AP Microeconomics Syllabus

AP Microeconomics Syllabus

Herrington, Samantha

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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.

1. 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.
2. 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.
3. 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, 2012

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.

Homework:

a.Assigned problems from Problems and Applications section from each chapter ofMankiw, N. Gregory, Principles of Economics hereafter referred to as Mankiw.

Assessments:

a.Unit tests comprised of selected questions from the assigned homework as well as relevant free response questions from previous AP Exams.

1. 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 2-hour 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 WorkTime: 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 StructuresTime: 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 MarketsTime: 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 ChoiceTime: 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