A Correlation of Foundations of Economics, 5th Edition, AP Edition, ©2011

to the

Advanced Placement Microeconomics and Macroeconomics Topics

A Correlation of

Foundations of Economics
5th Edition, AP® Edition

©2011

to the

Advanced Placement
Microeconomics and Macroeconomics
Topics

AP® is a trademark registered and/or owned by the College Board, whichwas not involved in the production of, and does not endorse, this product.

Advanced Placement Microeconomics and Macroeconomics Topics / Foundations of Economics
5th Edition, AP Edition, ©2011 /
AP ECONOMICS CORRELATION CHARTS
This chart correlates the Advanced Placement Microeconomics topics as outlined by the College Board with the corresponding chapters and section numbers in Foundations of Economics, AP* Edition.
AP Microeconomics Topics Textbook Correlation
I. Basic Economic Concepts / Chapters 1, 2, 3, 9
A. Scarcity, choice, and opportunity cost / 1.1, 1.2, 3.2
B. Production possibilities curve / 3.1
C. Comparative advantage, absolute advantage, specialization, and trade / 3.4, 9.1, 9.2
D. Economic systems / 2.3
E. Property rights and the role of incentives / 1.2
F. Marginal analysis / 1.2
II. The Nature and Functions of Product Markets / Chapters 4, 5, 6, 7, 8, 12, 13, 14, 15, 16, 17
A. Supply and Demand Chapter / 4
1. Market equilibrium / 4.3
2. Determinants of supply and demand / 4.1, 4.2
3. Price and quantity controls / Chapter 7
4. Elasticity / Chapter 5
a. Price, income, and cross-price elasticities of demand / 5.1, 5.3
b. Price elasticity of supply / 5.2
5. Consumer surplus, producer surplus, and market efficiency / 6.1, 6.2, 6.3, 6.4
6. Tax incidence and deadweight loss / 8.1, 8.2
B. Theory of consumer choice Chapter / 12
1. Total utility and marginal utility / 12.2
2. Utility maximization: equalizing marginal utility per dollar / 12.2
3. Individual and market demand curves / 4.1
4. Income and substitution effects / AP Test Prep Workbook, Chapter 13
C. Production and costs / Chapter 13
1. Production functions: short and long run / 13.1
2. Marginal product and diminishing returns / 13.2
3. Short-run costs / 13.3
4. Long-run costs and economies of scale / 13.4
5. Cost minimizing input combination / AP Test Prep Workbook, Chapters 13 and 18
D. Firm behavior and market structure / Chapters 13, 14, 15, 16, 17
1. Profit / Chapters 13, 14
a. Accounting versus economic profits / 13.1
b. Normal profit / 13.1, 14.2
c. Profit maximization: MR = MC rule / 14.1, 15.2, 16.2
2. Perfect competition / Chapter 14
a. Profit maximization / 14.1
b. Short-run supply and shutdown decision / 14.1, 14.2
c. Behavior of firms and markets in the short run and in the long run / 14.2, 14.3
d. Efficiency and perfect competition / 14.3
3. Monopoly / Chapter 15
a. Sources of market power / 15.1
b. Profit maximization / 15.2
c. Inefficiency of monopoly / 15.3
d. Price discrimination / 15.4
e. Natural monopoly / 15.1. 15.5
4. Oligopoly / Chapter 17
a. Interdependence, collusion, and cartels / 17.1, 17.2
b. Game theory and strategic behavior / 17.3
5. Monopolistic competition / Chapter 16
a. Product differentiation and role of advertising / 16.1, 16.3
b. Profit maximization / 16.2
c. Short-run and long-run equilibrium / 16.2
d. Excess capacity and inefficiency / 16.2
III. Factor Markets / Chapters 18, 19
A. Derived factor demand / 18.1
B. Marginal revenue product / 18.1
C. Labor market and firms’ hiring of labor / 18.2
D. Market distribution of income / 19.1
IV. Market Failure and the Role of Government / Chapters 6, 10, 11, 15, 17, 19
A. Externalities / Chapter 10, 11
1. Marginal social benefit and marginal social cost / 10.3, 11.1
2. Positive externalities / 10.1, 10.3
3. Negative externalities / 10.1, 11.1
4. Remedies / 10.3, 11.1
B. Public goods / Chapter 10
1. Public versus private goods / 10.1
2. Provision of public goods / 10.2
C. Public policy to promote competition / Chapters 15, 17
1. Antitrust policy / 17.4
2. Regulation / 15.5
D. Income distribution / Chapter 19
1. Equity / 6.5, 19.3
2. Sources of income inequality / 19.1, 19.2
This chart correlates the Advanced Placement Macroeconomics topics as outlined by the College Board with the corresponding chapters and section numbers in Foundations of Economics, AP® Edition.
AP Macroeconomics Topics
I. Basic Economic Concepts / Chapters 1, 3, 4, 20, 21, 22
A. Scarcity, choice, and opportunity costs / 1.1, 1.2, 3.2
B. Production possibilities curve / 3.1
C. Comparative advantage, absolute advantage specialization, and exchange / 3.4, 9.2
D. Demand, supply, and market equilibrium / 4.1, 4.2, 4.3
E. Macroeconomic issues: business cycle, unemployment, inflation, growth / Chapters 20, 21, 22
II. Measurement of Economic Performance / Chapters 20, 21, 22, 27, 28
A. National income accounts / Chapter 20
1. Circular flow / 2.3, 20.1
2. Gross domestic product / 20.1, 20.2
3. Components of gross domestic product / 20.1
4. Real versus nominal gross domestic product / 20.2
B. Inflation measurement and adjustment / Chapters 22, 28
1. Price indices / 22.1, 22.2
2. Nominal and real values / 22.3
3. Costs of inflation / 27.3
C. Unemployment / Chapter 21, 23
1. Definition and measurement / 21.1
2. Types of unemployment / 21.3
3. Natural rate of unemployment / 21.3, 23.2
III. National Income and Price Determination / Chapters 28, 29
A. Aggregate demand / Chapter 28, 29
1. Determinants of aggregate demand / 28.2, 29.1, 29.2, 29.4
2. Multiplier and crowding-out effects / 29.3, 25.3
B. Aggregate Supply / Chapter 28
1. Short-run and long-run analyses / 23.1, 28.3
2. Sticky versus flexible wages and prices / 28.1
3. Determinants of aggregate supply / 28.1
C. Macroeconomic Equilibrium / Chapters 23, 28
1. Real output and price level / 28.3
2. Short and long run / 28.3
3. Actual versus full-employment output / 21.3, 28.3
4. Economic fluctuations / 28.3
IV. Financial Sector / Chapters 25, 26, 27
A. Money, banking, and financial markets / Chapters 25, 26
1. Definition of financial assets: money, stocks, bonds / 25.1, 26.1
2. Time value of money (present and future value) / 25.1, 25.2
3. Measures of money supply / 26.1
4. Banks and creation of money / 26.2, 26.3, 26.4
5. Money demand / 27.1
6. Money market / 27.1, 27.2
7. Loanable funds market / 25.2
B. Central bank and control of the money supply / Chapters 26, 27
1. Tools of central bank policy / 26.3
2. Quantity theory of money / 27.2
3. Real versus nominal interest rates / 22.3
V. Inflation, Unemployment, and Stabilization Policies / Chapters 30, 31
A. Fiscal and monetary policies / Chapters 31, 32
1. Demand-side effects / 31.2, 32.2
2. Supply-side effects / 31.3
3. Policy mix / 31.2, 32.2
4. Government deficits and debt / 25.3, 31.1
B. Inflation and unemployment / Chapter 30
1. Types of inflation / AP Test Prep Workbook, Chapter 27
a. Demand-pull inflation / AP Test Prep Workbook, Chapter 27
b. Cost-push inflation / AP Test Prep Workbook, Chapter 27
2. The Phillips curve: short run versus long run / 30.1, 30.2
3. Role of expectations / 30.2, 30.3
VI. Economic Growth and Productivity / Chapters 24
A. Investment in human capital / 24.2
B. Investment in physical capital / 24.2
C. Research and development, and technological progress / Chapter 24
D. Growth policy / 24.4
VII. Open Economy: International Trade and Finance / Chapter 33
A. Balance of payments accounts / Chapter 33
1. Balance of trade / 33.1
2. Current account / 33.1
3. Capital account / 33.1
B. Foreign exchange market / Chapter 33
1. Demand for and supply of foreign exchange / 33.2
2. Exchange rate determination / 33.2
3. Currency appreciation and depreciation / 33.2
C. Net exports and capital flows / 33.2
D. Links to financial and goods markets / 33.2

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