Download Happy New Year and welcome back for the final semester of your

As we move into the second half of the year, you have a little less than 3 months to prepare for the AP
Macro & Micro Exams on May 10 & 12. As you have seen, we are 100% through the material that you
will be tested on. At this point, you should now have a firm grasp on many of the elementary graphs
and illustrations presented within the course. This understanding is important due to the fact that:
“Since 1996, students have been required to draw and label their own graphs for
some parts of the free-response questions on the AP Economics Examinations.
Drawing graphs is not just the key to earning points directly for your artwork; it
is also the secret to solving problems that may not even require a graph. Have
you noticed that economists seem compulsive about drawing graphs? It’s not
that they are repressed artists. Rather, they know this secret: Economics is very
hard to sort out in your head but relatively easy with a few illustrations. Invest
the time necessary to learn to draw the graphs. Resist the temptation to interpret
the question with words alone. Although the graders often permit a high point
allocation for good prose (word only) responses, the most successful prose
responses are typically explanations of graphs that show that the students
understand the graphs and visualize them in their minds.” BARRON’S How to
prepare for the AP Microeconomics Exam
To complete the project, students will need to use colored pens (pencils), graphing paper,
and their text book. Students are expected to place the following graphs on the required
pages.
ILLUSTRATION WITH CORRESPONDING PAGE:
Page 1:
1. The Circular Flow Model – (Include both the Circular Flow Model discussed in
Ch. 2
Page 2:
2. The Production Possibilities Frontier (Include output combinations that are
efficient, inefficient, and not feasible given the economy’s resources)
3. A Shift in the Production Possibilities Frontier with a corresponding explanation
of how such a shift is possible.
4. A Production Possibilities Frontier for Two Independent Countries (with two
respective products) and How Trade Between the Countries Increases each
Country’s Consumption. Note: Two illustrations are required here. See page
49 for assistance.
Page 3:
5. The Demand Curve. Show both an increase and a decrease in quantity demanded.
At the bottom of the graph, list the determinant that would cause a change in
quantity demanded.
6. A Market Demand Curve that is Comprised of Three Individual Demand Curves
Page 4:
7. A Shift in the Demand Curve. Show the shift in both directions (i.e. – increase and
decrease). At the bottom of the graph, list five determinants of demand that
would shift the demand curve in either direction.
Page 5:
8. The Supply Curve. Show both an increase and a decrease in quantity supplied. At
the bottom of the graph, list the determinant that would cause a change in
quantity supplied.
9. A Market Supply Curve that is Comprised of Three Individual Supply Curves
Page 6:
10. A Shift in the Supply Curve. Show the shift in both directions (i.e. – increase and
decrease). At the bottom of the graph, list six determinants of supply that
would shift the supply curve in either direction.
Page 7:
11. The Equilibrium of Supply and Demand
12. Binding Price Ceiling & Resulting Shortage
13. Binding Price Floor and Resulting Surplus
Page 8:
*For Graphs 14-19, discuss the impact on Price & Quantity either at the bottom of
each graph or off to the side.
14. Increase in Demand with Supply Remaining Constant.
15. Increase in Supply with Demand Remaining Constant
16. Increase in Demand with an Increase in Supply
17. Increase in Demand with a Decrease in Supply
Page 9:
18. Decrease in Demand with an Increase in Supply
19. Decrease in Demand with a Decrease in Supply
Page 10:
20. The Equilibrium of Supply and Demand Illustrating Consumer Surplus &
Producer Surplus
21. The Elasticity Along a Straight Line Demand Curve That Illustrates the Elastic,
Unitary Elastic, and Inelastic Ranges*On your graph, please note that: in the
elastic portion of the demand curve, MR is positive; in the unit elastic portion,
MR is zero; and in the inelastic portion; MR is negative.
Page 11:
*For Graphs 22 & 23, identify the deadweight loss and tax revenue associated within
the graph.
22. Tax Incidence: Elastic Demand with Inelastic Supply
23. Tax Incidence: Inelastic Demand with Elastic Supply
Page 12:
24. The Laffer Curve
Page 13:
*For Graphs 25-28, illustrate how free trade affects welfare in the domestic country.
25. International Trade in an Importing Country (i.e. – the World Price for the Good is
Below the Domestic Price
26. International Trade in an Exporting Country (i.e. – the World Price for the Good is
Above the Domestic Price
Page 14:
27. The Effects of a Tariff in an Importing Country
28. The Effects of a Quota in an Importing Country
Page 15:
*For Graphs 29 & 30, identify the appropriate government action needed to correct
the externality. As part of your response, discuss why the action selected impacts the
producer’s behavior.
29. Positive Externality
30. Negative Externality
Page 16:
31. Marginal Product of Labor Curve
32. Average Total Cost, Marginal Cost, Average Variable Cost, & Average Fixed
Cost Curves
33. Total Cost, Total Variable Cost, & Total Fixed Cost Curves
Page 17:
34. Short Run & Long Run Average Total Cost Curves Illustrating Economies of
Scale, Constant Returns to Scale & Diseconomies of Scale
35. Production Function*Include on your graph why the production function is
shaped as it is.
Page 18:
36. A Competitive Firm’s Short Run Supply Curve
37. A Competitive Firms’ Long Run Supply Curve
Page 19:
38. Lorenz Curve complete with an explanation of the Gini Coefficient
Page 20:
39. A Perfectly Competitive Firm’s Long Run Price & Quantity (Hint: Normal
Profits)
40. A Perfectly Competitive Firm’s Short Run Illustrating Positive Economic Profit
41. A Perfectly Competitive Firm’s Short Run Illustrating Negative Economic Profit
Page 21:
42. Side by Side Graphs for a Perfectly Competitive Firm and Market: The Graph will
begin in Long-Run Equilibrium, then it will demonstrate an Increase in
Demand (Illustrating Positive Economic Profits). Finally, the graph will return
to Long Run Equilibrium and Normal Profit. Under the graphs, provide a
summary of what happens with respect to entry/exit and P&Q as you shift the
different curves.
Page 22:
43. Side by Side Graphs for a Perfectly Competitive Firm and Market: The Graph will
begin in Long-Run Equilibrium, then it will demonstrate a Decrease in
Demand (Illustrating Negative Economic Profits). Finally, the graph will
return to Long Run Equilibrium and Normal Profit. Under the graphs, provide
a summary of what happens with respect to entry/exit and P&Q as you shift
the different curves.
Page 23:
44. A Monopoly in Long Run Equilibrium – be sure to shade in both the deadweight
loss & the area of monopoly profit.
45. A Monopolist with Perfect Price Discrimination
Page 24:
46. A Monopoly in Short Run Equilibrium with Negative Economic Profit – be sure
to shade in both the deadweight loss & the area of monopoly profit.
47. A Regulated Monopoly that is producing at the Allocatively Efficient Output
Level
Page 25:
48. A Monopoly that is producing at a quantity that Maximizes Total Revenue
49. A Regulated Monopoly that is producing at a quantity where it is receiving
Normal Profit in the Long Run
Page 26:
50. A Kinked Demand Curve for an Oligopolist
51. A Monopsonist in Long Run Equilibrium
Page 27:
52. A Monopolistic Competitive Firm in Long Run Equilibrium
53. A Monopolistic Competitive Firm’s Short Run Illustrating Positive Economic
Profit
54. A Monopolistic Competitive Firm’s Short Run Illustrating Negative Economic
Profit
Page 28:
55. The Market Supply & Demand Curves for Labor (i.e. – The Factor Market)
56. An Individual Firm’s Supply & Demand Curves for Labor (i.e. – The Factor
Market). Below your graph, please state the profit maximizing criteria that
companies will use when hiring employees.
Page 29:
57. Side by Side Graphs for the Factor Market (i.e. – Labor) and a Firm: The Graph
will begin in Equilibrium and then experience an increase in supply within the
Factor Market causing the market wage to fall. On the graph for the firm,
illustrate how this shift in the market will affect the firm’s hiring decision
when it comes to the profit maximizing number of workers that it will employ.
58. Side by Side Graphs for the Factor Market (i.e. – Labor) and a Firm: The Graph
will begin in Equilibrium and then experience a decrease in supply within the
Factor Market causing the market wage to rise. On the graph for the firm,
illustrate how this shift in the market will affect the firm’s hiring decision
when it comes to the profit maximizing number of works that it will employ.
Page 30:
59. Side by Side Graphs for the Factor Market and a Firm: The Graph will begin in
Equilibrium and then experience an increase in demand within the Product
Market. On the graph for the firm, illustrate how this shift in the Product
Market will affect both the Factor Market and the firm.
60. Side by Side Graphs for the Factor Market and a Firm: The Graph will begin in
Equilibrium and then experience a decrease in demand within the Product
Market. On the graph for the firm, illustrate how this shift in the Product
Market will affect both the Factor Market and the firm.
Page 31: (MACROECONOMICS)
61. The Loanable Funds Market
62. The Loanable Funds Market – Crowding Out – Shift the Supply Curve
63. The Loanable Funds Market – Crowding Out – Shift the Demand Curve
64. The Loanable Funds Market: Illustrate Capital Flight
Page 32:
65. The Money Market – The FED Buys Bonds*on your graph, explain what happens
to AD & Interest Sensitive Consumption & Investment. Also discuss what
happens to the LR growth in the economy.
66. The Money Market – The FED Sells Bonds*on your graph, explain what happens
to AD & Interest Sensitive Consumption & Investment. Also discuss what
happens to the LR growth in the economy.
Page 33:
67. The Money Market – There is an increase in the Price Level in the economy.
Show how this impacts the demand for money and the corresponding change
in the Nominal Interest Rate.*On the graph, discuss what happens to Interest
Sensitive Consumption & Investment as well as LR Growth in the Economy.
What will happen to AD in the economy?
68. The Money Market – There is a decrease in the Price Level in the economy. Show
how this impacts the demand for money and the corresponding change in the
Nominal Interest Rate. .*On the graph, discuss what happens to Interest
Sensitive Consumption & Investment as well as LR Growth in the Economy.
What will happen to AD in the economy?
Page 34:
69. The Foreign Currency Exchange Market: Show how an increase in the Real
Interest Rate in the Loanable Funds Market impacts the country’s currency
exchange rate.
70. The Foreign Currency Exchange Market: Show how a decrease in the Real
Interest Rate in the Loanable Funds Market impacts the country’s currency
exchange rate.
Page 35:
71. Illustrate the Macro Economy in a SR Contractionary (Recessionary) Gap.
72. Illustrate the Macro Economy in a SR Expansionary (Inflationary) Gap.
Page 36:
73. The Macro Economy Begins in LR Equilibrium and then experiences an Adverse
Supply Shock: Show how the active approach by the government will get the
economy back to equilibrium.
74. The Macro Economy Begins in LR Equilibrium and then experiences an Adverse
Supply Shock: Show how the passive approach by the government will get the
economy back to equilibrium.
Page 37:
75. The Macro Economy Begins in LR Equilibrium and then experiences a Favorable
Supply Shock: Show how the active approach by the government will get the
economy back to equilibrium.
76. The Macro Economy Begins in LR Equilibrium and then experiences a Favorable
Supply Shock: Show how the passive approach by the government will get the
economy back to equilibrium.
Page 38:
77. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences
an Adverse Supply Shock. Show how this impacts the SRPC.
78. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences
a Favorable Supply Shock. Show how this impacts the SRPC.
Page 39:
79. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences
a Decrease in AD. Show how this impacts the SRPC.
80. The Basic Macroeconomic Model begins in LR Equilibrium and then experiences
an Increase in AD. Show how this impacts the SRPC.
Page 40:
81. The Long Run Aggregate Supply (LRAS) begins in LR Equilibrium and then
experiences a Decrease. *on your graph, discuss why the LRAS may shift
inward. Please discuss what happens to the Natural Rate of Output and the
Natural Rate of Unemployment when there is a LR Decrease in LRAS.
82. The Long Run Aggregate Supply (LRAS) begins in LR Equilibrium and then
experiences an Increase. *on your graph, discuss why the LRAS may shift
outward. Please discuss what happens to the Natural Rate of Output and the
Natural Rate of Unemployment when there is a LR Increase in LRAS.
Page 41:
83. The Long Run Phillips Curve
84. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in
LR Equilibrium.
85. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in
SR Equilibrium due to an Expansionary Gap.
86. The Long Run Phillips Curve & the Short Run Phillips Curve with the economy in
SR Equilibrium due to a Recessionary Gap.
Page 42:
87. A Decrease in the Long Run Phillips Curve.*on your graph, discuss what happens
to the country’s Natural Rate of Unemployment.
88. An Increase in the Long Run Phillips Curve.*on your graph, discuss what
happens to the country’s Natural Rate of Unemployment.
THE ASSIGNMENT IS DUE ON MARCH 16 AND WILL COUNT AS A 4TH
QUARTER GRADE. IT IS WORTH 88 POINTS; 1 POINT PER GRAPH. ALL
PROJECTS SHOULD BE SUBMITTED IN A BINDER CLIP. PLEASE DO NOT
PLACE YOUR PROJECT IN A FOLDER OR STAPLE IT.
Please do a nice job as this will serve as an excellent study tool that can be used leading
up to the actual exams. Any submitted graph that is unprofessional in appearance (i.e.
– white out, correction tape, sloppiness, scribbled, graphs out of order, etc.) will
receive a zero.