AP MicroEconomics
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Course Outline

Unit I:  Basic Economic Concepts - 2 Weeks

(Chapters 1, 2, & 6, McConnell & Brue)
A.    Founding Principles
  • Scarcity, the economizing problem
  • Tradeoffs and Opportunity Cost
  • Free-market system (Adam Smith’s invisible hand)
B. Types of Economics
  • Microeconomics vs. macroeconomics
  • Positive economics vs. normative economics
C. Production Possibilities Graph
  • Straight vs. bowed PPF
  • Underutilization, full employment, and unattainable
  • Law of increasing opportunity cost
  • 3 shifters of the PPF
  • Consumer goods vs. capital goods
D. Circular Flow Model
  • Product market, Factor market, and Public sector
E. Specialization and Trade
  • Absolute advantage
  • Comparative advantage
 
Unit II:  Supply, Demand, And Consumer Choice – 4 Weeks
(Chapters 3, 4, 20, & 21.  McConnell & Brue)
A.    Demand (graph)
  • Law of demand
  • Market demand curve
  • Determinants of demand
  • Normal vs. inferior goods
  • Substitutes and complements
B. Supply (graph)
  • Law of supply
  • Market supply curve
  • Determinants of supply
C. Equilibrium and Efficiency (graph)
  • Equilibrium price and quantity
  • Disequilibrium:  surplus and shortages (graphing)
D. Government Policies (graphs)
  • Price floors and Price ceilings
  • Excise taxes, Subsidies, Tariffs, Quotas
D. Elasticity
  • Price, Income, and Cross Price elasticity of demand
  • The total revenue test (graph)
E. Consumer Choice
  • Law of diminishing marginal utility, Substitution effect, Income effect
  • Marginal benefit/cost
  • Utility maximizing rule
 
Unit III.  Costs of Production and Perfect Competition- 3 Weeks
(Chapters 22 & 23.  McConnell & Brue.)

A. Economists vs. Accountants
  • Total revenue
  • Explicit and Implicit costs
  • Economic costs and profits
B. Costs of Production (graph)
  • Fixed Costs, Variable costs, and Total costs
  • Per-unit costs (AVC, AFC, ATC)
  • Shifts in MC, ATC. AVC, and AFC
  • Marginal costs and Marginal revenue
  • Sunk costs
C. Law of Diminishing Marginal Returns (graph)
  • Stage I:  increasing returns
  • Stage II:  decreasing returns
  • Stage III:  negative returns
D. Long-run Production Costs (graph)
  • Economies of scale, Constant Returns to scale, Diseconomies of scale
E. Characteristics of Perfect Competition
  • Price takers
  • Demand = MR= Price
  • Graph:  Firm vs. industry (market)
  • Short-run (profit or loss)
  • Long-run equilibrium (New firm enter and exit)
  • Normal profit
  • Shutdown decision (P< AVC)
  • Productive efficiency (P = Min ATC)
  • Allocative efficiency (P = MC)
 
Unit IV.  Imperfect Competition-3 Weeks
(Chapters 24 & 25.  McConnell & Brue)

A. Characteristics of Monopolies
  • Barriers to entry
  • MR below demand (graphs)
  • Profit-maximizing price and quantity
  • Natural monopoly
B. Effects on overall economy
  • Compared to competitive industry
  • Dead-weight loss
  • X-efficiency
C. Price discrimination (graph)
  • Purpose and results
  • Graph (MR=D)
D. Regulation
  • Unregulated price, Fair return price, and Socially optimal price
  • Taxes and subsidies
E. Characteristics of Monopolistic Competition
  • Long-run equilibrium (graph)
  • Excess capacity
  • Non-price competition
  • Product differentiation
F. Characteristics of Oligopolies
  • Kinked demand curve-competitive pricing
  • Game theory (chart) price leadership
  • Collusion and cartels

Unit V.  Resource Market-3 Weeks(Chapters 27, 28, 29, & 35.  McConnell & Brue)
A.    Demand for labor
  • Derived demand
  • Marginal revenue product
  • Marginal resource cost
B. Perfectly competitive labor market (graph)
  • Wage makers
  • Perfectly elastic supply of labor
C. Monopsony (graph)
  • Wages and quantity compared to perfectly competitive labor market
D. Labor Unions
  • Goals and methods
E. Effects of Minimum Wage
F. Wage differentials
  • Investment in human capital vs. physical capital
 
Unit VI.  Market Failures and Government Involvement-3 Weeks
(Chapters 30, 31, & 34.  McConnell & Brue)
A.    Public goods
  • Demand for public goods
  • Supply of public goods
  • Free-rider problem
  • Non-excludability and Non-rivalry
B. Positive externalities/spillover benefits (graph)
  • Marginal social benefits vs. private benefits
  • Underallocation
  • Government remedy
C. Negative externalities/spillover costs (graph)
  • Marginal social cost vs. private cost
  • Overallocation
  • Government remedy
D. Income distribution
  • Lorenz curve (graph)
  • Tax incidences
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  • Home
    • Syllabus
    • Textbook
    • Test Schedule
    • Georgia Performance Standards
    • Course Outline
  • Units
    • Unit 1 >
      • Unit 1 Schedule
    • Unit 2
    • Unit 3 >
      • Unit 3 Schedule
      • Unit 3 Khan Videos
      • Unit 3 AC/DC Review Videos
      • Unit 3 Practice Worksheets
    • Unit 4 >
      • Unit 4 Schedule
      • Unit 4 Khan Videos
      • Unit 4 AC/DC Review Videos
      • Unit 4 Practice Worksheets
    • Unit 5
    • Unit 6
  • About
  • Quiz Bowl 2017!!
  • AP Exam Review
  • ECON Movies!!