James C. Lerch

Quality Schools International

A.P. Microeconomics Syllabus

Course Description

The AP Microeconomics course provides you with a broad introduction to the field of microeconomics, one of the social sciences. The premise of this course is that decision-making is based on economics. This course is divided it into five essential units as outlined below.

We will use as our primary text an online text called Principles of Economics.

However we will also use a wide variety of additional material to assist you in your learning.
This course culminates in a College Board AP Examination that test both broad factual knowledge and analytical skills. The examination is divided into two major sections: the Multiple Choice section and the Free Response section. Here is a breakdown of the parameters of the Microeconomics AP Examination:

In Microeconomics you will gain a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers, within the economic system. The course places primary emphasis on the nature and functions of product markets and includes the study of factor markets and the role of government in promoting greater efficiency and equity in the economy. The essential units are:

  1. Basic Economic Concepts
  2. The Nature and Functions of Product Markets
  3. The Theory of the Firm
  4. Factor Markets
  5. The Role of Government

Course Skills

In thiscourse you will develop the following skills:

Demonstrate economic questioning and analysis skills with a special emphasis on marginal analysis.

Interpret and create a variety of graphical models and economic concepts.

Analyze the development of modern economic theory.

Use and interpret the language of business and basic measurements of economic performance.

Apply economic skills and concept knowledge to higher college-level economic courses.

Course Assessment

We are a standards-based school, where your work is assessed for mastery. When you combine the relevance of our academic system with the rigor of AP, the result is a stringent college-level course where consistent excellence is expected. Summative Assessments will consist of the following. Formative Assessments, while not necessarily forming part of your grade, will be used to prepare you for the Summative Assessments, and will imitate them.

  • Examinations are given at the end of each unit and include AP style multiple choice and essays.
  • Free Response Questions, frequently involving are assigned frequently both as part of examinations and as stand-alone assessment tools. Responses will be assessed in terms of both core structure and content. You will be introduced to the AP Essay grading system, and learn to appreciate the vital importance of a well-crafted thesis. Paragraphs will be scored for evidence of both factual knowledge and analytical ability.

Course Materials

Primary Text
  • Rittenberg, Libby, and Timothy Tregarthen. "Principles of Economics." Flat World Knowledge Catalog. Flat World Knowledge, Inc., June 2011. Web. 27 May 2012. <
Secondary Texts
  • Ray, Margaret, Paul R. Krugman, and David A. Anderson.Krugman's Economics for AP. New York: Worth Publishers, 2011. Print.
  • McConnell, Campbell R., Stanley L. Brue, and Sean Masaki Flynn.Economics: Principles, Problems, and Policies. 19th ed. New York: McGraw-Hill/Irwin, 2012. Print.
  • Bade, Robin and Parkin, Michael Foundations of Economics, AP Edition. 5th Ed. (Upper Saddle River, New Jersey: Prentice Hall, 2010)
Supporting Materials
  • Anderson, David A.Cracking the AP Economics Macro & Micro Exams. 2011 ed. New York: Random House, 2010. Print.
  • Anderson, David A. Economics by Example. New York, NY: Worth Publishers, 2007. Print.
  • Anderson, David A. Economics by Example Teacher’s Manual. New York, NY: Worth Publishers, 2007. Print.
  • Dodge, Eric R.AP Microeconomics/Macroeconomics, 2010-2011. Dubuque, Iowa: McGraw-Hill Contemporary Learning, 2011. Print.
  • Collegeboard. Professional Development AP Economics Workshop Handbook 2010-11. Collegeboard, 2010.
  • Lopus, Jane S. Capstone: Exemplary Lessons for High School Economics. New York, N.Y.: National Council on Economic Education, 2003. Print.
  • Lopus, Jane S. Capstone: Exemplary Lessons for High School Economics: Teacher's Guide. New York, N.Y.: National Council on Economic Education, 2003. Print.
  • Lopus, Jane S., and Amy M. Willis. Economics in Action: 14 Greatest Hits for Teaching High School Economics. New York, N.Y.: National Council on Economic Education and Junior Achievement Japan, 2003. Print
  • Morton, John S., and Rae Jean B. Goodman. Advanced Placement Economics: Teacher Resource Manual. 3rd ed. New York, N.Y.: National Council on Economic Education, 2003. Print.
  • Morton, John S., and Rae Jean B. Goodman. Advanced Placement Economics: Microeconomics Student Activities Workbook. 3rd ed. New York, N.Y.: National Council on Economic Education, 2003. Print.
  • Solman, Paul. The Paul Solman Video Series. McGraw-Hill Publishing Company, 2006. Video.
  • Wheelan, Charles.Naked Economics: Undressing the Dismal Science. Fully rev. and updated. New York: W. W. Norton, 2010. Print.

Course Planner

  1. Unit One - Basic Economic Concepts

Chapters 1 - 2 of Principles of Economics.

Unit 1 focuses on basic economic concepts. These concepts account for 8 to 12 percent of the AP Microeconomics Examination. The most important concept is scarcity, which in turn result in the need to make choices. You must understand scarcity, opportunity cost, choice and trade-offs. You must be able to illustrate these concepts on a production possibilities curve.

Because of scarcity, every economic system must determine which goods to produce, how to produce them and for whom to produce them.

Much of the course will focus on how specialization and exchange increase the total output of goods and services. You must be able to differentiate between absolute advantage and comparative advantage, and be able to use comparative advantage analysis to determine optimal trade conditions.

In this unit, you will:

  • be introduced to the economic concepts of scarcity, opportunity cost and marginal analysis;
  • learn and use the production possibilities frontier and circular flow models
  • focus on comparative advantage and uses, and;
  • reinforce understanding of these economic concepts by applying them to a variety of conventional and unconventional situations.
  1. Unit Two - The Nature and Functions of Product Markets

Chapters 3 – 8 of Principles of Economics

Unit 2 focuses on the laws of supply and demand, consumer choice and their effects on the allocation of resources. These concepts account for 20 percent to 30 percent of the AP Microeconomics Examination.

You will learn that supply and demand curves are models for understanding human behavior in which consumer choice is emphasized. This unit contains many opportunities to graph changes in demand, supply and equilibrium price and quantity.

The unit also covers elasticity of demand and supply, as well as the effects of price ceilings and floors, income effects, substitution effects and diminishing marginal utility.

In this unit, you will:

  • learn the assumptions of determinants of supply and demand in order to use models of markets for description, analysis and prediction;
  • understand the significance and role of prices in a market economy;
  • use concepts of elasticities of demand and supply to evaluate quantitatively economic situations;
  • evaluate the use of government price controls (floors and ceilings), and;
  • apply supply and demand analysis to a variety of conventional and unconventional situations.
  1. Unit Three - The Theory of the Firm

Chapters 9 – 11 of Principles of Economics

The theory of the firm is the heart of AP Microeconomics. In this unit, it is important to understand and to differentiate between short-run and long-run equilibrium for both a profit-maximizing individual firm and for an industry. You must understand the relationships among price, marginal revenue, average revenue, marginal cost, average cost and profit.

You must be able to compare a monopolist’s price, level of output and profits with the price, level of output and profits of a perfect competitor. You should also be able to explain why perfect competition is preferable to monopolistic competition.

You must also be able to evaluate government regulation of monopoly.

In this unit, you will:

  • learn the market structures of perfect competition, monopoly, mmonopolistic competition and oligopoly;
  • learn about the costs of production;
  • determine short-run and long-run equlibria of a perfect competitor for both the firm and the industry;
  • identify and apply the basics of the monopoly firm, including comparison of the results achieved by a profit-maximizing monopolist and a profit-maximizing perfect competitor;
  • examine why monopolies are bad and review potential regulatory policies toward them, and;
  • examine “in-between” market structures of monopolistic competition and oligopoly using game theory to understand how oligopolistic decisions are made.
  • provide solutions to problems involving market structure and business decision making.
  1. Unit Four - Factor Markets

Chapters 12 – 14 of Principles of Economics

The basic analytical framework for examining factor markets uses concepts similar to those used in the supply and demand unit and the theory of the firm unit. Supply, demand, equilibrium, marginalism and profit-maximizing are all analyzed again in this unit. The only difference is that they are applied to inputs rather than outputs. You will not be learning a lot of new concepts in this unit. Instead, you will apply concepts already learned in studying product markets to the factor or resource markets.

The demand curve for a resource, however, is derived from the product that the resources can produce. In other words, you will be asked to relate demand in the product market to the demand in the resource market.

A key concept in the study of factor markets is marginal productivity analysis, which is used to analyze how wages, rents, interest and profits are determined. This unit stresses wage determination and uses it as an example to show how the factors of production are priced. The key is that a firm will hire inputs until marginal revenue product equals marginal resource cost.

We will also look at how wages are determined in a perfectly competitive labor market and in a monopsonistic labor market. The unit analyzes the effects of minimum-wage laws and union activities using both competitive and monopsonistic models.

In this unit, you will:

  • use the circular flow diagram to show the differences between factor markets and product markets;
  • describe and use the key concepts in factor markets;
  • examine how marginal productivity theory determines how resource prices are established;
  • analyze how wages are determined in competitive labor markets and in monopsonistic labor markets;
  • discuss the concept of economic rent;
  • use thoughtful questions to apply factor-market concepts to a variety of conventional and unconventional situations.
  1. Unit Five - The Role of Government

Chapters 15 – 19 of Principles of Economics

In this unit you will develop criteria to determine which activities government should undertake and to evaluate how well government performs these activities.

You will learn that governments must provide public goods. However, pure public goods are rare and must meet the criteria of shared consumption and nonexclusion.

You will also learn that governments try and correct market failures. A market failure occurs when the private market produces too much or too little of a good because of the existence of negative or positive externalities. Market failures also occur when people in markets do not have sufficient information, and this is also used to justify government intervention.

Although government intervention into the market (for whatever reason), may correct market failures, government policies can also fail. Public-choice theorists believe politicians and government officials are often as self-interested as businesspeople. The views of public-choice theorists will be offered to provide balance regarding the proper role of government.

In this unit, you will:

  • explain the conditions under which a good or service should be provided by the private sector or by government;
  • evaluate the role of externalities;
  • examine the arguments of public-choice economic theory;
  • discuss the economics of taxation.

Description of Frequently Used Class Activities

There are a variety of activities that we will conduct during class for each of the six units:

  • Graphing Activities – Each student will be frequently asked to properly draw economic graphs.
  • Class Quizzes – these quizzes are most often formative assessments designed to provide me with a gauge of your reading comprehension.
  • Multiple Choice Exams – these AP-style exams will be administered at the end of each unit and also as review prior to the actual AP Exam in May. Students who take the exam will have an option to earn half credit by admitting they don’t know the answer to the question, and then answering it for homework, identifying both the correct answer, why it is correct, what theme(s) is/are involved, and what historical thinking skill(s) is/are involved.
  • Forums – Students will be asked to participate frequently in online forums where various microeconomics issues will be discussed.
  • Note-taking- You are encouraged to take notes, summarize and re-organize them.
  • Self-Assessment Questionnaires/Rubrics – We will use a variety of questionnaires and rubrics to help you engage in metacognitive thinking.
  • Watch Videos – There are excellent videos available that may be shown throughout the year.
  • Listen to Podcasts – occasionally I will ask you to listen to podcast lectures of other economists.
  • Lecture – traditional lecture is relatively rare, but still sometimes necessary. When I lecture, you can count on requests for student summarization of what I have said, and also opportunities to develop student pairs that work together to digest what is being discussed.

Essential graphs for AP Microeconomics

Production Possibilities Curve

Demand and Supply

(Market Clearing Equilibrium)

Floors and Ceilings

Consumer and Producer Surplus

Effect of Taxes

A tax imposed on the BUYER-demand curve moves left

• elasticity determines whether buyer or seller bears incidence of tax

• shaded area is amount of tax

• connect the dots to find the triangle of deadweight or efficiency loss.

A tax imposed on the SELLER-supply curve moves left

• elasticity determines whether buyer or seller bears incidence of tax

• shaded area is amount of tax

• connect the dots to find the triangle of deadweight or efficiency loss.

Purely Competitive Product Market Structure

Long run equilibrium for the market and firm-price takers

Allocative and productive efficiency at P=MR=MC=min ATC

Imperfectly Competitive Product Market Structure

Monopoly Market StructureNatural Regulated Monopoly

Single price monopolist-price makerSelling at Fair return ( Qfr at Pfr)

Earning economic profit

Monopolistically Competitive Market structure

Long run equilibrium where P=AC at MR=MC output

Pure Competition Resource Market Structure

Perfectly competitive Labor Market-Wage takers

Firm wage comes from market so changes in labor demand do not raise wages.

Imperfectly competitive market structure-Wage makers

Quantity derived from MRC=MRP (Qm)

Wage (Wm) comes from that point downward to Supply curve.

Externalities

No ExternalityNegative Externality

Tax, direct controls, lawsuits, Coase theorem

Positive Externality

Subsidy to buyerSubsidy to Seller