[Music] [Music] Here we go. It's time to get rocking. Hey econ students around the world. I'm excited. This is the big moment you've been waiting for. We're going to talk about the exam predictions that I have for this year's free response. But first, I want to say thank you for joining me. Uh let me know in the comments. I'll be keeping an eye on the comments. Uh you know what uh what you need. But first, let me do a couple things. Uh welcome. Glad you're here. Let's jump straight into a few things. Uh we're going to talk about the AP exam. We're going to talk about definitions, rules, graphs, and shifters, some equations. We're going to go quick. gonna get things covered, getting it things moving, and then we're going to go from there. Uh, and then I'll do, like I said, my predictions, and then I'll hang out, ask uh ask me some questions, and uh we'll figure things out. But right now, let me know in the comments if it's making sense to you. Uh if you can hear me, if there's any audio issues, now is the time to tell me. So, uh we're good. All right. First things first, let's talk about uh the AP exam. Uh let me back up. Thank you. Thank you. Thank you. Thank you. I'm excited to be your online teacher to help your teacher in the classroom. Uh if you got my ultimate review packet or the ultimate exam slayer, you guys are awesome. There's also a bunch of other subjects if you haven't already seen those. The AP gov one is really awesome. Uh take a look at those. But thank you so much for supporting me and my channel. You you guys are great. Let's talk about the AP micro exam first. Obviously, you know, there are uh three fair response questions. There's going to be a long and two short fair response questions. There's going to be a ton of graphing in there, so make sure you know the graphs, and there's going to be 16 multiple choice questions. If you haven't already seen it, there's a fulllength uh practice exam in the ultimate uh ultimate review packet. There's one inside there, and it looks just like the actual AP exam. So, try that one if you haven't already done so. It gives you a report to see how you actually did at the end and tells you, you know, a breakdown for each unit. There's also two more of them in the ultimate exam slayer. So, take a look at that if you need some more practice. Let's move away from that stuff and talk about the test. Let's talk about the breakdown to get a five, four, a three, two, or one. Some of you are trying to get a five. Some of you trying to squeak away a three. Uh, keep in mind, you're not trying to get 100%. You're trying to be strategic here. If you're trying to get a five, awesome. Work on the hardest questions. Focus on that stuff. But really, the breakdown looks something like this when it comes to AP exam. And remember, your score, it's one-third the free response, uh, twothirds the multiple choice. So, if you do really well on the free responses, I mean really on the free responses, you only have to get a few questions on the multiple choice, right? You know, you get 10, 15 questions, boom, you just got yourself a three. But really, when it comes down to it, uh you got to know everything. You got to know all the main pieces. Um if you saw my exam slayer videos, you know this this course is really three units. If you know those three units, units two, units three, and units four is 75% of that exam. So, make sure you know those units first. But that's the breakdown to get a five, four, three, two, or one. It changes every year. Somewhere around 50 to 55% of the questions correct will get you that three you're looking for. If you're trying to squeak away that three, if you're trying to get a five, right? You know, it's not 90% or higher like your classroom. It's, you know, 75 to 80% higher than that is going to get you your five. So, keep that in mind. You're not trying to get 100%. Don't freak out if you don't know everything. There's some things you might not know. If you never learned monopsiny, don't worry about it. Drop it. You only got two days left. Don't worry about it. Especially if you don't know per competition or a monopoly. Focus on the big concepts, that lowhanging fruit. Let's start with a game right now. In the comments, I want you to list as many possible just looking at this question. If you saw a multiple choice with this question, what might they ask? I'm going to take a look at the comments right here in a second, but what could you see them ask about? And try to list it out on the comments right now. What sort of questions would you see them ask uh on with this as the stimulus for pre response? I'm looking at you guys right here. You guys are all coming in. Uh I love it when you guys I'll sometimes people say, you know, give me a shout out to my teacher. I'll do that a little later. Uh people talking about shifting. Yes. Dead weight loss, how to calculate it. Consumer surplus, producer surplus. Some of you guys are going a little further. That's good. Excise taxes. Awesome. Ceilings, floors, awesome. you could see all those kind of questions. Um not maybe because the way it's written that quantity doesn't really show uh the area of like consumer surplus if there was international trade but international trade. So instead of regular surplus or regular shortage possibly now the point what I'm trying to do is this okay understand that if you if you can answer that question if you know what they could ask you in really good shape that means you understand enough things to be okay what kind of questions might I see on this actual test? That's what we're going to be doing for the next, you know, few like 10 minutes here. I'm gonna say, okay, let's let's predict what you're going to see on the test based on what's happened in the past and your understanding of economics. So, it all starts off with some definitions. Okay, take a look at this list. These are the things that you might see just pure definition questions. If you watch the video inside my ultimate exam slayer, it's free. You can go watch it right now if you want. It breaks down the types of questions you're going to see. And the first one are those definition questions. You'll see a question what is economies of scale or uh what is a dominant strategy or what is antitrust laws or you know the definition of a public good you know non-exclusion shared consumption those kind of questions you'll see they're very clear you just got to know what it is so go down this list and mentally check them off okay say do I know the definitions of these yes you have to be able to calculate consumer surplus and producer surplus or calculate dead weight loss that's the next level but the first level is can you just define those things in a multiple choice question. Out of 60 multiple choice questions, you'll see at least six that are just definitions. So, six really easy lowhanging fruit fruit questions that you just have to know. Uh, this is the kind of things you're going to see. So, market economy versus a command or uh, you know, a centrally planned economy. They might have a question of that. The first question on the test is usually just about scarcity. It's your classic scarcity question. So, there's going to be some really easy questions. There's also going to be some tricky ones and some mathy looking ones. So, that was the first thing I want to show you is is make sure you those know those definitions. I'm going to move on. Let's talk about the rules. The most important rule is by far number seven. You got to know firms always produce where the MR equals MC. But take a look at these other rules. And I'll I'll let you think and look at them for a little bit. Uh when you look through your test, you're going to see these rules. The total revenue test, which has to do with elasticity. Remember, if the total revenue goes up or if the price goes up and the total revenue goes up, then the demand is inelastic if you remember that from that video. But basically, these are all the rules you're going to see, the ideas you're going to see. Understand for a perfectly competitive product market, there's a horizontal demand curve. That's the rule. It's a price taker. It's it's always the same. That's a rule. For a monopoly, you've got demand and marginal revenue. It's always going to be like that for a, you know, a nonpriced discriminating monopoly. So took take a look at this list. You can kind of see these are some of the rules you're going to see on there. The one's the most important. Like I said, number seven, you got to know that. You're also going to see a question about the shutdown rule. When the price falls below the average variable cost, you know that rule. Again, all I'm really showing you here, I'm not trying to go over content per se because I got videos to do all that stuff. I'm doing a quick reminder and you know, right now bake some of those thoughts you have like, "What about this? What about this?" And I'll answer some of your questions after I get through my predictions. Okay, those are the rules you have to know. Question is, do you know them? I hope so. Next one are the graphs. Now, when it comes to this class, you're going to draw at least four different graphs in the free responses. They're going to have you like, okay, draw this graph. You have to be able to draw it. And really, these are the only graphs that you have to draw. Production possibility curve, not the most important graph. I mean, they've put it on a free response before, but very rarely do you ever draw. You more likely to draw it in macro than micro. demand and supply. Very rarely do they have you just draw it on its own. Usually, it's with the side by side graphs for a market in a firm. Um maybe a ceiling and a floor. Again, they usually don't have you draw those things, but you'll see them on the multiple choice questions. So, if you, you know, understand a ceiling, a floor, where's consumer surplus, dead weight loss, all that stuff. Um the per unit tax, the idea of uh you know, a tax on a market might be a graph they can have you draw or a graph they give you. Now, when it comes to fair responses, it usually works out this way. They either give you the graph or they have you draw the graph. If if I was a student, I'd be like, "Just give me the graph and I'll analyze the graph because I understand what's going on." But those questions are a little harder. So hopefully hopefully you get the ones where they have you draw the graph and like you know you know how to draw monopolist competition in the long run or sidebyside graphs for perfect competition or a monopoly. The AP exam in recent years is getting a little more advanced. Back in the day it was just like draw monopoly show the area of profit. You know now they're doing draw monopoly and show the area of total cost. Right? you know where it is, but because you're so used to drawing profit, you might like like just shade that in and not pay attention. So read the question carefully. In fact, you might not know this, but AP does not stand for advanced placement. It stands for answer the prompt. AP means answer the prompt. Read the question. It'll tell you what to do. Again, the question is, can you do these things? The ones that's not a graph is the payoff matrix, right? So the idea of you know finding dominant strategy and that whole that whole concept it's not a graph but it is a chart and it's a skill. I have a video that's you know every graph you need to know. Make sure you watch that video the morning of the actual exam. You sit down you take the test sit right before you take the test as you're walking to the exam center. Watch that video. It'll get all those grass kind of back in your head. Um most important thing is you have to be able to draw them. You're going to miss so many response points if you can't draw those grass. So feel extremely comfortable drawing a negative externality or a positive externality or a sideby-side grasp for perfect competition in the labor market. Okay, last thing. Let's do a little bit of practice here. Your teacher might have shown you this. That's fine. Let's say there was a question that said, uh, draw a perfectly competitive firm in the product market showing profit. So, which one of these is the correct graph for a perfectly competitive firm show earning profit in the short run? That's the way they word it, too. and and and if they had you draw it, they'd actually be more specific. They'll say, you know, label the price PF and the quantity QF. Make sure to use those labelings. It's AP. Answer the prompt. All right, I'm looking at the comments. Let's see what you guys say. Which one is the correct graph for this correct graph? Looking for the correct graph. Give me the correct number. Okay, all these different answers are coming in. You guys are awesome. All right, good idea. Good idea. All right, you ready? The right answer is they are all incorrect. Every single one of these is wrong. And this is proving my point about graphs. Details matter. When uh the graders, I was a table leader and a grader for years. When the graders sit down, they're looking for details. It's not good enough to look kind of like it. It has to be exactly correct. So each one of these is wrong and for different reasons. Um now the good news is this you get kind of partial credit for graphs. So the way this would normally work out for this particular graph they said draw sidebyside graphs for perfect competition. Uh the individual firm would get three points. One point for having a horizontal demand curve labeled you know demand equals marginal revenue at the price set by the market. So you get one point. So all of these get at least one point. That's good. Even if you don't know anything, let's say you just don't know it, at least put something. It was the worst when students would dry hand turkeys or or screw around or do things and I have to grade. It's like you know something, right? So at least a horizontal demand curve. They all would get at least one point, but they're all wrong for different reasons. The second point would be you have to identify where the MR equals the MC. Look what the quantity is for each one of these. For graph number one, that's correct. For graph number two, that's incorrect. Right? For graph number two, the the marginal revenue does not hit the marginal cost at that quantity. They're producing the wrong darn quantity. For number three, the quantity is correct. And number four, the quantity is correct. But question two, the quantity is not correct. So some of these would get two points, right? Right now, number two only gets one point. The last thing is the area profit, the ATC has to be below the actual price. And so take a look right here. you'll see or take a look is they are all incorrect, right? Number one is correct in because it's showing a loss. So, it only get two out of the three points. Number two is only going to get one point because they're producing the wrong quantity. Don't ever produce the wrong darn quantity. That rule is the rule for a reason. You produce more than MR equals MC. And then number three is weird. Like, why the heck is this profit coming down below ATC? If I see number three on a graph, if I see that when a student does it and I'm reading their free response, I know it's gone. This kid tried to memorize the graph. They don't really understand what the heck they're doing. They're just drawing things. My teacher said, "There's a box somewhere around here." And they're just labeling random stuff. So that if you drew number three, you're definitely confused. You don't understand really what's happening. And number four is your classic mistake of just bad labeling, right? The ATC and the marginal cost are switched up and that actually makes the quantity wrong. Actually, I was misspoke earlier. Number four, the MR equals MC is on the other sides. I don't know if you can see my you can't really see my but marginal cost has to equal the demand curve and that quantity is actually wrong. So that last graph number four is actually the wrong quantity and only get one point. What's my point? I'm not trying to teach you a bunch of stuff. I got videos that teach you stuff. I'm trying to remind you that the graph details matter. If you can drop Monopoly, make sure you can draw the entire thing and get the correct box. For Monopoly making a loss, make sure you can draw that box. monopolist competition. Make sure the ATC is tangent at that demand curve. All those concepts are all those details actually matter when it comes to uh you know getting the points you deserve and you deserve these points. Take these points. They're waiting for you. Grab them. Take them. You know, they're they're yours. All right, let's move on to equations. There's equations you have to know. There's things they're going to ask you. You know, they're going to ask you maybe about opportunity cost using a chart for the production possibilities curve or, you know, when it comes to, you know, the idea of comparative advantage. Remember, when it comes to compared advantage, they don't ask that many questions on the free responses. In previous years, they've asked one uh question on compared advantage. So, if you're if you're running out of time right now, don't spend all your time on compared advantage in terms of trade. You might see one. You'll definitely see one multiple choice question. Maybe two and maybe a free response, but I don't think so. But that's that's what I think based on the past. Make sure you can calculate marginal. Marginal is the change, right? So the change in the total benefit divided by the change the change in output or something like that. So make sure you calculate marginal benefit marginal cost um all those other marginals come with it. So you know marginal resource cost or all those things same idea calculate marginal make sure you can calculate consumer and produce surplus. It's 1/ half base times height. So make sure you can spot the so there's there's different levels right there's like what is consumer surplus right? Then there's where is consumer surplus? So they might have letters in the graph. You go okay is A B C D is the area of this triangle or calculate the consumer surplus. If you can calculate it that means you can do all the other ones too. You understand what it is. You know where it is. You can calculate it. So make sure you calculate consumer and producer surplus. Uh understand how to calculate elasticity. There is a a free mult uh worksheet inside my ultimate review packet where I have you just practice elasticity questions like calculating the income elasticity, the cross price elasticity, the demand and the supply elasticities. They're not particularly hard. The only thing that's tricky, remember, if your teacher taught you the midpoint formula, you don't need that thing. It's a little more complicated. If you're practicing using uh chat chute, it's going to ask you midpoint formula questions and it's gonna it might ask you questions that are beyond actually what the AP test is going to ask you. So you have to be able to calculate percent change. That's the first one. So you know price went from 15 down to 12. What's the percent change? You have to be able to calculate that and then understand the actual equation. It's the percent change in quantity divided by the percent change in price. So make sure you can calculate it. Remember for demand it's always negative. that actually matters. For supply, it's going to be positive. And then for cross price and income, it all depends if it's positive, negative. Again, I don't want to spend too much time talking about content. Remember, I have videos that cover all this stuff that are a lot faster than me just talking to you in a live video. But keep in mind, that's going to be something you're going to see. You have to feel really comfortable with those cost curves, right? Cost curves are awesome. Be able to calculate average total cost, average variable cost, average fixed cost. Um, usually they don't give you a chart like on a free response. They don't give you a chart like your teacher did. and like you know fill in the columns but they will ask you questions either in the multiple choice or uh in the free responses where you you know what's the average total cost of six units or something like that or or maybe even more complicated they give you the average total cost and the fixed cost and you have to figure out the average variable cost. So if you understand the relationships between those things you're fine. Again I have great resources for you in the ultimate review packet and in the exam slayer. I have a ton of questions for unit three. Remember I'll say it one more time. It's unit two, three and four where the bulk of this course is. Focus your energy there. If you feel really comfortable with those, then you can move on. I would say the next unit in terms of importance is unit five. That's the idea of, you know, labor markets. Then unit six with externalities. And then finally, unit one is the in my opinion the least important because it's so easy. Scarcity, production possibility curve, opportunity cost. Those are all pretty easy concepts for the most part. Okay, last one is calculating profit. Remember they can give you a chart or they can give you the graph. A lot of times they'll give you the graph and you have to given that graph identify you know the area of profit on the graph for a monopoly or perfect competition or they might give you a chart. It's exactly the same. It's just chart form. They'll say here is the you know quantity of output. Here is the total cost given this price. How many units you should produce? You have to identify how many units they produce where M equals MC and then calculate how much that profit is. Make sure you can do both those skills. Again, I have videos that have you do both of those on YouTube and I have an extra practice chart video inside the ultimate review packet as well. At this point, it's just all about practice really. I mean, you're not here to learn anymore. Let's just be honest. You you learned what you've learned. Now, it's time, okay, with what I have learned. What can I do with it? Do I understand it at the level I need? So, at this point, it's just time to do some practice multiple choice questions or the free responses that I have inside the ultimate review packet or whatever it is. find those things that you need to practice and practice. Don't worry about learning new concepts. Um, all right. That said, ladies and gentlemen, it's now time. Oh, speaking of practice, like I said, I have some uh key equations practice sheets uh inside my resources. Take a look. I don't want to push my stuff too much. If you if you like it, you like it. We'll move on. Here's a list of things that you absolutely have to be able to do. If you can do these things, you're you're looking you're looking at a three guaranteed if when you read through this list. So, calculate maximize uh calculate maximize marginal utility. That's using the margin utility rule. Remember, you know, you're looking at, you know, buying two separate things and you have a certain income, you got $11. How can you spend $11? You calculate the margin utility per dollar. I have a video, free video on YouTube for unit one. Uh the unit summary videos. Really, it's those unit summary videos where this is a good time to watch them. They kind of summarize everything, put them back in your brain and have you calculate in practice. Identify, calculate consumer surplus, producer surplus, dead weight, loss, identify ceilings, floors, taxes, and quotas. This is all unit two stuff. You know, using supply and demand, the whole elasticity coefficient, applying the profit maximizing rule. So when it comes to producing output, doing all the cost calculations and revenue calculations on a chart and on the graph, identifying the shutdown rule, shutdown point, uh comparing the per unit and lumpsum taxes. If you have questions on that, we can talk about after I do my predictions and do the Q&A here. Uh identify the elastic and inelastic range of a demand curve. That's something to ask over and over again for some reason. The elastic range is when the marginal revenue is positive. Your teacher covered this probably in detail. When the marginal revenue is negative, that means the demand is inelastic. I can draw that for you too later if you guys want to see that. Um, identifying socially optimal output for a monopoly. So, understanding that a monopoly intentionally underproduces when they're not regulated because they want to maximize profit and you know to produce the amount society wants is where the demand equals a marginal cost. Understanding the idea of dominant strategy, Nash equilibrium, game theory is either one of those things you can either do right now or you can't do right now. uh because it's always the same. They give you a question, they give you the numbers and you can either, you know, read the chart and understand if this person does this and this person does that, then what should the other person do and then use that to figure out the dash equilibrium or you kind of can't do it. Um game theory is pretty important though. They could ask you that on a free response this year. Uh so if if it's on a free response, you gota So that's one of the ones that if you really don't let's say you had a teacher that just didn't teach much and it happens. they're new to teaching the course or or you're self-studying and you just never got to game theory, make sure to practice game theory. Anything that's could be its own full fair response, you have to make sure you're you're good at um identify uh no applying the profit maximizing rule for hiring workers is something that's super big. And then um the last one is uh calculating MRP and MRC. The the last one on the list you can't see is externalities. So number 14 on that list, I don't know why I got cut off, is being able to understand externality, spot it on a graph, identify dead weight loss, and be able to draw that graph as well. If you can do these, if you're going check, check check. And let's say out of these 14, you feel comfortable with 10 of them or 11 of them. Good. Remember, you're not trying to get 100%. You're good. All right. Anyways, I hope that's helpful. If you have questions, let me know. But it's time to move on to those free response predictions. Now, let me give you a warning here before we begin. I in the past I've been super close. There's been times where I'm I'm dead on and there's other times where I'm not even close. Please. And and three days after AP exam, I'll make a video going over the answers and, you know, seeing of all the teachers who submitted ideas, who got the, you know, who was closest. The thing here though, I want you to know is don't get mad at me if I'm wrong. I have no clue. I I don't talk to anyone who writes the exam. No one really knows. I'm just looking at past free responses. I'm just taking a guess here. And this year, I'm going off the rails. This year, I'm just going for it. A lot of times I'll pick something that's like kind of in the middle and be like, uh, we'll see. This year, I'm just going, here's what I think it's going to be. And if I'm right, I'm wrong. And if I'm right, I'm right. If I'm wrong, I'm sure people will tell me about it. But don't get mad at me. And don't spend all your time studying this. If like, I haven't done anything. I'm only going to do these free responses. Don't do that. Here's what I think it is. You guys ready? Drum roll, please. Free response number one is either going to be perfect competition with sideby-side graphs. That's what they always ask. Or a monopoly. That's usually what it is. Years ago there was a question on monopoly competition. I think this year it's going to be a monopoly. I think they're going to do a monopoly. And not only that, I think this is the year. Back up. Let me back up. When it comes to AP exam, there's two different sets. So you could be at the same exact school sitting right next to somebody and they have different fear responses. It it happened in my school all the time and it's actually kind of annoying because if you're like I would have done well in that fear response they give me this fear response but you never really know what they're going to give you. But there's two different sets and so I'm just saying set one set two could be different things. Last year one was monopoly one was perfect competition. I say set one this year is going to be a monopoly. When it comes to it, again, either they ask sideby-side graphs, they ask you a monopoly, and they say you have to draw it, or they do what I think it's going to be, and it's right here. I think they're going to ask about a natural monopoly, except they're going to give you the monopoly. So, the free response I'm referring to is like the 2023 uh set two, free response number three. You don't go do it right now, but understand what I'm talking about. I'm talking about they're going to give you a natural monopoly, and they're going to ask you a bunch of questions starting off with, you know, the easy softball. Where's price and quantity unregulated? And then maybe a question about the elastic inelastic range or where total revenues maximize. Remember total revenue is maximized where the marginal revenue hits zero. U maybe a question about a price ceiling to get the the get rid of dead weight loss. So like you know where would you put a price ceiling to you know result no dead weight loss to make this thing you know an efficient market. Uh and then maybe jumping into lump sum and perunit taxes. They love to ask questions about what's the effect of a per unit tax which does you know affects the quantity and a lump sum tax or subsidy that doesn't affect the quantity. Uh and then I think they're going to jump into negative externality maybe even in that same question say okay another you know move away from the monopoly and say okay assume that there's uh another product that creates negative externality draw that externality. So make sure you can draw either a negative or a positive externality as well. Remember, they're always going to have you draw. You're gonna have to draw. There's no way they're not going to in this question. I think this year though, they're going to give you the graph for Monopoly, but have you draw something else. Um, again, that's off the rails. That's that's normally that's not the case. I'm kind of going crazy here. Usually, it's perfect competition or monopoly. Make sure you can do all three. Make sure you can draw sideby-side graphs in the short run showing profit or loss or in the long run. Right? Side-by-side graphs. Can you see that? I don't know if you can see that. side-by-side graphs or make sure you can draw a monopoly making a profit or making a loss or like I say here analyze a monopoly given the information that they give you on the actual graph. That what I think is first response. Am I right? I don't know. We'll find out. Number two, I think is going to be boom. I think it's time for an excise tax question. I think they're going to give you supply and demand good old fashioned supply and demand graph kind of like the one I have up here. And they're going to say uh first calculate the elasticity of demand. If the price falls from you know 120 down to 100 and quantity does whatever quantity does calculate the elasticity demand coefficient. And remember they always ask you to show work. So make sure you show the actual work for that. So I think they're going to have you do that and then I think they're going to say okay if there's a tax of I don't know let's you know a $20 tax or $30 tax on this graph. Again I stole this graph from their free response. I don't think this is actually it, but there's a tax on there and you have to know the supply is going to shift to the left by the vertical amount of the tax. And then you have to identify things like where is the producer surplus or consumer surplus, where's the dead weight loss and definitely where is the area of tax revenue that goes with the government. There's a video that I made on YouTube. It covers everything you know about excise taxes. I think that's what the free response is going to be on and maybe it's going to pivot to talk about price controls. Assume instead there was a price ceiling at this price and what would be the result like what would be the quantity. uh they even could pivot over to international trade. So if the price instead was at 30 and we could buy this from another country, you know, where would be the consumer surplus or something like that. Um again, I'm going crazy here because I'm not there's no graph, right? They're going to give you the graph, but you don't have to draw the graph in this one. So like I said in the very beginning, you have to draw at least three or four graphs. Uh I think this one may they might not actually give you a graph that you have to draw, but you'll have to be able to use theirs. Third prediction for the 2025 fair responses I think is going to be side byside graphs for perfect competitive labor market. This is unit five starting off like there's a firm they hire workers and perfect competition. Uh identify the wage in the quantity in the market. Identify the wage and quantity for the firm. Make sure you hire MRP equals MRC. drawing that graph and then some sort of change in that market whether it's a minimum wage or a decrease in the supply and you have to show it on both graphs or something weird is happening. You know they could even do the classic question of like let's do assume workers are more productive for just this firm. So not the market but just this individual firm has more productive workers. How would that affect the quantity of workers hired? That would increase the demand because those workers are more productive. You'd want to hire more of them because they're more valuable. Something like that along the along the lines. But they're gonna ask you a question about that and at the end I think because they always have to work in perfect competition product market somewhere they you know pivot and say okay uh assume you know these workers are also at a perfect competitive product market and there's some sort of change and they have to explain something about the product market as well. Remember perfect competition when we talk about perfect competition there's two types when you see perfect competition on the test. There's perfect competition product market which is you know producing oranges and then the the workers that fertilize the fields those are the perfect competitive labor market. So be careful you see the idea of perfect competition. I'll say it one more time so we're all in agreement. I I have no idea. These are just my predictions. These are just my guesses. But this is what I think this year's fear responses are going to be on for set one. For set two I don't know. We'll see. Uh if I was being, you know, if if I was being a little bit more uh you know, conservative in my guesses, it would be monopoly or sideby-side graphs and then your classic other questions you'll see on free responses as well. Things like maybe game theory things like, you know, hiring workers giving, you know, chart, how many workers to hire a chart or how much output to produce given a chart or some sort of, you know, cost curve question where they'll say, you know, here's the cost curves, calculate total cost, variable cost, fixed cost, how many units should you produce uh given some revenue. That's it for the uh predictions. So, um I'm not leaving. You're not leaving either, but I just want to say thank you again for watching my videos. Um you guys are awesome. Right now, here's my suggestion. So, don't leave yet. My suggestion, couple things. The day of the AP exam, watch two videos, at least two videos. Watch the every graph you need to know question or video. Then watch every the entire course, like everything you need to know course of the entire course video. It's about 30 minutes long. It'll cover the entire course, the entire thing. Boom. I just put it there. Um, before we go anywhere, uh, I'm going to answer your questions and help you guys out. Uh, right now, what I want you to do is, uh, let me know if you want me to give any shout outs in the comments. Right? There any shout outs? Someone said, "Oh, no. I'm getting a one." I'm sorry. I don't want you to get a one. Okay. Um, some people I hope this isn't on. So, I'm I'm reading your comments and they're going pretty quick here, but that is okay. All right, let's hear some shout outs. Shout out shout outs. I want to hear a shout out to There we go. Here we go. I got a few of them. Mr. Garland, shout out to you. Shout out to Mr. Mangle. Mr. Brennan, shout out Mrs. Douglas, shout out to you. Mr. Rodman, Dennis Rodman, shout out to you. Uh, someone asked, "What about genie coefficient?" I do not think about you're trying to get a five. Axel, I can see her. Um, if these little tiny things are not that important on they're just not. Uh, shout out to Mrs. Floyd. Shout out to Mrs. Feed. Uh, shout out to um Mr. Con Academy. You guys are silly. Uh, Mr. Acres. Shout out to all these folks. Okay, so right now what we're going to do is this. I want to answer your questions and get uh what what you need. I want to help you guys out with the things that you're um that you need. Um I'm going to focus on the biggest concepts first and then we can start talking about the little details. I'm not going to go over any individual multiple choice questions. And I'm not going to hang out for very long. So, we've been going doing this for about half hour. Maybe I'll do another 15 20 minutes. Um it's more efficient to be 100% honest to watch my videos. I say exactly what I want to say uh when I make those videos. So, you know, definitely focus on those concepts. Uh, someone said externalities. What about Mr. DARP? You guys are asking good questions here. I'm looking for questions. How about this? So, um, Carl's talking about lump sum and per unit. Um, what do you need to know? You need to know that a lump sum tax or subsidy lump sum does not affect the quantity. It doesn't affect the marginal cost. Remember firms produce where MRI equals MC and MC is MC is the trick. MC tells you how much to produce. And a lump sum tax or a lump sum subsidy does not affect the quantity. Doesn't affect the quantity. That's a big concept. A per unit tax does. So on a test, they'll ask you, okay, what'll happen to price and quantity if there's a lump sum tax or subsidy? Nothing. Does not change. A way to remember that it's just a lump, right? A lump doesn't go anywhere. It's just sitting there doesn't do a lump. So it's a lump sum tax does not change quantity. That's what you need to know about that. Shout out to Mr. Stid. Okay, the Laoren curve graph. Lana asked a good question. Um, yeah. What What do you need to know about the Loren curve? It's just a graph. Uh, it's it's it's not that important. Uh, it's not a graph you'll ever have to draw. Very rarely do they ever ask you anything. All you need to know really is that the diagonal line represents what uh people, you know, perfect equality. And the bigger we are away from that, the farther we are away from that, the more inequality uh in the country. Not a big important concept at all. Someone asked about economies of scale. What is it? Jacob Connor asked that question. It's good question. Um Jacob, economies of scale is the idea that getting bigger is cheaper. So a firm that uh a firm that that can maximize you know the benefits of being big and and and buy resources in bulk and use mass production techniques has economies of scale. So you know a monopoly a natural monopoly has economies of scale. Uh externalities is a concept you didn't know both the definition but more importantly you have to be able to draw those graphs. So externalities is unit six. There's an external benefit or an external cost and other people. I have a video about it. Go look it up. It's it's everything you need to know about externalities. It's a video on YouTube. Take a look at that one for sure. Um will we have to draw a natural monopoly? You know what? They'll have you draw a monopoly. I've never actually seen a question where they say draw natural monopoly and they give you points off if you actually don't get like where the natural monopoly area is and understand that concept. Let's actually show you. So, you know, I love drawing graphs. So, let's draw a graph. Um, when I Let's Oh, maybe we won't draw a graph. Let's do this. Let's see if I can add uh another video to this thing real quick. So, here we go. Let's draw a graph real quick. You guys cool with that? Gonna draw a graph. What is a natural monopoly? So, a regular monopoly This is going to look interesting. So, here's price, here's quantity. You got a downward sloping demand curve and a downward sloping marginal revenue curve, right? And that marginal cost, you normally go down and up, right? Whoopsie. Okay, you normally go down and up. The marginal cost we're going to do is like this though. We're going to put it right here. And so, obviously, a monopoly would want to maximize profit where Michael's MC and that's going to be the price for an unregulated monopoly. But at the ATC, let's put it here actually. So, we're making Well, let's do this. Uh, let's do profit here. And the ATC is going to fall, hit a minimum here, and go back up. And I'm putting a dot here for a reason. Okay, this is the ATC. This is a natural monopoly. And the reason we know that is because at this point right here, the socially optimal quantity, the ATC is still falling. If the ATC is falling where society wants the units produced, the socially optimal quantity, that's the idea of a natural monopoly. It makes sense to have only one firm producing this uh this product, whatever this is, because they can produce at the lowest possible cost. Now, my question, your question is, is that, you know, what you're going to see on an actual test? And the answer is probably not. Uh I don't think they're going to ask you, you know, draw a natural monopoly, and if you didn't draw it exactly correct, you don't get the points. That's kind of silly. I've never seen that before. You could be asked to draw Monopoly, though. Let's be honest. I mean, Monopoly is a major graph. They could totally ask you about that. I've seen tons of questions where they ask you about that. I'm going back in your comments. Want to find out what you guys are saying. Um, someone said, someone asked about terms of trade, the mutually beneficial terms of trade. I have a video that talks about the terms of trade. Uh, it's not, I mean, you can watch the video if you want to. Not a huge concept. If you are taking the macro exam, it's something to cover because you could see it definitely on the macro test as well. So, you kind of get the benefits of, you know, studying both. Uh, if you are only doing micro, don't spend a lot of time doing terms of trade. Terms of trade, how do you do it? You just got to watch the video. It's too long for a quick live review. But the concept is easy. The concept is when two countries specialize, you should produce that, I should produce this. Whatever we trade, whatever I decide to trade with you, I have to get at a lower opportunity cost than if I produce it myself. So if you know producing one car cost me two planes, then if I'm going to trade with you, whatever I give up, whatever, you know, one car, I better get more than what I'd get if I produced it myself. So that's the real concept that you need to know. But like everything else, it needs practice. I'd watch the video and that would help you out with more of the details. Um, the least cost rule, right? Marcos asked, "Do I need to know about factor market?" Yes, factor market is unit five. Unit five is the factor market. You got to know the factor market. They I ask, you know, of the 16 multiple choice questions, at least six of them, maybe seven or eight are going to be about the factor market. And some will be really easy, like, you know, they'll be just standard supply demand questions like for, you know, if the the supply of uh law schools decreases, what's going to happen to the supply of lawyers? we're going to have less lawyers, right? Because, you know, they're they can't go to school to become a lawyer. So, those standard questions are really easy, but the next level questions where you have to actually hire workers or use the lease cost rule or any of those concepts, those are all unit 5's things. You've got to practice them. If you don't know or never learned unit five, my suggestion is take a look at the uh the unit summary video inside the ultimate review packet for unit 5 and fill out that study guide. In fact, for all of you, for all of you, if you haven't taken a look at those study guides, they're very compact. So there's like, you know, maybe two or three pages for the study guide. That's the entire unit. Um, that's something I would take with you to exam day. So have those study guides filled out as you're walking there looking at those. See those graphs. Okay, I got this concept. I got that concept. Make sure you practice and know that idea. Um, another person just asked, you guys are kind of answering. I'm going to put your your questions up here. Can you summarize factor markets? Yes, I will summarize factor markets. I just kind of did. It sounds like this is the one that multiple people are coming back to. Someone else act about asked about monopsinies. Factor markets. They're they're just the exactly like the product market, right? We did supply and demand. It's supply and demand over again except now it's opposite. In the product market, business is supply, right? And and individuals demand. Now it's reversed. In the factor market or the resource market, in the labor market, the businesses demand and individuals, you and me, supply. you supply your labor and the businesses want to want want to hire you. So, it's not particularly hard or tricky. Instead of using price, you're using the wage. Uh it's just it's just a slightly different way of thinking about the same concepts. I'm going to take that one off here. Okay, let me actually put up another question here. What is this is an important question whoever nurf is. Um allocative efficiency is actually a big concept. It's the same thing as socially optimal. So a firm is allocatively efficient when it is socially optimal when there's no dead weight loss. All the same idea. So for a monopoly or for any firm, it's where the marginal cost hits the demand curve. That's the amount that societyy's willing to pay, which the demand represents, you know, what people want to pay for something equals the additional cost of producing that unit. So if society's want to pay $10 and it cost you $10 to produce it, you're making the amount society wants. If societies want to pay $12 for something, it only cost you $8 to produce it. S societyy's saying, "Hey, can you please make more of these? This this gives more benefit to us than the cost, make more." Not just to maximize profit, but for society's sake. Societyy's like, "Hey, we want more of these things." Now, if it's reversed and the marginal benefit or the demand is $3 and it costs $8 to produce it, then you have a problem. The cost is greater than the benefit society. And that's the idea of being, you know, not allocatively efficient or not socially optimal. Hopefully that helps. Okay. Does ATC equal the sum of AFC and ABC? Yes, it does. The average total cost equals the average fixed cost plus the average variable cost. That is exactly correct. Uh, another question here. What happens to the monopoly in the long run? Another great question. Here's the great thing about monopolies. You know, in sideby-side graphs and perfect competition, right? In a monopoly, we have one graph. So, no sideby-side junk. And the long run is the short run. So, it just is. A monopoly stays a monopoly. Makes profit, makes loss, whatever. If it is making a loss, eventually will leave. But you're not going to see any questions about a monopoly in the long run because it's not what we're focusing on. It's not the idea of of, you know, firms entering or firm leaving. That's not actually a thing. Uh, let me pull up another one here. Um, can I draw a monopsin graph? Yes, I can. Is that what you wanted as an answer? Um, I can draw monopoly or monopsiny. I'm not going to. And the reason why, again, there's different tiers of importance. I'd rather draw monopoly and explain those concepts. A monopsin, I have a video that explains what a monopsiny is. And there's videos inside the, you know, this the unit summary video. But, um, in terms of importance, let's just focus on that. You might see a multiple choice question on it. It might just be a definition question. They might give you the graph. Uh, but really, it's I mean, how about this? You guys let me know in the comments. Do you guys want me to show you that graph? If you do, I'll show it to you. I'll show it to you. Um, remember, I can't hang out too long. I don't want this to be uh to be very inefficient. I want to be as efficient with our time as possible. So, let's go ahead and draw that graph. The idea of perfect No, not perfect competition. A monoposity. I'm going to switch uh papers here. Okay, here we go. Whoa, whoa, whoa, whoa. All right, so here we go. Now, first things first. If you're drawing anything in the factor market, you guys all love the factor market. If you're drawing in the factor market, you're not doing price. You're doing the wage. This is the quantity of workers. You've got a downward sloping demand curve, which equals the marginal revenue product. This is how much workers bring into the business. You've got an upward sloping supply curve, which represents what people are willing to work for, right? So, somebody out there is willing to work for a super low wage. The next workers want to work a little slightly higher wage. And so this is supply set by individuals. But there's also right here a marginal resource cost. And the reason why it's higher is because if I hire the next worker, then I can't pay one worker $10 and you know the next worker $11. I have to both pay them both $11. Oops, you can't see that. So this idea here is there's a marginal resource cost that is uh greater than the supply. If this makes sense to you or if you're still confused with it either way it's exactly the idea of monopoly, right? You already know this concept because you've seen it with a monopoly. So with a monopoly you get a downward slipping demand and a marginal revenue curve and you have a marginal cost curve. They're flipped images of each other. So take a look at that, right? They're literally flipped images. The reason why demand looks like this and marginal revenue goes down is the same kind of idea that explains this idea of a monopsin. And if you understand that concept, then you understand let's find profit maximizing here. Then take the concept here. You always produce where Mr equals MC. So here's the quantity. You don't charge this price. That's silly. You charge what people will to pay. And so this is the price. So for a monopoly, the price is higher than perfect competition and the quantity is lower than perfect competition. Okay, cool. Let's go look at a monopsin. Where is the monopsin higher? Where MRP equals MRC, which is here. So the quantity is here. Great. You don't pay your marginal resource cost. You pay what people are willing to work for, which is the supply. So the wage is down here. So the wage in a monopsin is lower than it would be at perfect competition. and the quantity is lower. Oh, that totally makes sense. Now, conceptually, understand a monopsin is the idea of these is one firm hiring. There's only one firm out there that's willing and able to hire people. That's it. And this monopoly is only one firm selling. Does that make sense? Isn't that pretty? Doesn't that make you feel happy inside? It makes me feel happy. Yeah, that makes sense. Cool. Okay, that is a monopsiny. Again, dude, people want to know, so I help you, right? you demand all supply. But the the truth is I'm not going to do that again. Those those are not the most important concepts in the world. Uh and you're just it's just not that important. Um that said, shout out to a few people. Okay. I'm not sure what that was. Shout out to Mr. Gley Gillespie. Um let's see. Will they ask about a game theory matrix? Yes, you'll see at least one question at least one question on the uh multiple choice section on game theory. I promise you. Um you'll also see maybe maybe a free response on that as well, but you'll see at least one. Well, they'll give you the actual game theory matrix and you actually have to use it for sure. Okay, let me see if there's any more comments in here really quickly. We're going to move on pretty fast here. Um yeah, excise tax. That's the one I think it's going to be on this year. That's my the second response. I think it's going to be on um they're not going to have you draw it. I don't think uh I there have been free responses where they've had people draw it. I think they're going to give you it and you have to like use the information they have on the chart to show the excise tax. Um I have videos on these. I know that is uh uncomfortable for some people like oh go watch a video but I got to help the most amount of people as possible. There is not going to be indifference curves. It's not part of the uh AP exam curriculum. So it's not going to be there. Um would we ever draw monopsin graph? No. Not at all. There'll be no qu question on on the Trump tariffs. Um I don't think there'll be any questions on tariffs. More comments. These are way more comments than I thought. You guys are just telling me here. We'll go all the way to new comments. Um oh yeah, the most important thing I needed to mention this. Darn it. Uh the next time I'm going to see you guys before the exam will be tomorrow night 5 o'clock. We'll do another live session. I'll answer a lot more questions. That uh video is only for the students who got uh my ultimate review packet or the exam slayer. There's a link in there that'll take you to my live review session. So, if you have those resources, stop by for that. And I'll do a lot more answer questions and I'll record that and people can watch it later on. Um any exam tips? So, that's a great question. I think I'll end it on this. What are the exam tips you need to walk away with? Number one exam tip is know the graphs. But I by by I mean like under really understand them. You're going to see multiple choice questions that you know if you just understand the graph, you got the right answer. Even if they don't ask you the graph or give you the graph, just really know those graphs. Understand why a monopoly looks the way it does. Understand why perfect competition looks the way that it does. So know that. Um other key things is make sure at this moment it's just time to practice. Try a multiple choice question, see how you do. Try a multiple choice question, see how you do. That's why you've gotten the exam slayer. You can try those. Um, it's not time to be learning and relearning. Uh, for the actual test itself, like test moments, like in the actual test, don't get bogged down in any ridiculous question where you're like, "Oh man, I'm spending four minutes on this question. It's just not worth it. You have to use economics. You know, you have you have a scarce resource, your time. So, if you have a question where you're doing a lot of calculations, just skip it. Come back later on." And you can do that with the digital exam. So, you know, skip it, come back later on, get those lowhanging fruit questions, then come back if you have time. I mean, if it's taking you a long time to figure it out anyways, it's probably a question you could potentially miss. So, it makes more sense to come back to it later on instead of miss, you know, questions 55, 56, 57, which could have been really easy. You could have just got the right answer. So, be pretty efficient as you're walking through the questions. uh in previous years the AP exam students have said it's very wordy like there's a lot you know it's a large paragraph and it's saying okay the marginal cost is nine each unit cost blah blah blah and so just that largeness of it sometimes messes students up you know don't freak out about that just read the question go methodical through what's going on here and if you come across something like I don't think I know this or this is going to take a while to do those calculations don't worry about it write it down a scratch piece of paper be okay I'll come back to question 12 and then keep moving on and then come back later on. So, that's probably the best tip I could give you. Right now, I'm going to be heading out. I want to thank you again for watching this video and watching all my videos. Uh you're you're so close. We we we're so close. When you get back in the classroom, say thank you to your teacher for sharing my videos in the classroom and for helping you. Uh remember, I am not your teacher substitute. I'm their compliment. My goal is to help your teacher in the classroom and to help you guys learn and love economics. You guys are awesome. again. The next time I'm going to see you is the video tomorrow night. We're going to cover, you know, Q&A, getting you guys ready for the exam. If you didn't already see it, make sure you watch the equations video you need to know, the graph video you need to know, and everything you need to know videos on YouTube. Those will summarize all the concepts that you need. As always, thanks for watching. I'll say it like I always do. Until next time, see you. Bye.