Key Issues for AP Microeconomics Graphs
In Advanced Placement (AP) Microeconomics, over 20 different graphs will be introduced to students. A large proportion of these will be tested in both Section 1 multiple-choice questions (MCQs) and Section 2 free-response questions (FRQs). Specifically, in Section 2 of the AP Microeconomics exam, there are three (3) questions. There is one (1) long question, which is worth 50% of the total Section 2 score, and two (2) short questions, which are worth 25% each of the total Section 2 score. The long question will require graphs, which can be in the form of analyzing a graph, manipulating the variables in a graph, or drawing a graph from scratch. It is vital that students are able to accurately reproduce and manipulate graphs. However, there are a few key obstacles that students must remember.
Check Your Labeling
AP graders will look for clear and accurate labeling. In the scoring guidelines for FRQs involving graphs, multiple points will be awarded for correct labels. This includes labels for all your curves and equilibrium points, but also your axes. Incorrect labels will negatively impact the analysis of the graph and, consequently, points will be lost. Committing to memory every aspect of the graphs is essential.
Identifying the equilibrium points in graphs is critical in AP Microeconomics graphical analysis. The equilibrium shows the point at which the market forces are balanced. The equilibrium may be simple, such as where supply meets demand, but students must take extra care when curves shift or elasticities change. Students often neglect the simpler tasks, which causes careless errors. Double-checking your axes and curve labels is a good habit that is highly encouraged.
Below is a simple supply and demand graph showing the effects of a tax on the supply of a product. It is common for FRQs to ask students to specifically label certain points on the graph. In the example below, the before-tax equilibrium price is clearly labeled at point PE and the before-tax equilibrium quantity is clearly labeled at point QE. However, the after-tax equilibrium price and quantity must also be identified and labeled, which may provide more of a challenge.
Find the Profit-Maximization Point
Students need to ensure they can label profit-maximization points. This is critical in any market structure analysis. The profit maximization point is where marginal revenue equals marginal cost. This is true because if marginal revenue exceeds marginal cost, a firm will increase output to increase its profits. However, if marginal cost exceeds marginal revenue, a firm is making a loss and will reduce its output. All firms will seek to operate at the profit maximization point, regardless of the respective market structure, and therefore it is imperative that students identify this point or any analysis of the firm’s decisions will be incorrect.
Below is an example of a monopoly graph. The profit-maximizing price PF and the profit-maximizing quantity QF are labeled.
Identify the Correct Areas
A question that commonly appears in the AP Microeconomics exam is one that asks students to identify and shade the area that represents the firm’s economic profits or losses. This type of question will be worth a significant amount of points as this is a more advanced level question, that will involve drawing a graph. Students will be expected to accurately reproduce the graph and shade the correct profit or loss area. The key here is to first identify the profit maximization point. The average total cost curve must also be correctly drawn to identify the area of profit or loss.
Final Remarks
There are many other graphs in AP Microeconomics that have not been mentioned but it is important that students learn them all in detail. Even the basic graphs, such as the production possibility curve, may be tested in the AP Microeconomics exam. It may seem like a daunting task for students, especially new economics students, to learn and analyze all the graphs within AP Microeconomics. If you are looking for AP Microeconomics help, please do not hesitate to contact the Presidio Education® Team for more information!
