2011/2012 AP MICROECONOMICS CONTENT MAP Mr. Crawford

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1 advanced placement microeconomics review UNIT TITLE CHAPTER TEST ONE LIMITS AND CHOICES 1 The MARKET SYSTEM 2 TWO SUPPLY and DEMAND 3 THREE ELASTICITY 4 MARGINAL UTILITY 6 FOUR COSTS OF PRODUCTION 7 PROFIT 8 FIVE PERFECT COMPETITION 9 MONOPOLY 10 SIX MONOPOLISTIC COMPETITION 11 OLIGOPOLY SEVEN FACTOR MARKETS 12 LABOR DEMAND 13 EIGHT MARKET FAILURE 5 PUBLIC AND PRIVATE SECTORS 17

2 AP MICROECONOMICS UNIT I FUNDAMENTALS OUTLINE 1. DEFINITION - Chapter 1 pg.3 -Why is scarcity a key economic concept 2. FUNDAMENTAL PRINCIPLES - Chapter 1 pp. 4-5 even in an affluent society? Chapter 1 a. SCARCITY -How does scarcity differ from poverty? Limits and Choices i. LIMITED and DESIRABLE -Why does scarcity necessitate rationing b. CHOICE and cause competition? Chapter 2 i. TINSTAAFL -What are the basic principles underlying The Circular Flow ii. OPPORTUNITY COST the economic way of thinking? c. PROFIT -How do economists look at choices and i. COST-BENEFIT ANALYSIS human decision-making? ii. SUBJECTIVE/UTILITY -What is the difference between positive d. RATIONAL and normative economics? i. INVESTMENTS -What is opportunity cost and why do ii. IMPERFECT INFORMATION Economic Reasoning: e. MARGINAL ANALYSIS economists place so much emphasis on Three-Ten Combination i. INCENTIVES MATTER it? Once to the Side f. TRADE CREATES WEALTH -Why do people trade? i. SPECIALIZATION -How does private ownership affect the A Nibble from the Free 3. THEORY - Chapter 1, pp use of resources? Lunch - Frank Armstrong a. POSITIVE/NORMATIVE -What are the limits of production? b. PITFALLS -What are the gains to both society and i. BIAS individuals from trade and exchange? ii. POST HOC -What are the two major methods of Economics U$A #1 iii. COMPOSITION economic organization and how do they 4. PPF Chapter 1, pp differ? M*A*S*H a. MAXIMUM EFFICIENCY i. FULL PRODUCTION ii. FULL EMPLOYMENT EXERCISE b. GROWTH i. TECHNOLOGY ECONOLAND ii. RE iii. TRADE 5. MODELS - Chapter 1 appendix, pp a. X AND Y AXIS b. DIRECT AND INVERSE RELATIONSHIPS c. SLOPE

3 OUTLINE 1. DEMAND Chapter 3, pp a. LAW OF DEMAND i. CHANGE IN P= INVERSE CHANGE IN Qd a) DMU, INCOME, SUBSTITUTION EFFECT b. NPD = CHANGE IN D i. TASTES ii. INCOME iii. MORE OR FEWER BUYERS iv. EXPECTATIONS v. RELATED GOODS' PRICES a) SUBS = SAME; COMPS = OPPOSITE CHANGE IN D = P Q CHANGE IN D = P Q 2. SUPPLY Chapter 3, pp a. LAW OF SUPPLY i. CHANGE IN P = DIRECT CHANGE IN Qs a) DIMINISHING RETURNS a) TOTAL REVENUE =PRICE X QUANTITY b. NPD= CHANGE IN S i. GOVERNMENT a) TAXES/SUBSIDIES a) PRICE CONTROLS ii. OTHER PROFIT OPPORTUNITIES iii. NUMBER OF SUPPLIERS iv. INVESTMENT IN TECHNOLOGY v. COST OF RESOURCE vi. EXPECTATIONS CHANGE IN S = P Q CHANGE IN S = P Q 3. EQUILIBRIUM Chapter 3, pp a. SHORTAGE and SURPLUS b. EQUILIBRIUM and EFFICIENCY AP MICROECONOMICS UNIT II MARKETS Chapter 3 Understanding Individual Markets: Demand and Supply 1. Describe the behavior of buyers and sellers in a competitive market 2. Explain the determinants of Demand 3. Explain the determinants of Supply 4. Distinguish between the Income and Substitution effect 5. Define Diminishing Marginal Utility and apply it to the Demand curve 6. Draw a graph from Supply and Demand schedules 7. Define Equilibrium 8. Determine what Equilibrium price and quantity will be given the Demand and Supply data for a good 9. Differentiate "changes in demand" and "changes in quantity demanded" 10. Differentiate between a "change in supply" and a "change in quantity supplied" 11. Analyze factors and situations that cause Supply and Demand curves to shift 12. Predict the effects of changes in the prices and quantities of Substitute and Complementary goods on the equilibrium price and quantity of a good 13. Explain shifts in the Supply and Demand curves based on changes in Supply and Demand The New Kings of Capitalism Paul Krugman Economics U$A #2 Economics U$A #16 Trading Places EXERCISE COFFEE SHOP

4 The Nature and Function of Product Markets Part 2(8 Days) B. Consumer Choice. 1. Demand, Supply, and Elasticity 2. Marginal Utility % of the AP Exam AP MICROECONOMICS UNIT III CONSUMER BEHAVIOR 1. Define Price Elasticity of Demand 2. Distinguish between Elastic and Inelastic Demand 3. Explain the factors that tend to make Demand Elastic or Inelastic 4. Determine the Elasticity of a good at different prices based on changes in Total Revenue 5. Explain the factors that make a good Elastic or Inelastic 6. Define and distinguish between a Normal and an Inferior good 7. Define Price Ceilings and Price Floors 8. Graph Price ceilings and Price Floors 9. Analyze the effects of Price Ceilings and Price Floors on a competitive market 10. Define and describe the concepts of Surplus and Shortage and how they relate to Price Ceilings and Price Floors 11. Explain how markets allocate resources Chapter 4 Demand, Supply, and Elasticity Chapter 6 The Theory of Consumer Behavior Jobs vs Gates II Saul Hansell Economics U$A #18 UNIT TEST DATE: 9/30

5 Production Costs (8 Days) A. Firm Production, Costs and Revenue 1 Marginal Product and Diminshing Returns 2 Total, Average, Marginal - Cost and Revenue 3 Long Run Costs and Economies of Scale 4 Profit 10-15% of the AP Exam UNIT TEST DATE: 10/14 AP MICROECONOMICS UNIT IV PRODUCTION COSTS 1. Distinguish between a fixed cost and a variable cost 2. Define and Graph total fixed cost, total variable cost, average fixed cost, average variable cost, average total cost and marginal cost 3. Define and plot total revenue, average revenue, marginal revenue and price 4. Define and identify profit, loss, the breakeven point and the shutdown point 5. Distinguish between normal profit and economic profit 6. Distinguish between productive and allocative efficiency 7. Distinguish between the short-run and the long-run 8. Distinguish between an implicit and an explicit cost 9. State the Law of Diminishing Returns 10. Explain the Long-run average cost curve 11. Explain the profit-maximizing rule Chapter 7 The Costs of Production Chapter 8 Pure Competition in the Short Run "The Nirvana Wars" Chris Heath Economics U$A #15

6 Theory of the Firm (8 Days) B Market Structure 1. Perfect Competition 2 Monopoly 10-15% of the AP Exam UNIT TEST DATE: 11/4 AP MICROECONOMICS UNIT V MONOPOLY 1. List the characteristics of a Perfectly Competitive, and Monopolistic market Chapter 9 2. Graph a Perfectly Competitive, and Monopolistic market 3. Distinguish between a Perfectly Chapter 10 Competitive, and Monopolistic market Monopoly 4. Describe the effects of different markets on the price of a product, the quantity of a product, the allocation of society's resources, the distribution of income and the rate of technological progress 5. Describe different types of non-price competition 6. Explain the theory of the regulated market place 7. Identify the socially optimal and fair return price for a regulated monopoly 8. Compare perfect competition and imperfect competition Pure Competition Economics U$A #17 EXERCISE *MESE* BUSINESS COMPETITION

7 Imperfect Competition (8 Days) A Product Pricing and Outputs 1 Monopolistic Competition 2 Oligopoly 10-15% of the AP Exam UNIT TEST DATE: 11/18 AP MICROECONOMICS UNIT VI IMPERFECT COMPETITION 1. List the characteristics of a Perfectly Competitive, Monopolistic Competitive, Oligopoly, and Monopolistic market 2. Graph a Perfectly Competitive, Monopolistic Competitive, Oligopoly, and Monopolistic market 3. Distinguish between a Perfectly Competitive, Monopolistically Competitive, Oligopolistic and Monopolistic market 4. Define the Concentration ratio 5. Describe the effects of different markets on the price of a product, the quantity of a product, the allocation of society's resources, the distribution of income and the rate of technological progress 6. Distinguish between homogenous and differentiated Oligopoly 7. Define collusion and list the advantages and disadvantages of collusion 8. Describe the Prisoner's Dilemma 9. Describe different types of non-price competition 10. Explain the theory of the regulated market place 11. Identify the socially optimal and fair return price for a regulated monopoly 12. Compare perfect competition and imperfect competition Chapter 11 Monopolistic Competition and Oligopoly "The Battle of the Portals" The Economist "The Big Guys: Did They do Tucker In?" Melvin Barger "The Prisoner's Dilemma" Sylvia Nash Economics U$A #19 Economics U$A #20 A Beautiful Mind

8 Factor Markets (8 Days) A. Supply and Demand in the Resource Market B 1. Natural Resources and Rent 2. Labor Resources a. Labor Supply b. Wages and Employment c. Imperfect Competition 3 Capital Resources. Derived Demand 10-15% of the AP Exam. UNIT TEST DATE: 12/9 AP MICROECONOMICS UNIT VII FACTOR MARKETS Chapter 12 Production and the Demand for Economic Resources 1. Describe the differences between product markets and factor markets 2. Define Derived Demand 3. Define Marginal Physical Product 4. Define Marginal Revenue Product 5. Given the appropriate data, construct a Marginal Revenue Product Schedule for a resource used for production in a perfectly competitive market 6. Given the appropriate data, construct a Marginal Revenue Product Schedule for a resource used for production in an imperfectly competitive market 7. Define Marginal Resource Cost 8. List the factors that would change a firm's demand for a resource 9. State the Profit-Maximizing principle used to determine how much of a given resource a firm will use 10. State the Least-Cost rule for determining which combination of resources a firm will use 11. Explain the major assumptions of the marginal productivity theory 12. Define a Monopsony and explain how resource prices and output would be determined in such a market 13. Define economic rent 14. Distinguish between interest, rent, wages and profits Chapter 13 The Pricing and Employment of Resources: Wage Determination "Jimmy Hoffa and the Teamsters" Arthur A. Sloane "Labor Unions in America" Morgan O. ReynoldS Economics U$A #22 Economics U$A #23 "F.I.S.T."

9 Efficiency, Equity, and the Role of Government A. Efficiency B. Equity (5-7 Days) 1 Public Goods 2 Distribution of Income 3 Externalities C Market Failures and Government Response D Global Trade and Comparative Advantage 8-12% of the AP Exam UNIT TEST DATE: 2/11 AP MICROECONOMICS UNIT VIII MARKET FAILURE Chapter 5 Market Failure 1. Define and Describe public goods 3. Develop a rationale for determining private and public sector goods 4. Develop a criteria for evaluating the effectiveness of government programs 5. Define and give examples of externalities and third-party costs 6. Explain overproduction and underproduction 7. Define and differentiate between the progressive, regressive, proportional, ability-to-pay and benefitsreceived theories of taxation 8. Develop a criteria for evaluating the effectiveness and fairness of a tax 9. Define Comparative and Absolute Advantage 10. Describe and give examples of the Law of Comparative Advantage 11. Define Specialization and Exchange 12. Explain how both parties to a trade gain from voluntary exchange 13. Explain Comparative Advantage in terms of Opportunity Cost 14. When given necessary data, compute the costs of producing two commodities in two countries, determine which has Comparative, calculate the price, and explain the gains from Specialization and Trade 15. Describe and evaluate the case for Free Trade 16. Describe and evaluate the case for Protectionism Chapter 18 AntiTrust Policy Chapter 6 Comparative Advantage "Microsoft's Battles" - Marc Saltzman "The Economics of Sharing" -The Economist Malden Mills: The Glow from a Fire - Art Boulay Economics U$A #26 AntiTrust