Task Verbs and Free-Response Technique: Exam Skills Guide (Microeconomics)

How to use this guide

This guide is for students who understand the economics but lose points in the free-response section. It covers the whole course. Read the verb table, then the three worked examples, then try the five tasks in “Practise it” before opening the model answers.

Every question on this page is original Marlbridge practice, not past exam material. All countries, firms and numbers are fictional. The marks shown are a suggested Marlbridge rubric to help you judge your own answers. They are not official scoring, and no total on this page predicts a score.

The free-response section at a glance

Feature	What to expect
Whole exam	2 hours 10 minutes: 60 multiple-choice questions (70 minutes), then 3 free-response questions
Free-response time	60 minutes, which includes a 10-minute reading period
Free-response weight	About a third of the exam (33.35% in the course description)
Question types	Question 1 is long (10 points); Questions 2 and 3 are short (5 points each), so 20 points in total
Format	Questions are shown in the Bluebook app; you handwrite answers in a paper booklet
Calculator	A four-function calculator is allowed on both sections
Practices	All four skill categories appear. Graphing (Category 4) is assessed only in free response

The course description groups free-response work into four kinds of task. Use the shares below to decide where to spend your effort.

Kind of task	Skill categories	Share of free-response points
Make a claim about a concept, model, outcome or effect	1, 2, 3	10–20%
Explain a concept, model, outcome or effect	1, 2, 3	25–35%
Do numerical analysis or a calculation	1, 2 or 3	15–30%
Draw a graph or visual, show a situation on it, or show the effect of a change on it	4	30–50%

Graphing alone can be half the section, so clean, fully labelled graphs are worth practising.

What each task verb asks you to do

The course lists a small set of verbs used in free-response questions. The table gives each one in our own words, with what a full answer contains and roughly how long it should be.

Verb	What a complete answer contains	Typical length
Identify (also What? Which? Will? and other question words)	The requested item only: a direction, a curve, a value, a strategy, a type of good. No reason needed	A word, a phrase or a value
Explain	How or why something happens, built as a chain from cause to effect using economic reasoning or evidence from the question. A graph or symbols may form part of it	One to three linked sentences
Calculate	The mathematical steps that lead to the final value. The working must be shown	Two to four lines
Draw a correctly labeled graph or visual	A new graph with both axes labelled, every curve labelled, and the key equilibrium values marked on the axes	One graph
Show / Label / Plot / Indicate	A mark added to a graph you have drawn: a shift, a new price, a shaded area, a labelled quantity. Arrows or new labels must make any change of direction clear	Additions to an existing graph

Two rules sit behind the table. First, answer exactly what the verb asks. An Identify part does not reward a paragraph, and an Explain part does not reward a bare direction. Second, direction words must be exact. If a question asks whether something will increase, decrease or stay the same, write one of those three words. “Changes” or “is affected” earns nothing.

Short examples for each verb group

Identify, What, Which, Will. The price of tea rises. Will the demand for lemons, a complement of tea, increase, decrease or stay the same? Answer: decrease. That is enough. If the part also says “Explain”, add the reason: tea buyers buy less tea, so they need fewer lemons at every price.

Explain. Explain why a perfectly competitive firm earns zero economic profit in long-run equilibrium. Answer: if firms earn positive economic profit, new firms enter because there are no barriers. Market supply shifts right and the price falls. Entry stops only when price equals minimum average total cost, so economic profit is zero. Notice the chain: profit → entry → supply shifts → price falls → profit gone.

Calculate. A firm’s total cost rises from $400 to $460 when output rises from 20 to 25 units. Calculate marginal cost. Answer: MC = ΔTC ÷ ΔQ = ($460 − $400) ÷ (25 − 20) = $60 ÷ 5 = $12 per unit.

Draw a correctly labeled graph. Draw a correctly labeled graph for a monopoly that earns economic profit. A full answer has: price on the vertical axis and quantity on the horizontal axis; a downward-sloping demand curve labelled D; a marginal revenue curve labelled MR that lies below demand; MC and ATC curves; the quantity where MR = MC marked Qm; the price read up to the demand curve and marked Pm; and ATC at Qm below Pm.

Show, Label, Plot, Indicate. On your graph, shade the deadweight loss. A full answer shades the triangle between the demand curve and the MC curve, from Qm out to the quantity where demand meets MC, and labels it DWL. Shading the wrong triangle, or shading without a label when one is asked for, does not earn the point.

Reading a multi-part question

1. Read every part before you write. Use the reading period for this. A later part often tells you what an earlier graph needs to show.
2. Circle the verb and the object of each part. “Show the price” and “show the quantity” ask for marks on different axes.
3. Notice “on your graph in part (a)”. That phrase means add to the graph you already drew, not draw a new one. Leave space around your first graph for this.
4. Use the exact labels the question gives. If it says “label it Q₁”, write Q₁, not Q′ or Qnew.
5. Watch for new information. A new assumption in part (c) applies from part (c) onward. Do not use it in part (b).
6. Track the chain. If part (d) depends on your answer to part (b), make your (b) answer easy to find, and reuse it. If your (b) answer might be wrong, still use it consistently in (d), so a reader can follow your method there.
7. Hold other things constant. Change only what the question changes. A tax on sellers does not also shift demand.
8. Write each answer next to its part letter.

Planning time across the section

The section lasts 60 minutes, but the first 10 are a reading period, which leaves 50 minutes of writing for 20 points: 2.5 minutes per point. The long question is half the points, so it deserves about half the writing time.

Block	Suggested time
Reading period: read all three questions, plan graphs, note which parts link	10 minutes
Question 1 (long, 10 points)	about 25 minutes
Question 2 (short, 5 points)	about 11 minutes
Question 3 (short, 5 points)	about 11 minutes
Final check: labels on every graph, direction words, blank parts	about 3 minutes

Follow the instructions given on the day about what you may do during the reading period. Start the long question first unless one short question is very quick for you. If a part stalls you for more than two minutes, write a labelled assumption, move on and come back.

Showing work on calculations

The course defines Calculate as working through mathematical steps to a final answer, and it requires the work to be shown. A correct number with no working may not earn the point. Set out every calculation the same way:

1. Write the formula in words or symbols: TR = P × Q; profit = (P − ATC) × Q; area of a triangle = ½ × base × height; MRP = MP × P.
2. Substitute the numbers from the question or your graph.
3. Give a clear final answer with a unit: $ per unit, $ thousand per week, workers, bikes per shirt.
4. State a sign or direction where it matters. A loss is a negative profit; say “a loss of $200”, not just “200”.
5. Check the sense. Deadweight loss cannot be bigger than total surplus. A price that buyers pay after a tax should be above the old equilibrium price.

With only a four-function calculator, a long, untidy decimal is a sign to recheck your working.

What earns and loses credit

Usually earns credit	Usually loses credit
A clear direction (increase, decrease, stay the same) followed by the reason	A reason with no direction, or “it changes”
A chain that names each step: cause → curve shifts → price or quantity changes	Skipping the middle step: “the tax raises the price” without saying supply shifts left
Correct economic terms: MR = MC, P = minimum ATC, MRP = wage	Vague words: “the firm does better”, “the market adjusts”
Graphs with labelled axes, labelled curves and labelled equilibrium points	Unlabelled curves or axes, or a shift with no new label
Using numbers from the question to support a claim	Quoting a rule (“firms maximise profit where MR = MC”) without applying it
One answer	Two answers that contradict each other, hoping one is right

Worked example 1: a calculation with a tax (Unit 2)

Question. In the fictional town of Marrow, weekly demand for bottled juice is Qd = 200 − 5P and supply is Qs = 3P − 40. P is dollars per bottle and Q is thousands of bottles per week. The equilibrium is $30 and 50 thousand bottles. The government places an $8 per-bottle tax on sellers, and the quantity falls to 35 thousand bottles, with buyers paying $33. Calculate (i) the tax revenue and (ii) the deadweight loss. (2 points)

Weak answer. “(i) 8 × 50 = 400. (ii) 8 × 15 = 120.”

What it misses. Part (i) uses the old quantity. The tax is collected only on bottles still sold, and only 35 thousand are sold after the tax. Part (ii) forgets that deadweight loss is a triangle, so it needs the ½. Neither answer has a unit.

Strong answer. (i) Tax revenue = tax per unit × quantity sold after the tax = $8 × 35 thousand = $280 thousand per week. (ii) Deadweight loss = ½ × base × height = ½ × $8 × (50 − 35) thousand = ½ × 8 × 15 = $60 thousand per week.

A quick check: buyers pay $33, which is $3 more than before, and sellers keep $33 − $8 = $25, which is $5 less. The two shares add up to the $8 tax.

Suggested Marlbridge rubric	Point
Tax revenue of $280 thousand, using the after-tax quantity, with working shown	1
Deadweight loss of $60 thousand, using ½ × tax × fall in quantity, with working shown	1

Worked example 2: an explanation with a number (Unit 4)

Question. Kestrel Ferries is the only ferry to a fictional island and charges one price to all passengers. At $20 per ticket it sells 100 tickets a day. To sell 101 tickets it must cut the price to $19.90. Explain why the marginal revenue from the 101st ticket is less than its price. (2 points)

Weak answer. “Because it is a monopoly, so MR is below demand.”

What it misses. It restates the fact the question asks you to explain. “Because it is a monopoly” is not a reason; it is the setting. The answer never says what the firm gives up when it cuts the price.

Strong answer. To sell one more ticket, Kestrel must lower the price on all its tickets, not only the extra one, because it charges one price. It gains $19.90 from the 101st ticket but loses $0.10 on each of the other 100 tickets, which is $10. So marginal revenue = $19.90 − $10 = $9.90, which is less than the $19.90 price. Check with total revenue: 101 × $19.90 − 100 × $20 = $2,009.90 − $2,000 = $9.90.

Suggested Marlbridge rubric	Point
States that the price must fall on all units sold, not only the extra unit	1
Uses the numbers to show MR ($9.90) is below the price ($19.90)	1

Worked example 3: a multi-part hiring question (Unit 5)

Question. Orrin Nursery sells trays of seedlings in a perfectly competitive market at $5 per tray. It hires gardeners in a perfectly competitive labour market at a wage of $60 per day. The marginal product of each extra gardener, in trays per day, is 20, 18, 15, 12, 9 and 6. (a) Calculate the marginal revenue product of the third gardener. (b) Identify the number of gardeners Orrin hires to maximise profit. (c) The price of a tray rises to $7. Will Orrin hire more gardeners, fewer gardeners or the same number? Explain. (4 points)

Weak answer. “(a) 15. (b) 6, because they all add output. (c) More, because the firm is richer.”

What it misses. Part (a) gives marginal product, not marginal revenue product: it never multiplies by the price. Part (b) hires every gardener who adds output, but a gardener is worth hiring only if they add at least as much revenue as their wage. Part (c) has the right direction, but “richer” is not an economic reason.

Strong answer. (a) MRP = MP × P = 15 × $5 = $75 per day. (b) MRP for the six gardeners is $100, $90, $75, $60, $45 and $30. Orrin hires while MRP ≥ wage, so it hires 4 gardeners (the fourth has MRP = $60 = wage). (c) More. A higher output price raises the MRP of every gardener (MRP = MP × P). At $7 the fifth gardener’s MRP is 9 × $7 = $63, which is more than the $60 wage, so hiring them adds to profit. The sixth adds 6 × $7 = $42 < $60, so Orrin hires 5.

Suggested Marlbridge rubric	Point
(a) MRP of $75 with MP × P shown	1
(b) 4 gardeners, where MRP = wage	1
(c) Identifies “more”	1
(c) Explains that the higher price raises MRP so a further gardener’s MRP now exceeds the wage	1

Part (c) reuses the method from (a) and (b), so reading all three parts first shows that the full MRP list is worth writing out.

Common mistakes

• Writing a paragraph for an Identify part, then running short of time on a graph worth more.
• Giving a direction with no reason when the part says Explain.
• Skipping a step in a chain, for example jumping from “a tax” to “a higher price” without saying supply shifts left.
• Leaving axes, curves or equilibrium values unlabelled, or drawing a shift with no new label.
• Drawing a new graph when the question says “on your graph in part (a)”.
• Using the old quantity after a tax, quota or price control has changed it.
• Forgetting the ½ when finding the area of a triangle such as consumer surplus or deadweight loss.
• Confusing marginal product with marginal revenue product, or a movement along a curve with a shift of the curve.

Practise it

Task 1 (Unit 1). In one day, a worker in Arlo can make 12 shirts or 4 bikes, and a worker in Benn can make 10 shirts or 5 bikes. Calculate the opportunity cost of one bike in each country, then identify which country has the comparative advantage in bikes.

Model answer

Arlo: 1 bike costs 12 ÷ 4 = 3 shirts. Benn: 1 bike costs 10 ÷ 5 = 2 shirts. Benn gives up fewer shirts for each bike, so Benn has the comparative advantage in bikes (and Arlo in shirts). Any trade between 2 and 3 shirts per bike benefits both. (Each opportunity cost with working: 1 point; correct country: 1 point, suggested Marlbridge rubric.)

Task 2 (Unit 2). Draw a correctly labeled graph of the market for monthly bus passes in a fictional city. On it, show a binding price ceiling labelled Pc, and label the quantity demanded Qd and quantity supplied Qs at that price.

Model answer

Axes: price (vertical) and quantity of bus passes (horizontal). A downward-sloping D and upward-sloping S crossing at equilibrium price Pe and quantity Qe, both marked on the axes. A horizontal line at Pc below Pe. Where Pc meets S, drop a line to the quantity axis and label it Qs; where Pc meets D, label Qd. Qd is to the right of Qs, so the gap is a shortage. A ceiling drawn above Pe would not bind and would not earn the point.

Task 3 (Unit 3). A perfectly competitive firm is at its profit-maximising output of 100 units. The price is $8, average total cost is $10 and average variable cost is $7. Will the firm produce or shut down in the short run? Explain.

Model answer

Produce. Price ($8) is above AVC ($7), so each unit covers its variable cost and adds $1 towards fixed cost. Producing gives a loss of ($10 − $8) × 100 = $200. Shutting down gives a loss equal to fixed cost: AFC = $10 − $7 = $3, so $3 × 100 = $300. Producing loses less. In the long run, if the price stays below ATC, firms will exit.

Task 4 (Unit 4). Two cafés in a fictional town, Lark and Mint, each choose to Open late or Close early. Payoffs are daily profits in dollars (Lark’s first): both Open (40, 30); Lark Open, Mint Close (70, 25); Lark Close, Mint Open (35, 60); both Close (55, 50). Identify Lark’s dominant strategy, if it has one, and explain using numbers from the table.

Model answer

Open late. If Mint opens, Lark earns $40 by opening and $35 by closing. If Mint closes, Lark earns $70 by opening and $55 by closing. Opening gives Lark more profit whatever Mint does, so it is Lark’s dominant strategy. An explanation that compares only one of Mint’s choices is incomplete.

Task 5 (Unit 6). A fictional paper mill’s production causes river pollution that imposes a constant external cost of $6 per tonne on people downstream. (a) Is the market quantity greater than, less than or equal to the socially optimal quantity? (b) Identify the per-unit tax that would lead to the socially optimal quantity. (c) Explain how the tax works.

Model answer

(a) Greater than. (b) $6 per tonne, equal to the marginal external cost. (c) Without the tax, the mill produces where marginal private benefit equals marginal private cost and ignores the external cost, so at the market quantity marginal social cost is above marginal social benefit. A $6 tax raises the mill’s private cost to the full social cost, shifting supply left until the market quantity equals the socially optimal quantity.

Where to practise next

• Comparative advantage and trade study guide for Calculate and Identify parts with opportunity cost.
• Effects of government intervention in markets practice for tax, surplus and deadweight loss calculations.
• Firms’ short-run decisions to produce study guide for produce-or-shut-down explanations.
• Monopoly study guide for marginal revenue and monopoly graphs.
• Oligopoly and game theory practice for payoff-matrix questions.
• Profit-maximizing behavior in perfectly competitive factor markets study guide for MRP and hiring decisions.
• Externalities study guide for social cost and corrective taxes.
• Unit 2 review for multi-part questions that mix verbs.