AP Microeconomics AP Microeconomics Practice Test 2025
This is the official AP Microeconomics AP Microeconomics question paper for 2025, as set in the Model questions examination. It carries 90 full marks and a time allowance of 130 minutes, across 10 questions. On Kekkei you can attempt this AP Microeconomics past paper online with a timer, get instant AI feedback and step-by-step solutions, and track the topics where you lose marks — completely free. Whether you are revising for your AP Microeconomics AP Microeconomics exam or solving previous years' question papers, this 2025 paper is a great way to practise under real exam conditions.
| Level | AP Microeconomics |
|---|---|
| Subject | AP Microeconomics |
| Year | 2025 BS |
| Exam session | Model questions |
| Full marks | 90 |
| Time allowed | 130 minutes |
| Questions | 10, all with step-by-step solutions |
Multiple Choice
Select the best answer.
If a severe frost destroys a significant portion of the Florida orange crop, what is the expected impact on the market for orange juice?
The supply curve shifts left (decreasing supply), leading to a higher equilibrium price and a lower equilibrium quantity of orange juice
A frost reduces the supply of oranges (an input). At every price, less orange juice is available, shifting the supply curve left. The new equilibrium has a higher price and lower quantity.
A pharmaceutical company raises the price of a life-saving medication with no substitutes by 20%, and the quantity demanded decreases by only 2%. The price elasticity of demand for this medication is:
Inelastic (0.1), because patients who need the drug have few alternatives and will pay the higher price, making demand relatively unresponsive to price changes
Price elasticity = 2%/20% = 0.1, indicating highly inelastic demand. This is typical of necessities with no close substitutes—patients who need a life-saving medication will pay almost any price.
The law of diminishing marginal utility states that:
As a consumer consumes additional units of a good, the additional satisfaction (marginal utility) gained from each successive unit tends to decrease, even though total utility may still increase
The first slice of pizza provides great satisfaction; the second is still enjoyable but less so; by the fifth, additional satisfaction is minimal. Total utility still rises even as marginal utility diminishes. This principle helps explain the downward-sloping demand curve.
A firm experiences economies of scale when:
Its long-run average total cost decreases as it increases the scale of production, due to factors such as specialization of labor, bulk purchasing discounts, and more efficient use of capital
Economies of scale occur in the downward-sloping portion of the LRATC curve. Larger firms benefit from specialization, bulk purchasing, and spreading fixed costs over more units. Beyond a certain point, diseconomies of scale may cause costs to rise.
Which of the following is a characteristic that distinguishes a monopolistically competitive market from a perfectly competitive market?
Firms sell differentiated products (through branding, quality, location, or features), giving each firm a small degree of market power and the ability to set prices slightly above marginal cost
The key distinguishing feature is product differentiation: unlike perfectly competitive firms that sell identical products, monopolistically competitive firms sell products that are similar but not identical, creating downward-sloping demand curves and limited pricing power.
A factory that discharges pollutants into a river, imposing health costs on downstream communities, is an example of:
A negative externality, in which the social cost of production exceeds the private cost because the firm does not bear the cost of pollution, leading to overproduction relative to the socially optimal quantity
The firm ignores external costs, so it produces more than the socially optimal quantity: marginal social cost exceeds marginal private cost. Solutions include Pigouvian taxes, cap-and-trade systems, or regulation.
In the classic Prisoner's Dilemma, two suspects are arrested and interrogated separately. Each can confess or remain silent. The Nash equilibrium of this game is:
Both prisoners confess, even though both would be better off if both remained silent, because confessing is the dominant strategy for each prisoner regardless of what the other does
Each prisoner's dominant strategy is to confess, regardless of the other's action. Since both reason this way, both confess—even though mutual silence would be better for both. This Nash equilibrium is Pareto inferior to mutual silence, demonstrating how individual rationality can lead to collectively suboptimal outcomes.
A price ceiling set below the equilibrium price (such as rent control) will result in:
A shortage, because the artificially low price increases quantity demanded while decreasing quantity supplied, creating excess demand that may lead to black markets and quality deterioration
At a below-equilibrium price, consumers want to buy more while producers want to supply less. The gap is the shortage. In housing, rent control often leads to long waiting lists, deterioration of housing quality, and informal subletting at higher prices.
A profit-maximizing firm in any market structure will produce the quantity where:
Marginal revenue equals marginal cost (MR = MC), because producing additional units beyond this point would add more to cost than to revenue, reducing profit
The MR = MC rule is the universal profit-maximization rule. If MR > MC, produce more; if MR < MC, produce less. For perfectly competitive firms, MR = Price; for firms with market power, MR < Price due to the downward-sloping demand curve.
Cross-price elasticity of demand between two goods is positive. This indicates that the goods are:
Substitutes, because an increase in the price of one good leads to an increase in the quantity demanded of the other, as consumers switch to the relatively cheaper alternative
Positive cross-price elasticity means the goods are substitutes: when the price of Coca-Cola rises, demand for Pepsi increases. Negative cross-price elasticity indicates complements. The magnitude indicates the strength of the relationship.
Frequently asked questions
- Where can I find the AP Microeconomics AP Microeconomics question paper 2025?
- The full AP Microeconomics AP Microeconomics 2025 (Model questions) question paper is available free on Kekkei. You can read every question online and attempt the paper under timed exam conditions.
- Does the AP Microeconomics 2025 paper come with solutions?
- Yes. Every question on this AP Microeconomics past paper includes a step-by-step solution, plus instant AI feedback when you attempt it on Kekkei.
- How many marks is the AP Microeconomics AP Microeconomics 2025 paper?
- The AP Microeconomics AP Microeconomics 2025 paper carries 90 full marks and is meant to be completed in 130 minutes, across 10 questions.
- Is practising this AP Microeconomics past paper free?
- Yes — reading and attempting this AP Microeconomics past paper on Kekkei is completely free.