Course Description

The purpose of AP Microeconomics is to give students a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers, within the economic system. It places primary emphasis on the nature and functions of product markets and includes the study of factor markets and of the role of government in promoting greater efficiency and equity in the economy. The following is a brief discussion of these topics and some aspects of them that a teacher may choose to explore.

           

Topic Outline

I.  Basic Economic Concepts . (8–14%)

A.  Scarcity, choice and opportunity cost

B.  Production possibilities curve

C.  Comparative advantage, absolute advantage, specialization and trade

D.  Economic systems

E.  Property rights and the role of incentives

F.  Marginal analysis

II. The Nature and Functions of Product Markets (55–70%)

A.  Supply and demand (15–20%)

1.  Market equilibrium

2.  Determinants of supply and demand

3.  Price and quantity controls

4.  Elasticity

a. Price, income and cross-price elasticities of demand

b. Price elasticity of supply

5.  Consumer surplus, producer surplus and market efficiency

6.  Tax incidence and deadweight loss

B.  Theory of consumer choice (5–10%)

1.  Total utility and marginal utility

2.  Utility maximization: equalizing marginal utility per dollar

3.  Individual and market demand curves

4.  Income and substitution effects

C.  Production and costs (10–15%)

1.  Production functions: short and long run

2.  Marginal product and diminishing returns

3.  Short-run costs

4.  Long-run costs and economies of scale

5.  Cost minimizing input combination

D.  Firm behavior and market structure (25–35%)

1.  Profit:

a. Accounting versus economic profits

b. Normal profit

c. Profit maximization: MR=MC rule

2.  Perfect competition

a. Profit maximization

b. Short-run supply and shutdown decision

c. Behavior of firms and markets in the short run and in the long run

d. Efficiency and perfect competition

3. Monopoly

a.  Sources of market power

b. Profit maximization

c. Inefficiency of monopoly

d. Price discrimination

e.  Natural monopoly

 

Objectives

Students will be able to:

1.      Demonstrate economic questioning and analysis skills.

2.      Interpret a variety of graphical models and paraphrase economic concepts.

3.      Analyze the development of modern economic theory.

4.      Explain the basic connections between economics and calculus.

5.      Use and interpret the language of business and basic measurements of economics performance.

6.      Apply economic skills and concept knowledge to higher college-level economic courses.

 

Required Books/Resources

Ø  Textbook: Bade, Robin and Michael Parkin. Foundations of Economics, 5^th ed. New York: Pearson, 2011.

Ø  Morton, John S. Advanced Placement Economics: Microeconomics. New York, NY: National Council on Economic Education, 2003. Two books: Student Activities and Teacher Resources Manual.

Ø  Studenmund, A. H., Richard L. Stroup, and James D. Gwartney. Coursebook to Accompany Economics: Private and Public Choice. Fort Worth: Dryden Press, 2005. (Special topics are used for research projects.)

Ø  Workbook: Bade & Parkin. Foundations of Economics Workbook.

Ø  Workbook: Baron’s AP Microeconomics/Macroeconomics. Baron’s Educational Series, 2009.