Download AP ECON UNIT 2 PLANS

AP MICROECONOMICS UNIT #2
INTRODUCTION TO MARKETS
GEORGIA PERFORMANCE STANDARDS IN THIS UNIT
Microeconomic Concepts
SSEMI2 The student will explain how the Law of Demand, the Law of Supply,
prices, and profits
work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.
SSEMI3 The student will explain how markets, prices, and competition influence
economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and
demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings
create shortages.
c. Define price elasticity of demand and supply.
International Economics
SSEIN1 The student will explain why individuals, businesses, and governments
trade goods and services.
c. Explain the difference between balance of trade and balance of payments.
SSEIN2 The student will explain why countries sometimes erect trade barriers and
sometimes advocate free trade.
a. Define trade barriers as tariffs, quotas, embargoes, standards, and subsidies.
b. Identify costs and benefits of trade barriers over time.
c. List specific examples of trade barriers.
e. Evaluate arguments for and against free trade.
SSEIN3 The student will explain how changes in exchange rates can have an
impact on the purchasing power of individuals in the United States and in other
countries.
a. Define exchange rate as the price of one nation’s currency in terms of another nation’s
currency.
b. Locate information on exchange rates.
c. Interpret exchange rate tables.
d. Explain why, when exchange rates change, some groups benefit and others lose.
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COLLEGE BOARD STANDARDS IN THIS UNIT
II. The Nature and Functions of Product Markets (55–70%)
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
I. Basic Economic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8–14%)
C. Comparative advantage, absolute advantage, specialization, and trade
READING ASSIGNMENTS
1. Chapter 3: pp. 44-50.
2. Chapter 3: pp. 50-53.
3. Chapter 3: pp. 53-61.
4. Chapter 18: pp. 339-348.
5. Chapter 18: pp. 348-352.
6. Chapter 18: pp. 352-356.
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.
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.
7. Chapter 19:
8. Chapter 29:
9. Chapter 35:
10. Chapter 36:
11. Chapter 36:
pp. 359-369.
pp. 570-578.
pp. 682-693.
pp. 696-700.
pp. 700-714.
6. Consumer surplus, producer
surplus, total surplus.
7. Utility.
8. Implications of taxation.
9. Implications of international
trade.
10. Exchange rates.
4. Chapter 29: 7, 9.
5. Chapter 35: 6, 7.
6. Chapter 36: 2, 3, 7, 10.
UNIT GRAPHS
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See handout
REFLECTION PAPERS
See handout
QUIZZES
1. Demand. (5)
2. Supply. (6)
3. Equilibrium. (7)
4. Price Elasticity of Demand. (8)
5. Cross/Income Elasticity. (9)
6.
7.
8.
9.
10.
Consumer/Producer/Total Surplus. (10)
Total/Marginal Utility and max. (11)
Implications of Taxation. (12)
Implications of International Trade. (13)
Exchange rates. (14)
TEST PRACTICE
1. Sample Multiple Choice.
2. Sample Free Response.
TESTS
Unit Test #2
OBJECTIVES
1. Distinguish between individual demand and market demand.
2. Distinguish between individual supply and market supply.
3. Distinguish between a change in demand and a change in quantity demanded.
4. Distinguish between a change in supply and a change in quantity supplied.
5. Discuss how prices ration scarce resources and goods.
6. Discuss the impact of taxes on market activity.
7. Discuss the impact of tariffs and quotas on market activity.
8. Analyze the workings of exchange rates.
VOCABULARY
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Markets
Demand
Quantity demanded
Law of demand
Determinants of demand
Substitute good
Complimentary good
Normal good
Inferior good
Supply
Quantity supplied
Law of supply
Determinants of supply
Equilibrium
Surplus
Shortage
Rationing fun. 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
Export supply curve
Import demand curve
Tariff
Revenue tariff
Protective tariff
Import quota
Non tariff barrier
Balance of payments
Balance of trade
Trade deficit
Trade surplus
Current account
Capital/financial acct.
Exchange rates
Flexible exchange rates
Fixed exchange rates
Gold standard
Devaluation
IMF
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
also tariffs and import quotas.
9. Interpret and analyze exchange rate graphs.
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