AP Microeconomics Syllabus

AP Microeconomics Syllabus
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Course Overview
AP Microeconomics is a semester course at Huntsville High School. AP Exams fall in the first
part of May and it is difficult to cover all the material that may be on the test, we move quickly
and you must be committed to reading your text and working out the problems.
Basic Economic Concepts requiring students to understand the existence of limited resources
along with unlimited wants necessitates some form of allocation system. We introduce concepts
of opportunity costs and trade-offs, specialization and exchange efficiencies, absolute and
comparative advantage, fallacies such as post hoc, ergo propter hoc, the importance of property
rights and the functioning of free markets.
A. Analyzing the Nature and Functions of Product Markets delves into supply and
demand models, consumer choice, production and costs, and the theory of the firm.
We analyze the determinants of supply and demand and how changes in these factors
affect equilibrium price and output focusing on the difference in shifts versus
movements along the curves. The impact of various government policies is studied as
they affect equilibrium status and market efficiency. The theory of consumer and
producer surplus is introduced here as well as the various concepts of elasticity and
cross-elasticity. Consumer choice is studied as to how the market and firm demand
curves are derived concentrating on the law of demand and the income and
substitution effects. Production and cost analysis are studied in the short and long run
starting with an analysis of the production function. Cost analysis is key here with the
distinction and importance of average and marginal cost concepts as applied to
equilibrium and efficiency. Firm size as controlled by economies and diseconomies of
scale as well as returns to scale is also studied. The last area covered is the theory of
the firm. Here we study the different market structures and how they differ due to the
characteristics of each. Stress is placed on the difference between demand and
marginal revenue curves for the various market structures and how this effects price
and output decisions. Allocative and productive efficiency is studied for each market
structure as well as the basis and difference in decision making for perfect or pure
competition, monopoly, oligopoly and monopolistic competition.
B. In Factor Markets we apply the concepts of supply and demand to markets for land,
labor and capital. We analyze derived demand and how the factor’s marginal product
and marginal revenue product affect the demand for and price of the factor.
C. Market Failure and Government concentrates on the arguments for and against
government intervention in the marketplace. We study marginal social benefit and
marginal social cost concepts as applied to externalities, public goods and market
distribution of income to determine the need for government intervention.
Text and Materials
Mankiw, N. Gregory, Principles of Economics – Sixth Edition Thomson South-Western,
Course Structure
In Class: Lecture style covering the material from Mankiw, N. Gregory, Principles of
Economics, supplemented with overhead transparencies supplied with the text as well as
video projections from the Internet. We go over the homework questions completely
using the video projector and the supplied answers from the publisher website and
analysis of the Activities from the Morton book.
a. Assigned problems from Problems and Applications section from each chapter of
Mankiw, N. Gregory, Principles of Economics hereafter referred to as Mankiw.
a. Unit tests comprised of selected questions from the assigned homework as well as
relevant free response questions from previous AP Exams.
b. Final examination is a complete previously released AP Examination, both multiple
choice and free response sections given over the course of two classes so there is a 2hour window of completion.
Course Outline
Unit 1: Basic Concepts
Time: 1 ½ weeks
Key Topics: Scarcity, choice, opportunity costs, the invisible hand, efficiency, market
failure standard of living, inflation vs. unemployment, business cycle, the circular flow
diagram, microeconomics vs. macroeconomics, positive vs. normative analysis,
production possibilities curve, property rights and marginal analysis.
Readings: Mankiw, Principles of Economics, chapters 1, 2 & 3
Unit 2: How Markets Work Time: 2 weeks
Key Topics: What is a market, what is competition, the demand curve relationship
between price and quantity demanded, market demand vs. individual demand, shifts in
demand, the supply curve relationship between price and quantity supplied, market
supply vs. individual supply, shifts in the supply curve, equilibrium and changes in
equilibrium, how prices allocate resources, elasticities of supply and demand
Readings: Mankiw, Principles of Economics, chapters 4, 5, & 6.
Unit 3: Markets, Welfare and the Public Sector Time: 3 weeks
Key Topics: Efficiency of markets, consumer & producer surplus, evaluating market
efficiency, costs of taxation and deadweight loss, Laffer Curve, international trade,
discussion of trade restrictions, externalities, public and private solutions to externalities,
public goods and common resources, property rights, the tax system.
Readings: Mankiw, Principles of Economics, chapters 7 – 12.
Unit 4: Firms and Market Structures
Time: 4 weeks
Key Topics: Costs of production, short-run and long-run costs, economies and
diseconomies of scale, competitive market structure, market supply curve, monopoly
structure, demand vs. marginal revenue, efficiency of monopoly, public policy toward
monopoly, price discrimination, oligopoly, cartels, game theory, antitrust policy,
monopolistic competition, advertising.
Readings: Mankiw, Principles of Economics, chapters 13 –17.
Unit 5: Factor Markets
Time: 2 weeks
Key Topics: Derived demand, demand for labor, marginal product of labor, marginal
revenue product, supply of labor, equilibrium in the labor market, land and capital,
determinants of wage equilibrium, labor market discrimination, income inequality,
income redistribution.
Readings: Mankiw, Principles of Economics, chapters 18-20
Unit 6: Consumer Choice
Time: ½ week
Key Topics: Budget constraints, indifference curves, substitutes and complements,
income and substitution effects, deriving the demand curve.
Readings: Mankiw, Principles of Economics, chapter 21
Final Assessment: Semester final given before winter break