What this practice covers
These questions are drawn from past AP Economics papers and filtered to factor markets. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on factor markets, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Using MP instead of MRP in the hiring rule.
- Forgetting that MRP = MP × MR, and that MR = P only in a competitive product market.
- Computing MRC as the wage rather than as the change in total labour cost.
- Drawing MRC below the labour supply curve in monopsony, it lies above.
- Reading the monopsony wage off the MRC curve instead of down to supply.
- Claiming a minimum wage always causes unemployment, without checking whether the market is monopsonistic.
- Confusing the least-cost rule (MP/P equal) with the profit-maximising rule (MRP/P = 1).
- Treating labour demand as if it were independent of product demand.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Factor Markets revision notes.