ii. 1 point: Upward shift in the P=MR curve for Bob’s Beans.

1 point: Showing Bob producing at the point where ATC is minimized.

Question:OK, so what if I screwed up part (A)? Am I doomed in part (B)?

Answer:Maybe not, but you don’t want to risk your “5” on generous partial credit.

Suppose in part (A) that you drew a graph that showed Bob earning positive profits rather

than losses. This is incorrect, and so the 4th point in part (A) cannot be given to you.

But—and here is where the partial credit may differ from year to year—if in part (B) you

correctly described the long-run adjustment to profits, you may (and I stress may) receive

some or all of the 4 points in part (B).

Part (B): Alternative scoring to an incorrect presumption of profits in part (A).

1 point: Because positive economic profits were being made in part (A), firms enter the soy-

bean industry, shifting the supply to the right.

1 point: The higher supply for beans decreases the price and increases the market quantity.

1 point: Downward shift in the P=MR curve for Bob’s Beans.

1 point: Showing Bob producing at the point where ATC is minimized.

Part (C): 4 points

1 point for a correctly labeled graph with a downward-sloping market demand curve and a

downward-sloping MR curve that lies below demand.

i. 1 point: Showing the quantity where MR =MC.

ii. 1 point: Showing the price from the demand curve.

iii. 1 point: Identifying the area of profit.

S 1

D

AT C

$ $

Quantity BB

Quantity Mkt

AVC

S 2 MC

Q 2 Q 1

P 1

P 2

q 1 q 2

P 1 = MR = d

P 2 = MR = d

182 › Step 5. Build Your Test-Taking Confidence

TIP

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