Advanced Placement Microeconomics
Course Overview
COURSE DESCRIPTION:
Advanced Placement Microeconomics is offered only in the 0dd-numbered years, alternating with
Advanced Placement Macroeconomics. The course is designed to help students develop criticalthinking skills through the understanding, application, and analysis of fundamental economic concepts
that apply to smaller sections of the economy. The focus of the course will be on the behavior and
interactions of consumers and producers with the factor market and product market and to develop an
understanding of the way in which government action impacts this behavior. At the conclusion of the
course students will be prepared to take the AP Microeconomics examination in May.
TOPIC OUTLINE OF CONTENT AREA:
I.
Basic Economic Concepts
a. Scarcity and Choice
b. Production Possibilities
c. Specialization and Trade
d. Economic Systems
e. The Role of Incentives
f. Marginal Analysis
II.
The Nature and Functions of Product Markets
a. Supply and Demand
b. Theory of Consumer Choice
c. Production and Costs
d. Firm Behavior and Market Structure
III.
Factor Markets
a. Factor Demand
b. Marginal Revenue
c. Labor Markets
d. Market Distribution of Income
IV.
Market Failure and the Role of Government
a. Externalities
b. Public Goods
c. Public Policy
d. Income Distribution
TEXTBOOK:
Mankiw, Gregory. Principles of Economics, 5th ed., South-Western, 2009.
SUPPLEMENTAL READINGS:
Buchholtz, Todd. New Ideas from Dead Economists. New York: Penguin Group, 2007.
Dubner, Stephen, and Levitt, Steven. Freakonomics. New York: Harper Collins Publishers,
2009.
Ehrenreich, Barbara. Nickel and Dimed. New York: Metropolitan, 2001.
McConnell, Campbell, and Stanley Brue. Economics, 16th ed., McGraw-Hill/Irwin, 2002.
Schlosser, Eric. Fast Food Nation. New York: Houghton Mifflin Company, 2002.
ADDITIONAL COURSE READINGS:
The Week
The Wall Street Journal Online Edition
The New York Times: Up Front
Local newspaper articles
Emphasis will be on written work, extensive reading and analysis of primary source documents. Students must
be willing to work independently and cooperatively. The readings will include a college textbook and numerous
assigned additional outside readings. Readings are intended to serve as the point of departure for class sessions
and discussions. Therefore, it is imperative for students to complete the assigned reading before a topic is taken up
in class. As an incentive for keeping up, there will be unannounced quizzes over the duration of the course.
Meaningful class participation is strongly encouraged and enhances the quality of class sessions.
Students will be expected to have a basic understanding of current events that affect the American
economy - domestically and internationally. Students are urged to keep up with current events daily by
reading a newspaper, a weekly news magazine, viewing nightly news, or watching a cable news station.
There are various weekly television programs that may also add to your current knowledge of events.
In order to cover the course material there will be nightly assignments. Students will also be assigned
short term and long term projects throughout the course.
GRADES:
Grades will be calculated on a total point basis including the following:
 Homework
 Projects
 Papers
 Quizzes, Tests and Exams
 Participation
* The final exam for this course will follow the school policy on exemptions of exams.
90% of total points = A
80% of total points = B
70% of total points = C
60% of total points = D
59% of total points = F
GOALS:
Students successfully completing the course will be able to:
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Demonstrate economic reasoning and decision making skills
Explain the relationship between supply, demand and prices
Evaluate the nature and function of product and factor markets
Examine firm behavior and varied market structures
Analyze the role of government in the economy
Successfully take the AP Microeconomics Exam in May of this school year
ACADEMIC HONESTY:
There are many times throughout this course that students will be expected to conduct research in
order to complete assignments. It is NEVER acceptable to plagiarize. This means that if you use
someone else’s work-- give them appropriate credit. You are responsible to appropriately document all
outside sources using MLA format. The guidelines that will be used in this course are consistent with
those presented by the Purdue Writing Lab (http://owl.english.purdue.edu/owl/resource/747/01/).
Any student that plagiarizes an assignment will receive a zero for that assignment.
RESOURCE DISCLAIMER:
To enhance student understanding and learning of a wide variety of economic concepts, this course will
incorporate a variety of multimedia tools. We will be watching a variety of videos and listening to audio
materials that relate directly to the subject matter. Some of these materials will be rated PG, PG-13, or
R. If you find these teaching tools objectionable for your student, simply send in a note or email me by
the end of this week to discuss this matter in more detail.
COMMUNICATION:
In an effort to make sure that both you and your parent/guardian are aware of the course rules and
expectations listed above I would like you and your parent/guardian to sign below. I will check for this
signature at the start of class TOMORROW.
Parent Signature: X____________________________________________
Student Signature: X___________________________________________
Advanced Placement Macroeconomics
Syllabus
Content, Scope, and Sequence:
Class meets for 80 minutes each day for a ninety day semester.
Topic Outline of Content Area:
I.
Basic Economic Concepts
a. Scarcity and Choice
b. Production Possibilities
c. Specialization and Trade
d. Economic Systems
e. The Role of Incentives
f. Marginal Analysis
II.
The Nature and Functions of Product Markets
a. Supply and Demand
b. Theory of Consumer Choice
c. Production and Costs
d. Firm Behavior and Market Structure
III.
Factor Markets
a. Factor Demand
b. Marginal Revenue
c. Labor Markets
d. Market Distribution of Income
IV.
Market Failure and the Role of Government
a. Externalities
b. Public Goods
c. Public Policy
d. Income Distribution
TEXTBOOK:
Mankiw, Gregory. Principles of Economics, 5th ed., South-Western, 2009.
SUPPLEMENTAL READINGS:
Buchholtz, Todd. New Ideas from Dead Economists. New York: Penguin Group, 2007.
Dubner, Stephen, and Levitt, Steven. Freakonomics. New York: Harper Collins Publishers,
2009.
Ehrenreich, Barbara. Nickel and Dimed. New York: Metropolitan, 2001.
McConnell, Campbell, and Brue, Stanley. Economics, 16th ed., McGraw-Hill/Irwin, 2005.
ADDITIONAL COURSE READINGS
The Week
The Wall Street Journal Online Edition
The New York Times: Up Front
Local newspaper articles
COURSE LONG ACTIVITIES
“Breaking News”
Each student is expected to track the news and to report out major current events to the class. Students
are expected to keep on ongoing journal of these events and will be required to write an analysis of
these events at the end of the course.
Cartoon Scrapbook
Each student must compile a scrapbook of two relevant political cartoons per week throughout the
course with explanation of the cartoons. Cartoons must relate to Economics and explanation will
incorporate core content.
Unit I: Basic Economic Concepts
(Approximate percent of course time: 15%, 12 days)
Day
Topic
1
Introduction to AP Microeconomics: course overview, course syllabus, AP expectations
Diagnostic pre-test for AP Microeconomics
2
Discussion of pre-test for AP Microeconomics
Writing for the AP Microeconomics exam, sample free response questions
3
Introduction to Economics: Mankiw’s ten principles of Economics,
Principles 1-6
4
Introduction to Economics: Mankiw’s ten principles of Economics,
Principles 7-10
Discussion of economic systems and the invisible hand of the marketplace
5
The economist as scientist: scientific method, assumptions, models (circular flow
model/production possibilities graph)
The economist as policy advisor: microeconomics vs. macroeconomics, positive vs.
normative analysis
6
Chapter 1 and 2 quiz
Introduction of market forces of supply and demand
7
Overview of markets and competition
Demand: law of demand, ceteris paribus, changes in demand vs. quantity demanded
8
Supply: law of supply, changes in supply vs. quantity supplied
Equilibrium: defining equilibrium, changes in equilibrium, shortage, surplus
9
Elasticity: determinants of elasticity of demand/supply, calculating elasticity, total
revenue
10
Government influences on supply and demand: price ceilings, price floors, taxes
11
Student debate: The government should intervene in the marketplace.
12
Unit Review
Unit 1 Assessment
Readings, Unit I
Principles of Economics (Mankiw), Chapters 1 and 2 (pp. 1-48) and Chapters 4, 5, and 6 (pp. 63-134)
Economics (McConnell, Brue), Chapter 4 Online Edition (http://highered.mcgrawhill.com/sites/dl/free/0072819359/124312/chapter04.pdf)
Freakonomics (Dubner, Levitt), excerpts from Chapter 1 (pp. 15-50)
Core Content, Unit I
Concepts:
economic decision making, macroeconomics vs. microeconomics, positive vs. normative economics,
scarcity, opportunity costs, production possibilities, factors of production, economic systems, benefits of
free enterprise, law of demand, law of supply, determinants of demand, determinants of supply, market
equilibrium, shifts in supply and demand with changes in equilibrium price and quantity, elasticity of
demand, elasticity of supply, changes in the business cycle, government influence on markets
Graphs:
Production possibilities frontier
Demand and supply curves showing equilibrium
Demand and supply curves showing shifts in demand/supply
Government influence on supply/demand: price ceilings and price floors
Terms:
economics, factors of production, consumer goods, capital goods, efficiency, market economies, centrally
planned economies, specialization, circular flow model, microeconomics, macroeconomics, positive
economics, normative economics, ceteris paribus, scarcity, shortage, opportunity cost, production
possibilities, law of increasing costs, demand, law of demand, quantity demanded, market demand,
substitutes, complements, normal goods, inferior goods, supply, law of supply, quantity supplied, market
equilibrium, equilibrium price, equilibrium quantity, elasticity, business cycle, recession, trough,
recovery, unemployment, inflation, economic growth
Films
30 Days: Minimum Wage video
Supply, Demand, and Elasticity Paul Soloman video
Activities, Unit I
Student Debate: The government should intervene in the marketplace.
Research Activity: Adam Smith and the Invisible Hand of the Marketplace
Unit II: Measurement of Economic Performance
(Approximate percent of course time: 12%, 11 days)
Day
Topic
1
Review Unit 1 Assessment
Introduction to economic performance
2
Measuring a nation’s income: income and expenditure, measures of gross domestic
product, components of GDP, real vs. nominal GDP
3
4
5
6
7
8
9
10
11
Measuring a nation’s income: application and limits of GDP
Review of measuring a nation’s income
Quiz on Gross Domestic Product
Introduction to measuring the cost of living
Measuring the cost of living: inflation, Consumer Price Index, market basket
Measuring the cost of living: GDP deflator vs. the CPI, effects of inflation, real vs.
nominal interest rates, current interest rates in the United States
Quiz on Inflation
Introduction to unemployment
Unemployment: definition, measuring, characteristics of the labor force
Unemployment: types, natural rate, limits of the unemployment rate
Student Debate: The United States should expand/increase unemployment benefits.
Unit Review
Unit 2 Assessment
Readings, Unit II
Principles of Economics (Mankiw), Chapters 23 and 24 (pp. 507-545), and Chapter 28 (pp. 613-637)
Nickel and Dimed (Ehrenreich), Part I (pp. 11-50) and the Evaluation (pp.193-222)
Core Content, Unit II
Concepts
Circular flow of economic activity, understanding gross domestic product, expenditure approach vs.
income approach to gross domestic product, nominal vs. real gross domestic product, types of
unemployment, full employment, limits of the unemployment rate, measurements of inflation, types of
inflation, effects of inflation
Graphs
Circular flow of economic activity
Terms
Gross domestic product, intermediate goods, final goods, expenditure approach, income approach,
personal consumption expenditures, net exports, national income, depreciation, personal income,
disposable personal income, nominal GDP, real GDP, GDP deflator, peak, recession, trough, recovery,
labor force, unemployment rate, frictional unemployment, structural unemployment, cyclical
unemployment, full employment, rate of unemployment, natural rate of unemployment,
underemployment, discouraged workers, inflation, Consumer Price Index
Activities, Unit II
Student Debate: The United States should expand/increase unemployment benefits.
Research Paper: The Underground Economy
Unit III: National Income and Price Determination
(Approximate percent of course time: 12%, 11 days)
Day
Topic
1
Review Unit 2 Assessment
Introduction to national income and price determination
Classical vs. Keynesian economic theory
2
National income and price determination: multiplier and crowding out effects
3
Aggregate demand: downward slope, shifts
4
5
6
7
8
9
10
11
Aggregate demand: graphs
Quiz on aggregate demand
Introduction of aggregate supply
Aggregate supply: short run vs. the long run
Aggregate supply: graphs
Quiz on aggregate supply
Economic fluctuations: sticky vs. flexible wages, prices
Economic fluctuations: supply shocks , impacts on real GDP and price level
Student Debate: The Tax Rebates of 2008 benefited the United States economy.
Unit Review
Unit 3 Assessment
Readings, Unit III
Principles of Economics (Mankiw), Chapter 33 (pp. 739-775)
New Ideas from Dead Economists (Buchholz), “Keynes: Bon Vivant as Savior” (pp.203-225)
Core Content, Unit III
Concepts
The multiplier effect, reasons for a downward sloping aggregate demand curve, determinants of
aggregate demand, aggregate supply in the short and long run, sticky versus flexible prices and wages,
determination of equilibrium output and price level, actual versus full employment, utilization of
resources
Graphs
Investment demand curve
Aggregate demand and short run aggregate supply curve
Aggregate demand and long run aggregate supply curve
Keynesian vs. Classical economic theory aggregate graphs
Terms
multiplier, investment schedule, leakage, injection, real balances effect, interest-rate effect, foreign
purchases effect, aggregate demand, short-run aggregate supply, equilibrium price level, equilibrium
real output, recession, depression, stagflation, natural rate of output
Films
Good Bye Lenin video
Activities, Unit III
Student debate: The Tax Rebates of 2008 benefited the United States economy.
Aggregate Supply and Demand Newsletter: Students will create a newsletter that explains and
demonstrates the key components of this unit
MIDTERM EXAM
A cumulative midterm exam is required by our school district. The timing and scheduling is determined
by administration. Depending on dates set, topics and concepts on the exam may include materials from
UNIT IV: Financial Sector
Unit IV: Financial Sector
(Approximate percent of course time: 20%, 17 days)
Day
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Topic
Review Unit 3 Assessment
Introduction to the financial sector
Savings, investment and the financial system: financial institutions, saving and
investing
Saving, investment and the financial system: financial assets, the market for loanable
funds
Saving, investment and the financial system: the economic policy of saving incentives,
investment incentives, and budget deficits
The basic tools of finance: measuring the time value of money, compounding and the
rule of 70, managing risk
Quiz on the financial system and tools of finance
Introduction of the monetary system
The monetary system: functions of money, kinds of money, money in the United States
The monetary system: history and organization of the Federal Reserve Bank
The monetary system: powers of the Fed and the money multiplier
The monetary system: tools of the Fed
The monetary system: tools of the Fed
Issue Focus: The Financial Crisis of 2008
Issue Focus: The Financial Crisis of 2008
The monetary system: impact and views of monetary policy
The monetary system: shortcomings of monetary policy
Student debate: The Federal Reserve Bank should be abolished.
Unit Review
Unit 4 Assessment
Readings, Unit IV
Principles of Economics (Mankiw), Chapters 26 and 27 (pp. 579-612), and Chapter 29 (pp. 641-662)
Core Content, Unit IV
Concepts
Functions of money, characteristics of money, measures of money, demand for money, the money
market, the creation of money, financial intermediaries, financial markets, loanable funds market,
organization of the Federal Reserve, tools of monetary policy, responsibilities of the Fed, and quantity
theory of money.
Graphs
Money market
Loanable funds market
Domestic bond market
Terms
Medium of exchange, store of value, measure of value, M1, M2, M3, checkable deposits, demand
deposits, time deposits, legal tender, asset demand, transaction demand, balance sheet, fractional reserve
banking system, required reserves, excess reserves, actual reserves, federal funds rate, prime interest
rate, discount rate, open-market operations, nominal interest rate, real interest rate, FDIC, and velocity
of money.
Films
The Fed Today video
Inside the Meltdown Frontline video
Activities, Unit IV
Student debate: The Federal Reserve Bank should be abolished.
Investment portfolio: Students will create their own investment portfolio with $50,000 of virtual money.
Unit V: Inflation, Unemployment, and Stabilization Policies
(Approximate percent of course time: 20%, 18 days)
Day
Topic
1
Review Unit 4 Assessment
Economic Policy Advisor Project Discussed
Introduction of Inflation, Unemployment and Stabilization Policies
2
Fiscal and monetary policies: demand-side effects
3
Fiscal and monetary policies: demand-side effects
4
Fiscal and monetary policies: supply-side effects
5
Fiscal and monetary policies: supply-side effects
6
Fiscal and monetary policies: policy mix
7
Fiscal and monetary policies: government deficits and debt
8
Fiscal and monetary policies: government deficits and debt
9
Student debate: The Federal Government should balance its budget.
10
Economic Policy Advisor Project Presentations
Fiscal and Monetary Policies Review
11
Fiscal and Monetary Policy Quiz and Free Response
12
Inflation: types, theories
13
Inflation: costs, policy limits, Greenspan v. Bernanke
14
Unemployment: origins of the Phillips curve, aggregate supply and demand
15
Unemployment: shifts in the Phillips curve (long-run/short-run)
16
Unemployment: the role of supply shocks
17
Macroeconomic policy issues
Unit Review
18
Unit 5 Assessment
Readings, Unit V
Principles of Economics (Mankiw), Chapter 8 (pp. 159-172), Chapter 12 (pp. 241-261), Chapter 29 and 30
(pp. 641-686), and Chapter 34 and 35 (pp. 777-825)
Core Content, Unit V
Concepts
Fiscal policy and the aggregate demand/aggregate supply model, monetary policy and the aggregate
demand/aggregate supply model, combinations of the policies and their effects, government deficits and
debts, long-run aggregate supply, demand pull and cost push inflation, and the inflation-unemployment
relationship.
Graphs
Aggregate demand/aggregate supply model
Phillips Curve
Laffer Curve
Terms
Expansionary fiscal policy, contractionary fiscal policy, budget deficit, budget surplus, built-in stabilizer,
discretionary policy, Laffer Curve, progressive tax system, regressive tax system, proportional tax
system, Phillips Curve, stagflation, aggregate supply shocks, long-run vertical supply curve, supply-side
economics
Films
School House Rock video
Roger and Me video
Activities, Unit V
Student debate: The Federal Government should balance its budget.
Economic Policy Advisor Project: Students will present to the “President” discussing the steps that he
should take to solve the current economic issues in the United States.
Unit VI: Economic Growth and Productivity
(Approximate percent of course time: 8%, 6 days)
Day
Topic
1
Review Unit 5 Assessment
Introduction of economic growth and productivity
2
Economic growth and productivity: investment in human capital and physical capital
3
Economic growth and productivity: research, development, and technological advances
4
Economic growth and productivity: economic schools of thought
5
Economic growth and productivity: economic schools of thought
Review
6
Unit 6 Assessment
Readings, Unit VI:
Principles of Economics (Mankiw), Chapter 25 (pp. 549-574) and Chapter 36 (pp. 827-847).
Economics (McConnell, Brue), Chapter 17 Online Edition (http://highered.mcgrawhill.com/sites/dl/free/0072819359/124312/chapter17.pdf)
New Ideas from Dead Economists (Buchholz), “The Monetarist Battle Against Keynes” (pp.226-246)
Core Content, Unit VI:
Concepts
Ingredients of economic growth, production possibilities analysis, long- and short-run analysis, labor
and productivity, technological advance, Economic Schools of Thought, Keynesian-Fiscal Policy,
Classical, Neo-Classical, Monetarist, Behavioral Economics
Graphs
Production Possibilities Curve
Aggregate demand/aggregate supply model
Laffer Curve
Phillips Curve
Key Terms
Economic growth, labor productivity, labor-force participation rate, human capital, economies of scale,
infrastructure, efficiency, Keynsian-fiscal policy, classical and neo-classical, monetarist school,
behavioral economics school
Unit VII: Open Economy: International Trade and Finance
(Approximate percent of course time: 12%, 9 days)
Day
Topic
1
Review Unit 6 Assessment
2
3
4
5
6
7
8
9
Introduction to international trade and finance
Globalization project discussed
International trade: trade patterns and trends, gains from trade, trade agreements
International trade: trade restrictions, views of protectionism, free trade vs. fair trade
International finance: balance of payments, current account balances, balance of trade
International finance: the exchange rate, changes in the exchange rates, exchange rate
policy
International finance: currency appreciation and depreciation, historic examples
Issues in the developing world: levels of development, issues in development, financing
development
Globalization Project Presentations
Review
Unit 7 Assessment
Readings, Unit VII:
Principles of Economics (Mankiw), Chapter 3 (pp. 49-61), Chapter 9 (pp. 177-196) and Chapters 31 and 32
(pp. 691-735)
Economics (McConnell, Brue), Chapter 5 & 16 Online Edition (http://highered.mcgrawhill.com/sites/dl/free/0072819359/124314/WebChapter39.pdf)
New Ideas from Dead Economists (Buchholz), “David Ricardo and the Cry for Free Trade” (pp. 68-90)
Core Content, Unit VII
Concepts:
Absolute advantage, comparative advantage, specialization, terms of trade, balance of payments, foreign
exchange markets, implications on foreign trade, effects of domestic fiscal and monetary policies on
capital flows and foreign exchange markets, use of resources, international decision and policy making
Graphs:
Production possibilities frontier
Foreign exchange market
Loanable funds market
Key Terms
Absolute advantage, comparative advantage, specialization, terms of trade, tariffs, quotas, subsidies,
world price, domestic price, current account, balance on goods and service, trade deficit, trade surplus,
capital account, official reserves, flexible exchange rates, fixed exchange rates, depreciation,
appreciation, European Union (EU), General Agreement on Tariffs and Trade (GATT), Bretton Woods
Conference, World Trade Organization (WTO), North American Free Trade Agreement (NAFTA),
International Monetary Fund (IMF) , World Bank (WB)
Films
Commanding Heights video
Life and Debt video
This is What Democracy Looks Like video
Activities, Unit VII
Globalization Project: Students will research a United States trade partner that is less developed and
create a presentation about this country.
FINAL EXAM
A final exam is required by our school district. The timing and scheduling of which is determined by the
administration. Depending on dates set, topics and concepts on the exam may, or may not, include
materials from UNIT IV- Unit VII.
Papers that are submitted by the due date can be rewritten as many times as necessary until the
student is satisfied with the grade received. Students are warned that these papers, worth 10
points, can only receive scores of 1 (sometimes 2 or 3) or 10. In other words, students receive
either an F or an A. Therefore it is important to finish the papers by the due date so that they can
be rewritten.
General Instructions
ALL PAPERS MUST:
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be typed
be double spaced
include paper title and number
include student's name and CLASS MEETING TIME
have no cover page or plastic covers, etc.
be stapled in the upper left-hand corner
written as you would an English composition with complete sentences, correct
punctuation, etc.
if the paper includes a graph (paper 2 and paper 3)
o the graphs must be discussed IN THE PAPER
o Hand-drawn graphs are required !!!
o tell the reader when to refer to the graphs
o EXPLAIN the graphs in the paper
be more than one paragraph
if they include news articles the articles must be printed on (Xeroxed), or taped to, an 8
1/2" x 11" piece of paper and stapled to the paper
have ALL previous drafts handed in with rewrite.
Paper 1: the 5 E's (Ch 1)
Define the "5 Es" and relate each definition to the concept of SCARCITY and the goal of
MAXIMIZING SATISFACTION. Explain by using realistic examples of how economic
growth, allocative inefficiency, productive inefficiency, inequity, and unemployment affect
scarcity. Please keep the paper as short as possible.
This paper is based on information from class lectures and from
http://www.harpercollege.edu/mhealy/eco211/lectures/microch1-18.htm. Be sure to read and
study this before writing your paper.
If you need to rewrite this paper ONLY REWRITE the "Es" that you got wrong. DO NOT just
change the paragraphs that you got wrong and hand in the whole paper again including the
paragraphs that were correct in a previous draft. You will have to DELETE the paragraphs that
were OK and just hand in rewrites of the paragraphs that you got wrong.
Paper 2: Supply and Demand (Ch. 3)
SAMPLE ARTICLE:
http://cnn.com/US/9907/27/gas.prices/
http://cnn.com/US/9908/09/rv.boom/
Find a newspaper article on an INDIVIDUAL PRODUCT whose PRICE and QUANTITY
SOLD has changed. Your analysis should indicate why the price and/or quantity has changed by
noting which non-price determinants of demand or supply have changed. The article must
mention at least TWO non-price determinants that have changed. If the article mentions more,
then you must discuss them in your paper as well. You may use two different articles that
mention two different determinants. Use supply and demand graphs to show changes in the
equilibrium price and/or quantity. Clearly state what happened to the non-price determinants,
what happened to supply and demand, and what happened to the price and quantity sold of the
product as a result.
The following are also REQUIRED for paper 2:
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
See the "General Instructions" above
Before beginning to look for a news article and write your paper:
o read and study chapter 3
o do the assigned Study Guide problems
o attend class and take plenty of notes
o rewrite your notes from class
The news articles must be printed on, Xeroxed on, or taped to, an 8 1/2" x 11"
piece of paper and stapled to the back of your paper
In the article CIRCLE the statements that indicate that a non-price determinant of
supply or demand has changed
Your paper MUST include a supply and demand graph.
o The graph must show the change in equilibrium price and quantity
mentioned in the article.
o Your graph must show the changes in demand and/or supply that causes
the change in equilibrium price and quantity. This means that the demand
and/or supply curves must shift.
o
o
o
o
o
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If you are discussing one product, then all changes should be made ON
THE SAME GRAPH.
In your paper you must say something like " . . . therefore demand has
increased. This will shift the demand curve to the right. On the graph
below you can see that an increase in demand will shift the demand curve
from D1 to D2. As a result, the price of the product will increase (from P1
to P2) and the quantity will increase (from Q1 to Q2)."
Hand-drawn graphs, well labeled, are preferred.
On your graph be sure to label the horizontal axis with the product that
you are discussing (for example "Q of gasoline" or Q of boats"). THIS IS
REQUIRED.
Supply and demand must be drawn on the SAME GRAPH with the
equilibrium price and quantity clearly labeled.
The purpose of this paper is to show me that you understand how to use supply
and demand graphs to explain why prices change.
Do not summarize the article, but rather explain your graph.
Let me say this again. Do not summarize the article. Only use the parts of the
article that explain the change in price and quantity. You should be summarizing
the textbook and class notes, NOT the article.
Grading:
o 1/10 means get a new article and start over (if you handed in your original
paper on time).
o 2/10 means that only one determinant was found in the the article. If you
handed your paper in on time you may redo your paper using that one
determinant AND find another article with one more determinant and
write another paper.
o 3/10 means that two or more determinants were found in the article, but
you must rewrite your analysis
o 10/10 means you are done!
Paper 3: SHOULD GAS PRICES BE HIGHER?
Read and study the assigned reading for chapters 4 and 16.
Listen to the news article below.
Write a short paper WITH GRAPHS explaining the following:

Why does James Surowiecki believe the current price of gasoline is too low and
results in inefficiency?
o
o
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which kind of inefficiency?
does he believe that there are negative externalities (spillover costs) or
positive externalities (spillover benefits) and what are they?
o show the inefficient quantity on your graph
What are the effects of the higher tax that James Surowiecki is proposing?
o what effect does it have on efficiency?
o show the effect of the higher tax on your graph
o use your graph to discuss how the tax makes the market for gasoline more
efficient
Hand-drawn graphs, well labeled, are required!!!
Discuss in your paper and show on the graph:
o the profit maximizing quantity and price
o the allocatively efficient quantity and price
o the quantity that WE GET
o the quantity that WE WANT
o the quantity where MSB=MSC
o the equilibrium quantity
o the effects of the higher tax
The purpose of the paper is to EXPLAIN THE GRAPH. You must explain
the graph in your paper (you cannot just say "see graph below").
You must also explain why the supply curve with negative externalities is to
the right of the MSC curve. This must be done to explain why "too much"
will be produced if there are negative externalities
Arguing the Upside of High Gas Prices
Morning Edition, September 22, 2005
One writer believes gas prices actually should be high. Steve Inskeep talks with James
Surowiecki, a financial columnist for The New Yorker who says a 50-cent gas tax would make
drivers pay for the real cost of cars on the road and make business cater to the fuel-conscious.
http://www.npr.org/templates/story/story.php?storyId=4858826
Paper 4: Elasticity (ch. 6)
Discuss the price elasticity of demand for the product in your article from paper 2. Explain
whether you think the market demand is price elastic or price inelastic and justify your answer by
discussing all the determinants of price elasticity of demand. Finally, discuss why it is important
to know the price elasticity of demand. This means, what happens to total revenues when the
price changed? Did they increase or decrease?
1
AP® Microeconomics
Syllabus 1
Objectives: Students will be able to
Demonstrate economic questioning
•
•
and analysis skills.
Interpret a variety of graphical models
concepts.
•
•
•
[C6] and
[C1]
paraphrase economic
Analyze the development of modern economic theory.
Explain the basic connections between economics and calculus.
Use and interpret the language of business and basic measurements of
economics performance.
•
Apply economic skills and concept knowledge to higher college-level
economic courses.
Course Planner
Content Summary
Semester 1—Microeconomics
1. Basic economic concepts: scarcity, choice, opportunity cost, PPF [C1]
2. Nature and function of product markets: supply and demand, elasticity,
consumer choice, firm production costs and revenues, pricing, perfect
competition, imperfect competition [C2]
3. Factor markets: derived demand, factor pricing [C3]
4. History of economic thought: Adam Smith, Thomas Malthus, David
Ricardo, Karl Marx, John Maynard Keynes
5. Role of government: government regulation, public goods, externalities
distribution of wealth [C4]
6. Gains from trade and absolute and comparative advantage [C1]
C1—The course teaches
students basic economic
concepts
C6—The course teaches
how to generate,
interpret, label, and
analyze graphs, charts,
and data to describe
and explain economic
concepts
C2—The course
provides students with
instruction in the nature
and functions of product
markets
C3—The course provides
students with instruction
in factor markets
C4—The course provides
students with instruction
in market failure and the
role of government
2
Unit 1: Basic Concepts 1 week
Key Topics: Scarcity, Choice, Opportunity Cost, PPF, Basic Marginal Benefit/
Marginal Cost Analysis [C1, C5]
Readings: Mankiw, Principles of Economics, Chapter 1, pp. 4–11; Chapter 2, pp. 24–28
Assessment: Quiz with two short-answer questions and six to eight multiplechoice
questions
Unit 2: Supply and Demand 3 weeks
Topics: Demand, Law of Diminishing Marginal Benefits, Supply, Consumer
and Producer Surplus, Consumer Choice/Optimal Purchase Rule, Allocative
Efficiency, Deadweight Loss, Elasticity, Total Revenue Test, Price Discrimination,
Price Floors and Ceilings, Efficiency versus Equity [C2]
Readings: Mankiw, Principles of Economics, Chapter 4; Chapter 5, pp. 89–99;
Chapter 6; Chapter 7; Chapter 8, pp. 164-69; Chapter 15, pp. 337-39
Assessment: Test with one long-answer question, two short-answer questions, and
eight to twelve multiple-choice questions.
Unit 3: Costs and Revenues 3 weeks
(emphasis on graphs) [C6]
Topics: Law of Diminishing Marginal Returns, Economies of Scale, Costs
(fixed, variable, marginal), Cost Curves (relationship between curves), Total and
Marginal Revenues, Profit and Loss (MR/MC and TR/TC), Break-Even, Shut
Down, Economic Profit versus Normal Profit [C2]
Readings: Mankiw, Principles of Economics, Chapter 13
Assessment: Test with one long-answer question, two short-answer questions,
and eight to twelve multiple-choice questions
Unit 4: Perfect Competition 3 weeks
Topics: Assumptions, Relationship between Industry and Firm, Profit Maximization,
Long-Run Equilibriums, Short-Run Equilibriums and the Adjustment Mechanism,
Allocative Efficiency [C2] (for a firm)
Readings: Mankiw, Principles of Economics, Chapter 14
Assessment: Test with one long-answer question, two short-answer questions, and
eight to twelve multiple-choice questions
Unit 5: Imperfect Competition 3 weeks
Topics: Relationship Between Price and MR, Barriers to Entry, Profit Maximization,
Monopoly, Regulation, Natural Monopoly, Oligopoly and Duopoly Game Theory
with Game Tree and Payoff Matrix (dominant strategy, Nash Equilibrium, collusion,
prisoner’s dilemma, interdependence), Collusive Oligopoly, Monopolistic
Competition (long run and short run) (Note: In each imperfectly competitive
C1—The course teaches
students basic economic
concepts
C2—The course
provides students with
instruction in the nature
and functions of product
markets
C5—The course
promotes understanding
of economic decisionmaking
and its factors,
such as marginal analysis
and opportunity costs
C6—The course teaches
how to generate,
interpret, label, and
analyze graphs, charts,
and data to describe
and explain economic
concepts
3
market structure, examine its effect on allocative efficiency and consumer and
producer surplus, and make comparisons to perfect competition.) [C2]
Readings: Mankiw, Principles of Economics, Chapter 15; Chapter 16, pp. 345-61;
Chapter 17, pp. 373-80, 385
Assessment: Test with one long-answer question, two short-answer questions, and
eight to twelve multiple-choice questions
Unit 6: Factor Markets 2 weeks
Topics: Factors of Production (review definitions of marginal revenue, marginal
product, the law of diminishing marginal returns), Derived Demand, Marginal
Revenue Product Analysis, Optimal Purchase Rule, Perfectly Competitive Factor
Markets, Profit Maximization/Cost Minimization Rules, Monopsony, Economic
Rent, Distribution of Income Among Factors, Unions [C3, C5]
Readings: Mankiw, Principles of Economics, Chapters 18 and 19; Chapter 20,
pp. 440-45
Assessment: Quiz with two short-answer questions and six to eight multiplechoice
questions
Unit 7: The Role of Government 2 weeks
Topics: Role of Government, Public versus Private Goods, Marginal Social
Cost/Marginal Social Benefit Analysis, Market Failures, Positive and Negative
Externalities, Taxes, Free Riders, “Tragedy of the Commons” [C4]
Readings: Mankiw, Principles of Economics, Chapters 10 and 11 (and parts of 12,
if time allows)
Assessment:
1. Quiz with two short-answer questions and six to eight multiple-choice
questions
2. Extra-credit APR Exam free-response section
Comprehensive Final Exam: One long-answer question, two short-answer questions,
and a full multiple-choice section (60 questions) of an AP Released Exam.
Two hours are planned for the exam.
Teaching Strategies
Complete AP • Exam problems in class. Give students 10 to 15 minutes
to work out the answers to an old AP free-response question. Let the
students work in small groups if they (or you) prefer. When a group
finishes quickly, have them put their answer on the board. I do this
several days a week, at either the beginning or the end of the period. It has
several benefits:
C2—The course
provides students with
instruction in the nature
and functions of product
markets
C3—The course provides
students with instruction
in factor markets
C5—The course
promotes understanding
of economic decisionmaking
and its factors,
such as marginal analysis
and opportunity costs
C4—The course provides
students with instruction
in market failure and the
role of government
4
Visit weaker groups or students ■■ so that they can get some
individualized instruction.
■■ Assess where common misunderstandings are happening. If I get
questions from several groups on the same part of the problem, I know
to review or reteach that idea.
■■ Students learn to do AP problems in the amount of time they will get
on the actual AP Exam. This helps them know how to pace themselves
when it counts.
•
Give reading previews. Give introductory lectures to the upcoming
reading from the textbook. Emphasize that these lectures are not meant
to be a perfect substitute for the reading; rather, they let students read new
material with some familiarity. Economics textbooks are not the easiest
to read. When students tackle the textbooks having already seen the big
ideas, they get the most from the time they spend on the reading.
•
Frontload on fundamental topics. Extend the units at the beginning of
the course and make sure that as many students as possible are on board
with the basics such as opportunity cost, supply and demand, and the cost
curves. Spending more time on these topics the first time through will
save you a lot of time later. Students can pick up new topics quickly if they
are well grounded in the topics that come early. Hours spent up front can
save you days later on in the semester!
•
Use the newspaper. Nothing motivates students like seeing that
economics is being put to use every day around them. Finding good
articles for class is easy. Look in the Wall Street Journal on page A2, “The
Economy.” The commodities page has a supply-and-demand article every
day. The Sunday “Business” section in the New York Times almost always
has something you can use, as do the editorial pages. Make a “clip-andsave”
file, gather articles as you see them, and then break them out when
you cover that topic. Searching the paper for a few minutes every day will
quickly produce more good articles than you can use.
Student Evaluation
Student grades are determined as an average of tests, quizzes, papers, and
extracredit
assignments. Grades are broken down as follows:
Tests 40% Units 2, 3, 4, 5
Quizzes 10% Units 1, 6, 8
Papers 30% Nickel and Dimed summer reading, Nickel and
Dimed supply-and-demand analysis, The Worldly
Philosophers paper
Project 10% Mutual fund project, AP Released Exam freeresponse
section
Final 10% Comprehensive
5
Teacher Resources
Economics U$A. Video series. Produced by Educational Film Center. N.p., 2002.
Ehrenreich, Barbara. Nickel and Dimed: On (Not) Getting By In America. New
York: Metropolitan Books, 2001.
Heilbroner, Robert L. The Worldly Philosophers: The Lives, Times, and Ideas of the
Great Economic Thinkers. Rev. 7th ed. New York: Simon and Schuster, 1999.
Mankiw, N. Gregory. Principles of Economics. 3rd ed. Mason, Ohio: Thompson
South-Western, 2004.
Morton, John S., and Rae Jean B. Goodman. 2004. Advanced Placement
Economics: Microeconomics, Student Activities. 3rd ed. New York: National
Council on Economic Education.
The New York Times
The Wall Street Journal