2026 AP Micro FRQs Explained

Hey, how you doing micro students? This is Jacob Clifford. We have the free responses from 2026. Let's go over the answers. My first reaction, what the fart is going on? Why are these things so ridiculously easy? I mean, I don't get it. We spent the entire year working. I just can't believe they're so ridiculously easy. Here we go. They did something new for the first free response here. They actually had a game theory question first in question number one. They've never done that in 20 plus years. Cool. Awesome. I just made a video talking about game theory. So, if you watch that video, you got this. This was easy. We have two different firms here. We've got Furham and Osell. I'll just call them F and O to keep things simple and we can move along. For A, what is F's most profitable strategy if O chooses to produce sheets? Well, sheets means F has a choice between 40 million and 50 million. They're going to do 50 million, so the answer was rail. No explanation required. That's going to get you one point. Now, B does require you to explain. Does O have a dominant strategy? The answer is no. And not only do you have to explain, you have to explain using numbers. So, this is where you actually might get caught up cuz you have to fully explain it using numbers from the matrix. The best way to get the points was just to explain what's going on. So, if F chooses trucks, then O is going to choose beams because 125 million is better than 95 million if they choose the sheets. And if F chooses rail, then O is going to choose sheets because 75 million is more than 25 million. And so, they're going to choose sheets, not beams. Sometimes they choose sheets. Sometimes they choose beams. Therefore, they do not have strategy. So, O doesn't have a dominant strategy, but F does and it's actually rail, which helps you with part C. F is going to choose rail every single time, so it's up to O to decide what they're going to choose, either sheets or beams. They're going to choose sheets. The right answer here is rail and sheets. F is going to choose rail and O is going to choose sheets. That's the right answer. Now, in D, they switched it up and asked you to actually redraw this thing if F incurs a 20 million increase in their cost in rail transportation. You just had to redraw it and then change everything for rail, but only for F. Now, you have to be careful here. They're not increasing their profit by $20 million. They're increasing their costs. So, these numbers for F are going to fall by 20 million. Now, on part E, it becomes a little more traditional. It has you draw the graph. It says, "If it was monopoly and they're making profit, draw the graph. " You're going to get at least four points here, maybe even five. Now, you have to have a downward-sloping demand curve with a marginal revenue curve that's below it. That'll probably give you one point. A marginal cost curve and showing where MR equals MC is the quantity, price up to demand. That's going to be another point. Then, you have to have the ATC. Now, you don't have to show the area of profit, but you have to show that there is profit. So, the ATC has to be below where the price hits the demand curve, and you have to shade in the area of deadweight loss. Remember, that's the area of this triangle. Easy-peasy. Part F, I talked about multiple times in all my review sessions. If the government imposes a lump-sum tax, it's going to stay the same. But, it does ask you to explain. To get that point, you had to say, "A lump-sum tax does not affect the marginal cost, so it's not going to affect where MR equals MC. The quantity's going to stay the same. " Because the rest of free response was easy, they might be really strict with this one. You might have had to say, "The marginal cost and the marginal revenue won't change when there's a lump-sum tax to get that actual point. " Now, if you thought question one was easy, question two was even easier. You've done this hundreds of times. It all starts off giving you a chart with the quantity of helmets produced, the total cost, and the marginal cost. They've already done the calculation for you. And they say, "Okay, the price is set by the market. It's $60, and there's a fixed cost of 80. " First question is, "Identify the market structure. Is this perfect competition, monopolistic competition, oligopoly, monopoly? " The answer is perfect competition. No explanation required. Easy. Now, the reason why is cuz the price is set by the market. This firm is a price taker. Now, for questions B and C, they have you do some calculations. For B, they say, "What's the average variable cost of producing four helmets? Show your work. " The right answer, well, you had to figure out what the total variable cost is by subtracting out the fixed costs. So, the total cost was 200. If you subtract out the fixed costs, you get 120 which is the total variable cost. Divide that by quantity, that's going to give you $30 is the average variable cost. Again, you had to show your work. If you didn't show the work and set up those equations, you're not going to get the point. Now in C, they ask you to calculate the economic profit when they sell five helmets. To figure that out, you had to get the total revenue. So five helmets times the $60 price is going to give you $30 of total revenue. When you subtract out the total cost of 235 for producing five units, you end up with $65 of economic profit. Again, you had to show your work, set up those equations, or you don't get the point. Now in D, they ask you to find the profit maximizing quantity. To do that, just add a new marginal revenue column, compare the marginal revenue to the marginal cost. And you should keep producing as long as the marginal revenue is greater than the marginal cost. So the right answer here is eight units. But again, you had to fully explain. I bet a lot of students are going to miss this point cuz they're just going to say it's where MR equals MC. They're not going to give you that because in this case, MR doesn't equal MC. Now to get the point, you likely have to say something like you got to produce where the MR is greater MC without the MC going over, and you don't produce the ninth unit because the marginal cost is greater than the marginal revenue. But it also says use numbers. So you had to say something like the marginal cost of the ninth unit

is 65, which is greater than the marginal revenue of $60 for the ninth unit. So you shouldn't produce the ninth unit. On part E, I can't even believe this is actually on a free response. I feel like I'm like in inception. Like I don't get it. This is so easy. They tell you the firm's making profit. They say, "What's going to happen to the market price in the long run? " The answer is it's going to fall. But you do have to explain. So you have to say something like firms going to enter, which is going to increase the market supply causing the price to fall. That was easy. Let's go take a look at question number three. It all starts off with just drawing supply and demand. One point for showing an equilibrium price at $20 and a quantity showing Q1. That gets you a point. What is happening? Oh my gosh. Then they added in the idea of trade which I specifically talked about in the review session. Suppose the market price is $10, The draw that $10 price and label the new quantity Q2, which is right here. It's on the domestic supply curve. Again, no explanation required, that got you one point. Now, will total economic surplus increase, decrease, or remain the same? The answer was increase. Again, no explanation gets you a point. Now, in part C, they ask you something we haven't seen a lot on very many free responses, but I cover it in my class. I've explained it to teachers and I've explained it in my video. If there's a $5 tariff, then the world prices go from $10 up to $15. For CI, you had to show the quantity, so the price goes now up to 15. The new quantity is right here. They ask you to label it Q3. Again, no explanation required, but the concept is easy. When there's a tariff, price goes up cuz we're not paying cheaper world prices and producers, domestic producers, are going to produce more. In the last part in C, what's going to happen to the domestic producer surplus? The answer was it's going to increase. Now, this one you do have to explain. Say something like when the price goes up, now producers can produce more output, increasing the difference between what the price is and what they're willing to sell it for. Producer surplus has increased. In fact, that's a little tricky. I'm not exactly sure what they're going to allow and not allow. I'm not sure if it's just enough to say, "Well, the price went up, so producer surplus went up. " They might have you actually say something about the quantity going up as well, but we'll have to see when we see the rubric. Now, overall, I think these free responses were a cakewalk. I hope you did great on the free responses and the multiple choice questions. I want to thank you so much for watching my videos and let me help you learn and practice microeconomics this year. Even though we probably practice at this level, but you were tested at this level, that's okay. You guys are awesome. Thanks for watching. Until next time.