AP MICROECONOMICS UNIT #2
AP MICROECONOMICS 2018-2019
UNIT #2 PLAN
INTRODUCTION TO MARKETS
GEORGIA STANDARDS OF EXCELLENCE (GSE) IN THIS UNIT
Microeconomics
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International
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COLLEGE BOARD STANDARDS IN THIS UNIT
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II. Nature and Functions of Product Markets—part one this unit (20–30%)
A. Supply and demand (15–20%)
1. Market equilibrium
2. Determinants of supply and demand
3. Price and quantity controls
4. Elasticity
a. Price, income, and cross-price elasticities of demand
b. Price elasticity of supply
5. Consumer surplus, producer surplus, and allocative efficiency
6. Tax incidence and deadweight loss
B. Theory of consumer choice (5–10%)
1. Total utility and marginal utility
2. Utility maximization: equalizing marginal utility per dollar
3. Individual and market demand curves
4. Income and substitution effects
KEY IDEAS SHEET
Refer to sheet given out at start of unit
READING ASSIGNMENTS
1. Intro to Demand: Module 5.
1. Intro to Supply: Module 6.
2. Equilibrium: Module 7.
3. Price Controls (Ceilings and Floors: Module 8.
4. Quantity Controls: Module 9.
5. Income and Substitution Effects and Elasticity: Module 46.
6. Interpreting Price Elasticity of Demand: Module 47.
7. Other Important Elasticities: Module 48.
8. Consumer and Producer Surplus: Module 49.
9. Efficiency and Deadweight Loss: Module 50.
10. Barriers to Trade: Module 44.
11. Utility Maximization: Module 51.
LECTURES
1. Introduction to Markets and Demand.
2. Supply.
3. Equilibrium and Changes in Equilibrium.
4. Price and Quantity Controls.
5. Elasticity of Demand.
6. Cross Elasticity and Income Elasticity and Elasticity of Supply.
7. Consumer surplus, producer surplus, total surplus, efficiency, and deadweight loss.
8. Implications of taxation.
9. Implications of international trade.
10. Utility.
11.
1.
1.
2.
UNIT PROBLEM SET: due the day before the test; will be provided to you
UNIT GRAPHS
See handout on the blog.
QUIZZES
1. Demand. 6. Implications of International Trade.
2. Supply. 7. Total/Marginal Utility and util max.
3. Equilibrium.
4. Elasticity.
5. Consumer/Producer/Total Surplus.
6. Implications of Taxation.
TEST PRACTICE: will work on in class the day before the test
1. Sample Multiple Choice.
2. Sample Free Response. Also done in class throughout the unit.
TEST
Unit Test #2 including multiple choice and FRQs.
VOCABULARY
Markets
Demand
Quantity demanded
Law of demand
Determinants of demand
Substitute good
Complementary good
Normal good
Inferior good
Supply
Quantity supplied
Law of supply
Determinants of supply
Equilibrium
Surplus
Shortage
Rationing funct.of prices
Price ceiling
Price floor
Elasticity of demand
Elastic demand
Inelastic demand
Unit elastic demand
Total revenue
Elasticity of supply
Market period
Short-run
Long-run
Utility
Total utility
Marginal utility
Law of dim. Marg. Util.
Utility maximizing rule
Consumer surplus
Producer surplus
Total surplus
Tax
Tax incidence
Deadweight loss
Laffter Curve
World price
Domestic price
Tariff
Import quota
Non-tariff barrier
GRAPH/CHART/APPLICATION SKILLS
1. Interpret and analyze supply and demand graphs including all changes, price ceilings and floors, etc.
2. Compute and classify elasticities of supply and demand using the midpoint formula.
3. Compute total revenue and use it to test for elasticity.
4. Compute total and marginal utility from a chart and from a graph.
5. Use the utility-maximizing rule to analyze expenditures.
6. Compute consumer, producer, and total surplus from a graph.
7. Interpret and analyze supply and demand graphs with taxes.
8. Interpret and analyze supply and demand graphs with world prices on them and tariffs and import quotas.
9. Interpret and analyze exchange rate graphs.
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