Free Response Question Prep Handout
The AP Exam will require you to answer three free response questions after you have completed 60 multiple
choice questions. The FRQs are worth 1/3 of the total grade; the 1st question is worth half of the free
response points, with the 2nd and 3rd questions divided equally among the rest of the credits. The unit tests in
this class will consist of TWO Short Free Response Questions. The following points are some helpful tips
in preparation for these types of questions.
1. Determine what the question is looking for you to know and to demonstrate.
2. Determine what do you need to do (draw a graph, write a definition, show a process)
3. Label every part of the graph or model clearly. There are no partial points for graphs.
4. Emphasize Basic Principles.
5. Do Economics. The questions may change, but the principles do not change.
6. Use correct terminology.
7. Note when you have a two point question!!! When an explanation is expected, there will be some
verb that will indicate that in the question. The most common word used is “explain”, but you might
also see “describe” and “analyze”. If that is the case, you need to be sure to not just restate the stem
of the question as their only answer. If, however, the question states “what is” or “indicate” or your
“identify”, then a simple assertion is all that is needed. Recently, students have been asked to
“calculate and show your work”. In that case, you do need to show how you arrived at your answer. I
recommend that you underline the verbs and then answer accordingly.
The problem below is somewhat challenging and if you find it difficult, please do not fret. However, you will
have to spend more time studying: Krugman Module 4, Comparative and Absolute Advantage.
Both the European Union and the United States produce cars and television shows. Assume the following:
 Each region has 240,000 worker hours to divide between producing Cars and TV shows.
 Initially, assume workers are divided equally between producing Cars and TV shows.
 Labor costs (in worker hours) required for the production of cars and these shows are as follows:
Labor required to make a car
Labor required to produce a
television show
European Union
100
600
United States
80
400
A. What are the initial levels of production of cars and television shows in each region? What is the total
production in the two regions?
B. Draw the production possibilities curves for the two regions.
C. Which region has an absolute advantage in producing cars? Which region has an absolute advantage in
producing television shows?
D. Which region has a comparative advantage in producing cars? Which region has a comparative advantage in
producing television shows?
E. Starting with the initial levels of production, demonstrate how comparative advantage can be exploited to raise
joint production for a greater amount goods and services consumed.
Both the European Union and the United States produce cars and television shows. Assume the labor costs
(in worker hours) required for the production of cars and these shows are as follows:
Chart A: Fixed Outputs
Labor required to make a car
Labor required to produce a
television show
European Union
100
600
United States
80
400
A. What are the initial levels of production of cars and television shows in each region? What is
the total production in the two regions?
Initially, when Europe and the United States each put ½ of their 240,000 labor hours into television shows
and cars (Allocative Efficiency), the European Union produces 1,200 cars and 200 television shows while
the United States produces 1,500 cars and 300 television shows. Total production is 2,700 cars and 500
television shows.
Chart B: Fixed Inputs
Cars
Television Shows
European Union
2400
400
United States
3000
600
B. Draw the production possibilities curves for the two regions.
C. Which region has an absolute advantage in producing cars? Which region has an absolute
advantage in producing television shows?
The United States has an absolute advantage in producing both cars and televisions shows. This can be seen
in Chart B where you have fixed the level of inputs to see total output.
D. Which region has a comparative advantage in producing cars? Which region has a
comparative advantage in producing television shows?
Chart C: Fixed Inputs
Cars
Television Shows
European Union
2400 (1/6)
400 (6)
United States
3000 (1/5)
600 (5)
Europe has a comparative advantage producing cars and the United States has a comparative advantage
producing television shows (see chart C in parenthesis.) Looking at the table it is clear that Europe is worse
than the United States in both levels of production. But Europe is very bad at producing television shows
compared to cars. So Europe’s comparative advantage (least opportunity cost) is in car production.
E. Starting with the initial levels of production, demonstrate how comparative advantage can be
exploited to raise joint production for a greater amount goods and services consumed.
The main goal is to be able to trade and reach a point beyond your Production Possibility Frontier. Any trade
situation that lowers your opportunity cost compared to Chart C, will allow you to consume beyond your
initial level of production. i.e. Europe produces all cars and trades 1200 to the United States. The United
States produces 300 cars and 540 TV Shows; and then trades 220 TV shows to Europe in exchange. Europe
lowers their opportunity cost from 6 to 5.45. The United States lowers their opportunity cost from .20 to
.183.