As we move into the second half of the year, you have a little less than 3 months to prepare for the AP Macro & Micro Exams on May 10 & 12. As you have seen, we are 100% through the material that you will be tested on. At this point, you should now have a firm grasp on many of the elementary graphs and illustrations presented within the course. This understanding is important due to the fact that:
“Since 1996, students have been required to draw and label their own graphs for some parts of the free-response questions on the AP Economics Examinations. Drawing graphs is not just the key to earning points directly for your artwork; it is also the secret to solving problems that may not even require a graph. Have you noticed that economists seem compulsive about drawing graphs? It’s not that they are repressed artists. Rather, they know this secret: Economics is very hard to sort out in your head but relatively easy with a few illustrations. Invest the time necessary to learn to draw the graphs. Resist the temptation to interpret the question with words alone. Although the graders often permit a high point allocation for good prose (word only) responses, the most successful prose responses are typically explanations of graphs that show that the students understand the graphs and visualize them in their minds.” BARRON’S How to prepare for the AP Microeconomics Exam
To complete the project, students will need to use colored pens (pencils), graphing paper, and their text book. Students are expected to place the following graphs on the required pages.
ILLUSTRATION WITH CORRESPONDING PAGE:
Page 1:
1. The Circular Flow Model – (Include both the Circular Flow Model discussed in Ch. 2
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2. The Production Possibilities Frontier (Include output combinations that are efficient, inefficient, and not feasible given the economy’s resources)
3. A Shift in the Production Possibilities Frontier with a corresponding explanation of how such a shift is possible.
4. A Production Possibilities Frontier for Two Independent Countries (with two respective products) and How Trade Between the Countries Increases each Country’s Consumption. Note: Two illustrations are required here. See page 49 for assistance.
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5. The Demand Curve. Show both an increase and a decrease in quantity demanded. At the bottom of the graph, list the determinant that would cause a change in quantity demanded.
6. A Market Demand Curve that is Comprised of Three Individual Demand Curves
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7. A Shift in the Demand Curve. Show the shift in both directions (i.e. – increase and decrease). At the bottom of the graph, list five determinants of demand that would shift the demand curve in either direction.
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8. The Supply Curve. Show both an increase and a decrease in quantity supplied. At the bottom of the graph, list the determinant that would cause a change in quantity supplied.
9. A Market Supply Curve that is Comprised of Three Individual Supply Curves
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10. A Shift in the Supply Curve. Show the shift in both directions (i.e. – increase and decrease). At the bottom of the graph, list six determinants of supply that would shift the supply curve in either direction.
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11. The Equilibrium of Supply and Demand
12. Binding Price Ceiling & Resulting Shortage
13. Binding Price Floor and Resulting Surplus
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*For Graphs 14-19, discuss the impact on Price & Quantity either at the bottom of each graph or off to the side.
14. Increase in Demand with Supply Remaining Constant.
15. Increase in Supply with Demand Remaining Constant
16. Increase in Demand with an Increase in Supply
17. Increase in Demand with a Decrease in Supply
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18. Decrease in Demand with an Increase in Supply
19. Decrease in Demand with a Decrease in Supply
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20. The Equilibrium of Supply and Demand Illustrating Consumer Surplus & Producer Surplus
21. The Elasticity Along a Straight Line Demand Curve That Illustrates the Elastic, Unitary Elastic, and Inelastic Ranges*On your graph, please note that: in the elastic portion of the demand curve, MR is positive; in the unit elastic portion, MR is zero; and in the inelastic portion; MR is negative.
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*For Graphs 22 & 23, identify the deadweight loss and tax revenue associated within the graph.
22. Tax Incidence: Elastic Demand with Inelastic Supply
23. Tax Incidence: Inelastic Demand with Elastic Supply
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24. The Laffer Curve
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*For Graphs 25-28, illustrate how free trade affects welfare in the domestic country.
25. International Trade in an Importing Country (i.e. – the World Price for the Good is Below the Domestic Price
26. International Trade in an Exporting Country (i.e. – the World Price for the Good is Above the Domestic Price
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27. The Effects of a Tariff in an Importing Country
28. The Effects of a Quota in an Importing Country
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*For Graphs 29 & 30, identify the appropriate government action needed to correct the externality. As part of your response, discuss why the action selected impacts the producer’s behavior.
29. Positive Externality
30. Negative Externality
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31. Marginal Product of Labor Curve
32. Average Total Cost, Marginal Cost, Average Variable Cost, & Average Fixed Cost Curves
33. Total Cost, Total Variable Cost, & Total Fixed Cost Curves
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34. Short Run & Long Run Average Total Cost Curves Illustrating Economies of Scale, Constant Returns to Scale & Diseconomies of Scale
35. Production Function*Include on your graph why the production function is shaped as it is.
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36. A Competitive Firm’s Short Run Supply Curve
37. A Competitive Firms’ Long Run Supply Curve
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38. Lorenz Curve complete with an explanation of the Gini Coefficient
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39. A Perfectly Competitive Firm’s Long Run Price & Quantity (Hint: Normal Profits)
40. A Perfectly Competitive Firm’s Short Run Illustrating Positive Economic Profit
41. A Perfectly Competitive Firm’s Short Run Illustrating Negative Economic Profit
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42. Side by Side Graphs for a Perfectly Competitive Firm and Market: The Graph will begin in Long-Run Equilibrium, then it will demonstrate an Increase in Demand (Illustrating Positive Economic Profits). Finally, the graph will return to Long Run Equilibrium and Normal Profit. Under the graphs, provide a summary of what happens with respect to entry/exit and P&Q as you shift the different curves.
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43. Side by Side Graphs for a Perfectly Competitive Firm and Market: The Graph will begin in Long-Run Equilibrium, then it will demonstrate a Decrease in Demand (Illustrating Negative Economic Profits). Finally, the graph will return to Long Run Equilibrium and Normal Profit. Under the graphs, provide a summary of what happens with respect to entry/exit and P&Q as you shift the different curves.
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44. A Monopoly in Long Run Equilibrium – be sure to shade in both the deadweight loss & the area of monopoly profit.
45. A Monopolist with Perfect Price Discrimination
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46. A Monopoly in Short Run Equilibrium with Negative Economic Profit – be sure to shade in both the deadweight loss & the area of monopoly profit.
47. A Regulated Monopoly that is producing at the Allocatively Efficient Output Level
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48. A Monopoly that is producing at a quantity that Maximizes Total Revenue
49. A Regulated Monopoly that is producing at a quantity where it is receiving Normal Profit in the Long Run
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50. A Kinked Demand Curve for an Oligopolist
51. A Monopsonist in Long Run Equilibrium
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52. A Monopolistic Competitive Firm in Long Run Equilibrium
53. A Monopolistic Competitive Firm’s Short Run Illustrating Positive Economic Profit
54. A Monopolistic Competitive Firm’s Short Run Illustrating Negative Economic Profit
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55. The Market Supply & Demand Curves for Labor (i.e. – The Factor Market)
56. An Individual Firm’s Supply & Demand Curves for Labor (i.e. – The Factor Market). Below your graph, please state the profit maximizing criteria that companies will use when hiring employees.
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57. Side by Side Graphs for the Factor Market (i.e. – Labor) and a Firm: The Graph will begin in Equilibrium and then experience an increase in supply within the Factor Market causing the market wage to fall. On the graph for the firm, illustrate how this shift in the market will affect the firm’s hiring decision when it comes to the profit maximizing number of workers that it will employ.
58. Side by Side Graphs for the Factor Market (i.e. – Labor) and a Firm: The Graph will begin in Equilibrium and then experience a decrease in supply within the Factor Market causing the market wage to rise. On the graph for the firm, illustrate how this shift in the market will affect the firm’s hiring decision when it comes to the profit maximizing number of works that it will employ.
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59. Side by Side Graphs for the Factor Market and a Firm: The Graph will begin in Equilibrium and then experience an increase in demand within the Product Market. On the graph for the firm, illustrate how this shift in the Product Market will affect both the Factor Market and the firm.
60. Side by Side Graphs for the Factor Market and a Firm: The Graph will begin in Equilibrium and then experience a decrease in demand within the Product Market. On the graph for the firm, illustrate how this shift in the Product Market will affect both the Factor Market and the firm.
Page 31: (MACROECONOMICS)
61. The Loanable Funds Market
62. The Loanable Funds Market – Crowding Out – Shift the Supply Curve
63. The Loanable Funds Market – Crowding Out – Shift the Demand Curve
64. The Loanable Funds Market: Illustrate Capital Flight
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65. The Money Market – The FED Buys Bonds*on your graph, explain what happens to AD & Interest Sensitive Consumption & Investment. Also discuss what happens to the LR growth in the economy.
66. The Money Market – The FED Sells Bonds*on your graph, explain what happens to AD & Interest Sensitive Consumption & Investment. Also discuss what happens to the LR growth in the economy.
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67. The Money Market – There is an increase in the Price Level in the economy. Show how this impacts the demand for money and the corresponding change in the Nominal Interest Rate.*On the graph, discuss what happens to Interest Sensitive Consumption & Investment as well as LR Growth in the Economy. What will happen to AD in the economy?
68. The Money Market – There is a decrease in the Price Level in the economy. Show how this impacts the demand for money and the corresponding change in the Nominal Interest Rate. .*On the graph, discuss what happens to Interest Sensitive Consumption & Investment as well as LR Growth in the Economy. What will happen to AD in the economy?
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69. The Foreign Currency Exchange Market: Show how an increase in the Real Interest Rate in the Loanable Funds Market impacts the country’s currency exchange rate.
70. The Foreign Currency Exchange Market: Show how a decrease in the Real Interest Rate in the Loanable Funds Market impacts the country’s currency exchange rate.
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71. Illustrate the Macro Economy in a SR Contractionary (Recessionary) Gap.
72. Illustrate the Macro Economy in a SR Expansionary (Inflationary) Gap.
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73. The Macro Economy Begins in LR Equilibrium and then experiences an Adverse Supply Shock: Show how the active approach by the government will get the economy back to equilibrium.
74. The Macro Economy Begins in LR Equilibrium and then experiences an Adverse Supply Shock: Show how the passive approach by the government will get the economy back to equilibrium.
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75. The Macro Economy Begins in LR Equilibrium and then experiences a Favorable Supply Shock: Show how the active approach by the government will get the economy back to equilibrium.
76. The Macro Economy Begins in LR Equilibrium and then experiences a Favorable Supply Shock: Show how the passive approach by the government will get the economy back to equilibrium.
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77. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences an Adverse Supply Shock. Show how this impacts the SRPC.
78. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences a Favorable Supply Shock. Show how this impacts the SRPC.
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79. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences a Decrease in AD. Show how this impacts the SRPC.
80. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences an Increase in AD. Show how this impacts the SRPC.
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81. The Long Run Aggregate Supply (LRAS) begins in LR Equilibrium and then experiences a Decrease. *on your graph, discuss why the LRAS may shift inward. Please discuss what happens to the Natural Rate of Output and the Natural Rate of Unemployment when there is a LR Decrease in LRAS.
82. The Long Run Aggregate Supply (LRAS) begins in LR Equilibrium and then experiences an Increase. *on your graph, discuss why the LRAS may shift outward. Please discuss what happens to the Natural Rate of Output and the Natural Rate of Unemployment when there is a LR Increase in LRAS.
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83. The Long Run Phillips Curve
84. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in LR Equilibrium.
85. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in SR Equilibrium due to an Expansionary Gap.
86. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in SR Equilibrium due to a Recessionary Gap.
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87. A Decrease in the Long Run Phillips Curve.*on your graph, discuss what happens to the country’s Natural Rate of Unemployment.
88. An Increase in the Long Run Phillips Curve.*on your graph, discuss what happens to the country’s Natural Rate of Unemployment.
THE ASSIGNMENT IS DUE ON MARCH 16 AND WILL COUNT AS A 4TH QUARTER GRADE. IT IS WORTH 88 POINTS; 1 POINT PER GRAPH. ALL PROJECTS SHOULD BE SUBMITTED IN A BINDER CLIP. PLEASE DO NOT PLACE YOUR PROJECT IN A FOLDER OR STAPLE IT.
Please do a nice job as this will serve as an excellent study tool that can be used leading up to the actual exams. Any submitted graph that is unprofessional in appearance (i.e. – white out, correction tape, sloppiness, scribbled, graphs out of order, etc.) will receive a zero.