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Mr. Latimer
www.clevelandhs.org
[email protected]
AP® Microeconomics
Syllabus
AP® Microeconomics is a one-semester course at the initial college level and is a foundation for possible future
study in economics or business. This semester, we will emphasize the small-scale economic principles and the
individual decision makers within an economy. Topics discussed will reflect the material for AP Economics
Course Description at www.apcentral.collegeboard.com. Each student is expected to take the AP
Microeconomics Exam that is administered in May. Students will have ample opportunity to improve their
writing, speaking, critical thinking, and consensus building skills. You will also generate, interpret, correctly
label, and analyze graphs, charts, and data to describe and explain economic concepts. This will be a rigorous
course, but it will also be enjoyable. Hard work and dedication will be essential for success. All homework
assignments will be posted on Cleveland’s webpage.
Textbook
McConnell, Campbell, and Stanley Brue. Economics, 17th ed. McGraw-Hill/Irwin, 2008.
The assigned reading from McConnell and Brue will be referred to as M&B. There will also be assigned
reading from various articles and handouts provided by the teacher.
Grading
Assigned Homework and Class work = 15-40 pts.
Unit Tests = 25-40 pts.
Chapter Tests = 25-30 pts.
Final Exam = 50-60 pts.
All homework, including essays and short answers will be written in black ink and follow the MLA Style
Guide for quotes and citations. Everything will be hand written in your own words and graded on content, use
of documentary and supporting evidence, evidence of critical thinking, grammar, punctuation, and spelling.
SPRING TERM
The following readings will be completed before the beginning of the week they will be discussed.
I. General Concepts (8-14%)
Basic Economic Concepts:
A. Scarcity, choice, and opportunity cost
B. Production possibilities curve
C. Comparative advantage, specialization, and trade
D. Economic Systems
E. Property rights and the role of incentives
F. Marginal analysis
List of Key Words or Terms:
Economics, economic approach, microeconomics, factors of production, positive
economics, normative economics, scarcity, consumer choice, opportunity cost, model,
production possibilities, constant costs, law of increasing opportunity cost, specialization,
terms of trade, productive efficiency, allocative efficiency, private property, incentives,
marginal benefit, and marginal cost.
Key Graphs:
A. Production possibilities curve
B. Circular flow of economic activity
II. Supply and Demand (15-20%)
The Nature and Functions of Product Markets:
A. Supply and Demand
1. Market equilibrium
2. Determinants of supply and demand
3. Price and quantity controls
4. Elasticity
5. Consumer surplus, producer surplus, and market efficiency
6. Tax incidence and deadweight loss
7. Total utility and marginal utility
8. Utility maximization
9. Individual and market demand curves
10. Income and substitution effects
Key Words or Terms:
Demand, law of demand, quantity demanded, market demanded, substitutes,
complements, normal goods, inferior goods, supply, law of supply, quantity supplied,
market structures, market equilibrium, equilibrium price, equilibrium quantity, shortage,
surplus, price ceiling, price floor, elastic, inelastic, unit elastic, perfectly elastic, perfectly
inelastic, total revenue, elasticity of supply, consumer surplus, producer surplus,
production, cost, total economic surplus, market efficiency, taxation, tax incidence,
deadweight loss, marginal utility, law of diminishing marginal utility, marginal utility vs.
total utility, individual demand curve, market demand curve, horizontal summation,
substitution effect, and income effect.
Key Graphs:
A. Demand and supply curves showing equilibrium, shifts of demand/supply
B. Demand and supply curves showing ceilings and floors
C. Demand and supply curves showing consumer surplus/producer surplus
D. Demand and supply curves showing deadweight loss
M&B Chapters 18-20
III. Theory of Business Firm (25-35%)
Firm Behavior and Market Structure:
A. Profit
B. Perfect Competition
C. Monopoly
D. Monopolistic competition
E. Oligarchy
Key Words or Terms:
Implicit costs, explicit costs, economic costs, economic profits, normal profit, perfect
competition, total revenue, average revenue, marginal revenue, profit maximization at
MR=MC, shutdown, short-run supply, long-run supply, allocative efficiency, productive
efficiency, monopoly, natural monopoly, barriers to entry, patent, price discrimination,
socially optimal price, fair return price, monopolistic competition, product differential,
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excess capacity, oligopoly, cartels, collusion, concentration ratio, price, and leadership
model.
Key Graphs:
A. Perfectly competitive side-by-side industry and firm graphs
B. Perfectly competitive firm with short-run profits
C. Perfectly competitive firm with short-run losses
D. Perfectly competitive side-by-side industry and firm graphs in long-run equilibrium
E. Monopoly firm graph with profit maximizing price and quantity
F. Monopoly firm graph with socially optimal or fair return price
G. Monopolistically competitive firm in the short-run
H. Monopolistically competitive firm in the long-run
I. Allocative Efficiency: MC=MB
J. Short-run and Long-run costs
K. Diminishing Marginal Utility
L. Diminishing Returns
M&B Chapters 21-24
IV. Factor Markets (10-18%)
A. Derived factor demand
B. Marginal revenue product
C. Labor market and firm’s hiring of labor
D. Market distribution of income
Key Words or Terms:
Factor market, product market, capital, labor, labor market, market failures, input,
resource, derived demand, marginal (physical) product of labor (MPL), productivity,
marginal revenue product, marginal resource cost, wage taker, substitution effect, output
effect, least cost combination of resources, profit maximizing combination of resources,
monopsony, unions, bilateral monopoly, nominal wage, real wage, economic rent,
interest rate for investment funds.
Key Graphs:
A. Circular flow of economic activity
B. Marginal revenue product (Demand) curve
C. Market’s marginal revenue product and marginal resource cost (Supply) curves
D. Firm’s marginal revenue product and marginal resource cost (Supply) curves
E. Side-by-side perfectly competitive market and firm graphs
F. Monopsony
M&B Chapters 25-26
Spring Break (April 18-22) – M&B Chapter 27
V. Government and the Economy (12-18%)
A. Externalities
1. Marginal social benefit and marginal social cost
2. Positive externalities
3. Negative externalities
4. Remedies
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B. Public goods
1. Public versus private goods
2. Provision of public goods
C. Public policy to promote competition
1. Antitrust policy
2. Regulation
D. Income distribution
1. Equity
2. Sources of income inequality
Key Words or Terms:
Marginal cost-marginal benefit rule, positive externalities, spillover effect, negative
externalities, spillover cost, Coase theorem, tragedy of the commons, tax, subsidy,
quantity control, rivalry, private goods, public goods, common resources, free rider,
progressive tax, proportional tax, regressive tax, ability to pay principle, benefits received
principle, average tax rate, marginal tax rate, Sherman Act of 1890, Clayton Act of 1914,
horizontal merger, vertical merger, conglomerate merger, natural monopoly, equity,
Lorenz curve, poverty rate, transfer payments, and noncash transfers.
Key Graphs:
A. Market supply and demand curves with optimal price/quantity
B. Market supply and demand curves with positive externalities
C. Market supply and demand curves with negative externalities
D. Lorenz curve
M&B Chapters 28-29
Review for AP Exam(s)
AP Exams: Thursday, May 13: AP Macroeconomic (morning) and Microeconomic
(afternoon)
Stock Market Simulation, Create a Video on an Economic Concept, and Personal finances after the AP
Exams
Final Exams
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