AP MICROECONOMICS UNIT #2



AP MICROECONOMICS UNIT #2

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. Chapter 3: pp. 44-50.

1. Chapter 3: pp. 50-53.

2. Chapter 3: pp. 53-61.

3. Chapter 18: pp. 339-348.

4. Chapter 18: pp. 348-352.

5. Chapter 18: pp. 352-356.

6. Chapter 19: pp. 359-369.

7. Chapter 29: pp. 570-578.

8. Chapter 35: pp. 682-693.

9. Chapter 36: pp. 696-700.

10. Chapter 36: pp. 700-714.

LECTURES

1. Introduction to Markets and Demand.

2. Supply.

3. Equilibrium and Changes in Equilibrium.

4. Elasticity of Demand and Supply.

5. Cross Elasticity and Income Elasticity.

6. Consumer surplus, producer surplus, total surplus.

7. Utility.

8. Implications of taxation.

9. Implications of international trade.

1. TEXTBOOK STUDY QUESTIONS

1. Chapter 3: 3, 6, 8, 9, 14.

2. Chapter 18: 2, 3, 4, 5, 8, 9, 10, 15.

3. Chapter 17: 1, 4, 7, 13.

4. Chapter 29: 7, 9.

5. Chapter 35: 6, 7.

6. Chapter 36: 2, 3, 7, 10.

ONLINE QUIZZES FROM TEXTBOOK SITE LINK ON THE BLOG

1. Chapter 3: 1-10.

2. Chapter 4: 1-10.

3. Chapter 6: 1-10.

4. Chapter 37: 4, 7, 9.

UNIT PROBLEM SET: due the day before the test; will be provided to you

UNIT GRAPHS

See handout on the blog.

QUIZZES

1. Demand. (5) 6. Total/Marginal Utility and util max. (10)

2. Supply. (6) 7. Consumer/Producer/Total Surplus. (11)

3. Equilibrium. (7) 8. Implications of Taxation. (12)

4. Price Elasticity of Demand. (8) 9. Implications of International Trade. (13)

5. Cross/Income Elasticity. (9)

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.

TESTS

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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