AP Microeconomics

By taking on the role of a leader at a fictitious company, you will learn fundamental economic concepts, including scarcity, opportunity costs and trade-offs, productivity, economic systems and institutions, exchange, money, and interdependence.

Major Concepts:

• Scarcity
• Resource allocation
• Economic systems
• Production Possibilities Curve (Frontier)
• Reading and constructing basic economics graphs
• Comparative advantage and trade
• Cost-benefit analysis
• Marginal analysis and impact on consumer choice
• The law of demand and determinants of demand
• The law of supply and determinants of supply
• Price elasticity of demand
• Price elasticity of supply
• Cross-price and income elasticity
• Market equilibrium
• Constructing and interpreting market graphs
• Economic surplus
• Market disequilibrium
• International trade and public policy
• The production function
• Short-run production costs
• Long-run production costs
• Types of profit
• Profit maximization of the firm
• A firm’s short-run production decisions
• A firm’s long-run decisions to enter or exit a market
• The perfectly competitive market model
• Allocative and productive efficiency
• Distinguishing imperfect from perfect competition
• Characteristics of imperfectly competitive markets
• The monopoly model
• Basics of the natural monopoly model
• Price discrimination in a monopoly
• The monopolistic competition model
• Oligopoly and game theory
• Reading and analyzing a payoff matrix
• Defining factor (resource) markets
• Differentiating input from output markets
• Identifying changes in factor demand and factor supply and outcomes
• Profit maximization in a perfectly competitive factor market
• The monopsony model
• Socially optimal production
• Defining market failure
• Efficient versus inefficient market outcomes
• Externalities
• Public goods
• Private goods
• Effects of government intervention
• Comparing government intervention in different market structures