AP Macroeconomics
Unit 3: Market failure and Government Intervention
Essential Questions:
1. What are price controls and how do they lead to market inefficiency?
2. Who benefits and who loses from price controls and why are they used despite the fact their economic and
political costs?
3. What are externalities and how do they lead to market inefficiency?
4. Why do externalities often require government intervention?
5. Which government policies designed to deal with externalities are most efficient?
6. What are public goods and why do markets fail to supply efficient quantities of public goods?
7. What are common resources and why are they overused?
8. What are artificially scarce goods and why are they under consumed?
9. How can government intervention in the production and consumption of public goods make society better
off?
Key Terms:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
artificially scarce good
black market
Coase theorem
common resource
elastic
emissions tax
excludable
free-rider problem
inelastic
marginal private benefit
marginal private cost
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
marginal social benefit
marginal social cost
minimum wage
negative externality
network externality
non-excludable
non-rival in competition
perfectly elastic
perfectly inelastic
Pigouvian subsidy
Pigouvian tax
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
positive externality
price ceiling
price elasticity of demand
price elasticity of supply
price floor
private good
public good
rival in competition
technology spillover
tradable emissions permit
transaction costs
unit elastic
AP Macroeconomics
Unit 3: Market failure and Government Intervention
Calendar:
DAY
TOPIC
HW DUE /
SCHEDULED TEST
11-Oct
Friday
Price Controls
Have read Module 8 and
answered chapter end questions.
12-Oct
Saturday
Price Controls
Have read "Higher Minimum
Wage No Longer Seen as SureFire U.S. Job Killer" and "The
Young and the Jobless" and
post reflections in journal/
TOPIC
HW DUE /
SCHEDULED TEST
DAY
14-Oct
Monday
Externalities and Public Policy
Have read Module 74 and
Module 75.
15-Oct
Tuesday
Government Intervention Case Study: Baby
Economics
Have listened to NPR podcast
“Baby Economics” and posted
answers to discussion questions
on Weebly.
16-Oct
Wednesday
Public Goods
Have read Module 76.
17-Oct
Thursday
Government Intervention Case Study
To Be Determined
18-Oct
Friday
Government Intervention Case Study
To Be Determined
TOPIC
HW DUE /
SCHEDULED TEST
DAY
21-Oct
Monday
Government Intervention Case Study
To Be Determined
22-Oct
Tuesday
Government Intervention Case Study
To Be Determined
23-Oct
Wednesday
Government Intervention Case Study
To Be Determined
24-Oct
Thursday
Government Intervention Case Study
Unit 3 Take Home Test Due
25-Oct
Friday
SPORTS DAY