AP Microeconomics
Mr. Waterman
Microeconomics – Key Concepts & Graphs
Unit 1
1. Define the science of economics
2. Distinguish between opportunity cost, scarcity, and trade-offs
3. Distinguish between macroeconomics and microeconomics
4. Make a distinction between positive economics and normative economics
5. List the three basic economic questions
6. Define comparative advantage and specialization and benefits of exchange
7. Use a production possibilities curve to demonstrate opportunity cost and growth
Unit 2
8. List the determinants of demand and supply curves
9. Recognize which factors will cause demand curves or supply curves to shift
10. Distinguish between changes in quantity demanded versus a change in demand
11. Distinguish between changes in quantity supplied versus a change in supply
12. Determine equilibrium using a demand/supply graph and show the effects on price
and quantity when equilibrium changes
13. Distinguish between a normal and inferior good
14. Distinguish between a substitute and complementary good
15. Predict the effect of an effective price ceiling or floor in a market
16. Measure elasticity using percentage changes in quantity caused by price changes
17. Use demand/supply graphs to show the effect of differences in elasticity
18. Define the law of diminishing marginal utility
19. Use the income effect and the substitution effect to explain the down-sloping
demand curve
20. Apply the utility-maximizing rule
21. Given a demand/supply graph, identify/calculate the area of consumer
surplus/producer surplus
Unit 3
22. Distinguish economic profit from accounting profit
23. Use a circular flow diagram to model a market
24. Make a distinction between the short run from the long run
25. Define the law of diminishing marginal returns
26. Identify per unit costs when given total costs and output; identify total costs when
given per unit costs output
27. Identify the key characteristics of the different types of market structure
28. Use the profit-maximizing rule (MR=MC) to determine output price for firms in the
different types of market structure
29. Determine short and long run profit in the different types of market structure
30. In words and using graphical analysis, show the short and long position of the purely
competitive firm
31. In words and using graphical analysis, show the profit scenario of a single price
monopolist and a perfectly discriminating monopolist
32. Identify the government policies employed when a firm exercises monopoly power or
is a natural monopoly
33. In words and using graphical analysis, show the position of the monopolistically
competitive firm in the short and long run
34. Predict the behavior of oligopolistic firms using game theory and profit matrixes
Unit 4
35. Define derived demand
36. Given a graph or a table, determine the market wage and the quantity of labor a
profit-maximizing firm would hire in a perfectly competitive labor market
37. Given a graph or a table, determine the market wage and the quantity of labor a
profit-maximizing firm would hire in a imperfectly competitive labor market
Unit 5
38. Given a graph, identify the incidence of a tax on buyer and seller and the
deadweight loss
39. Define a public good
40. Discuss the free rider problem
41. List the effect of income and payroll taxes on the economy
42. Identify the two principles used to assess fairness of a tax
43. Explain negative and positive externalities and give examples of each
44. Identify the possible remedies for market failures that might be employed to achieve
an optimal allocation of resources
Key Graphs
Supply & Demand
Price Floor
Price Ceiling
Consumer & Producer Surplus
Taxation & Deadweight Loss
Perfect Competition (Side by side)
Monopoly
Monopolistic Competition
Regulated Natural Monopoly
Perfectly Competitive Resource Market (Side by side)
Monopsony – Imperfect Resource Market
Externalities
Positive – Subsidize Producers
Negative – Tax Producers