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AP Economics syllabus Advanced Placement Microeconomics Course Outline Course Overview: AP Microeconomics is a rigorous, college-level course which surveys the individual and firm behavior and choices. After an introduction to economics, we will spend the first semester studying and preparing for the Microeconomic AP Exam. Among the topics we will study and discuss: Consumer Choice Demand and Supply Elasticity Firm – Costs of Production Market Structure Firm/Output Determination Perfect Competition Monopoly Monopolistic, Competition, Oligopoly, and Strategic Behavior Regulation and Antitrust Policy Labor Demand/Supply – Product Market Unions and Labor Market Rent/Interest/Profits During our study of Microeconomics, we will spend time learning and employing various economic models to help us understand and compare various output functions, market structures, and government involvement in areas such as regulation, correcting externalities and paying for public goods. ADVANCED PLACEMENT EXAM In May, I will expect you to take the Advanced Placement exam in Microeconomics. Not only will the test measure your success in this class, but it will also be a good indicator for you, personally, on how ready you are to pursue economics in college. Class Materials: You will need to bring the following materials to class each day: 1. Your textbook which is a college level textbook We will often be reviewing homework problems and discussing equations and graphs that are found in your text. Please bring it everyday -- no excuses. 2. A calculator of some kind to help you through the basic math part of economics. In this way, you will have more time to concentrate on the analysis of the economic problem, rather than the basic math of it. 3. A notebook, preferably a three ring binder which you will divide into the following sections: Reading notes/ Problems -- Homework Class notes/handouts AP Economics syllabus Please arrange to have access to a daily newspaper. The Wall Street Journal is the preferred option, but the New York Times and Boston Globe will be fine. We will be constantly connecting what we are learning in class to what is actually happening in our economy. If you have a subscription to Business Week and/or Fortune -- great. PBS (12) Market Watch gives an inside looks into our economy at 7pm each evening. Preparation for class: 1. A solid math background will greatly enhance your ability to understand the principles of economics. 2. You should also have a strong background in English and Social Studies; your writing and reading skills need to be advanced in order to keep up with the pace. . . (I usually insert rules and procedures for the class. . .but I omitted them here). GRADING POLICY -- I do everything on the point system. I check homework only when I need to. I quiz and test often – so you need to keep up with your reading and problem sets. Tests, quizzes, and projects/papers comprise about 95% of your grade. Retaking EXAMS: If you have trouble the first time with a concept and you do not do well on an exam or quiz, you have an opportunity to retake. However, you must do the following first: Show me your notebook – I want to see evidence of the following o Reading notes o Class notes o Problem sets o Processing – evidence of you working it out After school session to review your old exam/correct your old exam Make-up new exam ASSESSMENTS: Unit exams – multiple choice, open response Term 1 Projects: o Economics Around Town – assignment and rubric attached o Outside Reading - You can choose either Barbara Ehrenreich Nickel and Dimed: On (not) getting by in America. Or Steven Levitt and Stephen Dubner Freakonomics 100 points – assignment attached. Due __________. o Debates on Price Floors/Price Ceilings – 50 points – assignment given in October. Term 2 Projects o Market Analysis – Due by December vacation. AP Economics syllabus I will add quizzes as needed. We will work on many free response questions between units. Extra readings will be available a couple of days before they are due. You can plan out your reading in your textbook well in advance. My advice on reading the textbook: 1. Always read over the text BEFORE COMING TO CLASS! You will not necessarily understand everything in your textbook before class. Yet, it will give you a frame of reference. Take notes – outline/Cornell note taking method/graphic organizer. Place notes in right side of notebook. 2. Come to CLASS – Attendance is key to understanding. We will present problems, do activities, etc to help you grasp concepts. Take notes. Add notes to right side of notebook. 3. After class – highlight notes. Use sticky tabs, markers, high lighters, note in margin, etc to go over notes and make notes on notes. Try concept mapping, etc (I’ll show you). Questions? Graphs, pictures, etc – in left side of notebook. Ask your questions the next day in class or, if you need a great deal of assistance come for extra help. . ASAP. Do not wait until the day before the exam! RESOURCES Textbook: Mankiw, Gregory N. Principles of Economics. 3rd ed. Mason Ohio: Thomson/SouthWestern, 2004. Other support: Anderson,David and Chasey, James. Favorite Ways to Learn Economics. 2nd ed. Mason, Ohio: Thomas/Southwestern, 2006. Morton, John and Goodman, Rae Jean. Advanced Placement EconomicsMicroeconomics: Student Activities. 3rd ed. NY: National Council on Economics Education, 2005. Other sources I bring into classroom: Heilbroner, Robert L. The Worldly Philosphers: The Lives, Times, and Ideas of the Great Economic Thinkers. 7th ed. NY: Simon & Schuster/Touchstone, 1999. AP Economics syllabus Dixit and Nalebuf. Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life. Landsburg, Steven. The Armchair Economist: Economics & Everyday Life. NY: Simon & Schuster, 1993. Articles from Wall Street Journal and New York Times AP Economics syllabus Week FALL Unit Chapter (from Mankiw) Chapter Topic Graphs, Tables, Charts, Concepts, Supplemental Readings and Tests Outside Reading: “The Power of Incentive” and “Rational Riddles” (Landsburg,) 1 August 28th-Sept. 4th 1 Nature and Method of Economics Concepts: Students will be able to: define and provide examples for the 10 basic principles of economics. practice economic thinking through activities. Define the following: scarcity, choice, incentives, thinking at the margin, equity v. efficiency, selfinterest v. social interest, market failure, externality, factors of production, normative v. positive economics. Discuss the basic questions of economics. Recognize factors of production Compare and contrast basic structuring of economy – command v. market v. mixed. Activities Seating activity – first day of class/trading seats/passes Scenarios on rational thinking, incentives, thinking on margin, efficiency v. equity. . .etc. – small group –puzzles brainstorming/discussions Odd problems at end of chapter 1 in Mankiw. Standards addressed -Massachusetts Frameworks: E1.1 – productive resources AP Economics syllabus E1.2 - Scarcity E.1.3 – Broad Economic Goals E1.4 – Incentives (Please see www.doe.mass.edu/frameworks/hss/final.pdf for details) Outside reading -- Ted Bucholz – New Ideas from Dead Economists “Adam Smith” Concepts Students will be able to recognize the purpose and scope of models. Explain circular flow model. Explain tradeoffs and opportunity costs associated with tradeoffs. Draw production possibilities curve Determine the shape of PPC in relation to specialization and increasing costs. Graphs: Circular Model – and Production Possibilities Frontier (PPF 2 September 9th-11th 2 Economizing Problem Activities: Model airplanes – truth about models David Anderson’s experiment with smiles and links Problem sets: odd numbers of problems/application at end of chapter 2 in Mankiw Working through scenarios together (handouts – teacher made) NCE workbook Assessments: Economics around town assignment Outside reading – articles- news AP Practice Questions Standards Addressed: Massachusetts Frameworks: E1.2 and E1.9 AP Economics syllabus Outside reading: Short excerpt from World is Flat (Friedman) “Trade Successes and Human Rights Failures” (handout)/or recent article from NYTimes or Wall Street Journal. 3 September 12-20th Concepts Students will be able to: Recognize the benefits of trading. Link comparative advantage to opportunity cost. Differentiate between input and output problems. .3 Comparative Advantage Activities Experiment: Comparative advantage game – cars and computers Matrix analysis and problem solving NCEE Handouts Teacher exercises – handouts. Seminar – value of trade – Does the model always work? Problems in Mankiw Assessment: Objective Test Sept. 22nd Economics around Town – reflection/application Standards Addressed: Massachusetts Frameworks: E1.6 4 September 23rd- 4 Demand and Outside Reading: AP Economics syllabus October 4th Supply Students will be reading excerpts from articles and books such as Freakenomics and Nickle and Dimed. Concepts: Students will be able to: Define supply and demand Explain why demand is downward sloping and why supply slopes upward Show and determine how supply and demand equilibrium determine price in a market. Analyze the role of price in acting as a signal for buyers and sellers. Differentiate between real prices and nominal prices. Differentiate between changes in demand and quantity demand changes. Differentiate between changes in supply and quantity supply changes. Demonstrate how changes in supply and/or demand impact equilibrium in the market. Explain the different ways supply and demand change. Define and demonstrate impact of substitutes, complements, income effect, and normal v. inferior good on demand. Graphs: Supply and demand – equilibrium Importance of labeling! Showing shifts v. movements. Activities: Experiment: Oral auction Around the world: (game(s) that sends students to one of several spots in the classroom to determine how a particular incident impacts a change in demand, supply, etc. NCEE exercises Problems in Mankiw AP Economics syllabus Teacher practice/handouts – emphasis on open response Assessment – Practice open response quiz Standards Addressed: Massachusetts Framework: E.2.1-E.2.8 5 Concepts: Students will be able to: Calculate elasticity coefficient Differentiate between elasticity coefficient and slope of curve. Demonstrate how elasticity of demand and supply impacts changes in revenue as price changes. Relate elasticity coefficient to total revenue. Draw extremes of elasticity – Demand and inelastic and perfectly elastic Supply demand/supply curves. Elasticity Activities: How elastic is it? – Questionnaire/human graph of answers. Practice calculating elasticity – handouts/elastic buddies NCEE workbook Standards Addressed: Massachusetts Frameworks: E.2.10 October 5th-17th 5. Tax incidence, price 6 and 7 and controls, part of Consumer chapter 8 Surplus, (160-169) efficiency and deadweight loss Outside Reading --- Policy Debate research Concepts: Students will be able to: Define tax incidence Locate tax on graph. Measure impact of tax on both buyer and seller. Show and explain consumer surplus, producer surplus, and deadweight AP Economics syllabus loss on graph. Define and show allocative efficiency. Locate deadweight loss on graph after tax. Compare/Contrast consumer and producer surplus before and after the imposition of tax. Demonstrate with a graph how government controls such as price ceilings and price floors create shortages and surpluses. Graphs: Supply/demand/price floor/price ceiling imposed Supply/demand – after tax – shift in supply curve. Activities: Debates on minimum wage, rent control – see attached assignment Problems in textbook NCEE workbook Practice with taxes – teacher handouts/NCEE workbook. Assessment: Debate/researched based essay. Objective Test on chapter 4-7 on October 16th Free Response on Oct. 17th Standards Addressed: Massachusetts Frameworks – Standards Addressed: Massachusetts Frameworks: E.2.9 (most of our unit is beyond the scope of the Frameworks) 6 October 18-25th 21 Consumer Choice Concepts: Students will be able to: Define total utility Define marginal utility Apply utility to our choices of AP Economics syllabus goods/services. Recognize and practice law of diminishing marginal returns. Choose goods and services using marginal utility per dollar. Discuss the relationship with consumer choice theory and the derivation of the demand curve (I introduce indifference curves and budget constraints, but I do not emphasize them at this level – I give the option of for my more advanced students to read and do some problem sets on indifference curves). Table: Total Utility/Marginal Utility/Marginal Utility per dollar. Activities: How many donuts can you really eat? –(marginal returns) Breakfast at a la Micro café – making choices based on Marginal Utility per dollar. Practice scenarios – AP Workbook and NCEE Assessment: Economics around the town assignment. Standards Addressed: Massachusetts Frameworks: E.2.4 8 October 28thNovember 7th 13 Costs of Production Concepts: Students will be able to Define economic profit =Total Revenue – explicit costs and implicit costs Define the differences between economic profit and accounting profit. Show with a graph and table the law of diminishing marginal returns. Draw Total cost, Total Variable Costs, and Total Fixed Costs, Marginal Costs, Average Costs. Discuss the relationship among the AP Economics syllabus . 9 7 . November 8-14th November 15-20th . 14 15 . cost curves. Demonstrate the mirror effect of productivity graphs and cost graphs. Table: Total, Average and Marginal Costs; Graph: Total Cost, Total Variable Costs and Total Fixed Costs; APPLICATION: Excel – Mama Mia case study Objective Test Free Response with Rubric November 7, 2005 .Graph: Total Revenue (TR) and Marginal Revenue (MR) for Perfectly Competitive Firms; Graph: Total Revenue (TR), Total Cost (TC) for Perfectly Competitive Firms; Graph: Profit Maximization (MR=MC) for Perfectly Competitive Firms; Graph: ShortRun Loss Minimization for Perfectly Competitive Firms; Graph: Short-Run Pure Supply Curve (MC) and Shutdown Points [Perfect] for Perfectly Competitive Firms; Table: Competition Profit Maximizing Output for Perfectly Competitive Firms and Graph: Profit Maximization; Table: Loss Minimization for Perfectly Competitive Firms and Graph for Loss Minimization . Pure Monopoly NCEE workbook Practice open response questions Market Analysis Project GRAPH -Firm Price and output, Socially Optimal Price and Output, Regulated Price and Output; Economic Deadweight. Price Discrimination Explain MR is < Price/table/graph NCEE workbook Problems in textbook Practice open-response questions – using news, life, etc – compare/contrast monopoly with perfect competition Reading: “Why Popcorn Costs More at the Movies and Why the Obvious Answer is Wrong” - Landsburg Market analysis study AP Economics syllabus . .November 21-28th 16 8 December 2ndDecember 6th 17 9. Read on your own! . . 10 . December 5-14 . 32 . 18 &19 . Game Theory and strategic behavior interdependence, collusion, cartelsNCEE handouts Oligopoly Book problems Reading: Landsburg “Courtship and Collusion: The Mating Game.” Market analysis Product differentiation and role of advertising, profit maximization, Sr and LR equilibrium Monopolistic Comparison in allocative efficiency; excess Competition capacity Objective Test Dec. 1st and Free Response December 2nd Anti-Trust Policy and Regulation In class – GRAPH: MC pricing v. ATC pricing – Fair Rate of return – NCEE Workbook – I’ll teach graph before test on markets. . . Derive MRP. Explain how MRP is a derived demand from product market. Show on graph and explain with words why MRP=MFC. Compare/contrast perfectly competitive firm in the product market with an imperfect competitive firm’s MRP. Show wage rate in perfectly competitive labor market. Show supply for labor in industry – Explain its shape/backward bending? Differentiate between moves on MRP and The Demand shifts of MRP. Differentiate between shifts for and moves on labor supply curve. Resources: Case studies: The Factor Unions Markets Goals – Impact on labor market for industry/firm (GRAPH) Cost/benefits of Unions Monopsonies Graph – MFC >Wage Federal Reserve Boston – Labor Productivity – 2006 Problems in textbook NCEE workbook . AP Economics syllabus Economic Rent 11 12 December 15th – December vacation January 2nd-10th . .MIDTERM EXAM: MICROECONMOICS Test and Review – Jan. 11th-Midterm date And review of concepts so far! Graph – supply of resource/increasing demand Link with current events - Externalities-negative and positive; marginal social benefit v. marginal social cost; remedies – Coase Theorem/Trading permits 10,11,15,20 Public goods (parts) Government Antitrust policy; regulation Read over and Market Income distribution the winter Failure Demonstrations/experiments break) NCEE Workbook Problems in textbook . . . AP Economics syllabus SAMPLE ASSIGNMENTS AP Economics MARKET ANALYSIS Current Events GOAL: Students will complete a case study of market structures by using reputable news sources around them. PROCESS: 1. Read, watch and listen to the news. You will be most successful at this assignment if you listen and read regularly to the news. If you wait until right before this project is due, you will it difficult to link the news with the market. Reputable sources might include the Wall Street Journal, New York Times, Boston Globe, Fortune, Business Week, and Market Watch on PBS or Marketplace on NPR. 2. As you listen, read, and watch the news, pay attention to any stories that seem to have a direct bearing on one of the markets we are studying in class. For example, you might hear that the frost in California is killing the citrus. Homogonous product? Easy entry (well, not exactly), price taker (yes, for our purposes). So, even though the story is not an exact match for perfect competition (because after all no model can completely represent every aspect of the real world), it is still a good fit. You would use this article or news story to explain the impact of the news on the citrus market. Use graphs and analysis wherever possible. 3. Find at least one good example of each of the following market structures: a. Perfect competition b. Monopoly c. Monopolistic competition d. Oligopoly 4. For each example (and you should find the example by reading the news. . .) analyze the following: a. What helps to characterize it as this particular type of market? b. How does the product/firm/etc fit the mold – cost curves, demand curve, etc. c. Where might their be some room for disagreement (esp in perfect competition b/c it’s challenging to find a perfect example) d. Is this business profitable (accounting? Economic profits?) Long-run prospects. AP Economics syllabus Your write-up needs to be typed, double-spaced and at least 1-2 pages per entry. Market Analysis Rubric Quality of rational for choices for market analysis Interpretation of article and real life example Application of concepts from class to market analysis 4 3 2 Student chooses examples from the news that have at least several similarities to a specific market we studied in class. Student uses at least three specific reasons from our market chart to explain why the firm fits into a particular market. The student notes that the fit may not be perfect; however, the student stresses the reasons why the firm is more like one market structure than another. Student summarizes and highlights the major points of the article he/she read in order to explain relevant features of the firm to the market. There are several connections to specific points in the article to the market analysis. Student chooses a firm to fit each market structure. Student explains at least two reasons why the firm fits the market structure. Student tries to force market structure on firm without recognizing that the real word may not fit in exactly to the model. Student has trouble applying the characterist markets from our chart to the firm. Student makes one connection between chart and fir but has trouble making his/her point. Student summarizes the article – perhaps without highlighting the relevant information about the market structure. Student shows he/she understand the key points in the article. There are at least two connections between the article and the market analysis. Student applies at least two specific points from the models, graphs or theories that we Student shows he/she read the article, but it be difficult from the summary to ascertain whether student understood the economic principals in the article. There is some attem connect the specific points of the article to th analysis. Student applies several specific points (3 of them) from the models, graphs, or theories Student applies at least two specific points f the models, graphs or theories that we learne class to the particular firm at question. AP Economics syllabus Variety and quality of sources that we learned in class about specific market structures to the firm. Student discusses at least three elements of the model that we went over in class. Student uses at least three different sources in the project. Two of the sources are major business sources – NY Times Business, Wall Street Journal, Fortune Magazine, Business Week, PBS Market Watch. Student correctly cites sources. learned in class to the particular firm at question. Student uses at least two different sources in the project. Two of the sources are major business sources – NY Times Business, Wall Street Journal, Fortune Magazine, Business Week, PBS Market Watch. Student correctly cites sources. Student uses at least one source in the projec but four articles in that source. Or the studen uses two different sources but only one is a reputable business source such as NY Times Business, Wall Street Journal, Fortune Mag Business Week, PBS Market Watch. Studen sources, but the citation may not be correct format. Sample outlining for a unit -- PERFECT COMPETITION (3-4 DAYS) Mastery Objectives for Perfect Competition: Students will be able to Explain and differentiate among the four types of markets: o Perfect competition o Monopolistic competition o Oligopoly o Monopoly Define perfect competition Explain how price and output are determined in perfect competition Show the relationship between average revenue, marginal revenue and price Explain why firms sometimes shut down temporarily and lay off workers Explain why firms enter and leave the industry Draw and differentiate between firm and industry graphs. Predict the effects of a change in demand and of a technological advance on both the firm and industry models. AP Economics syllabus Explain why perfect competition is efficient – define and show on a graph allocative efficiency. Day 1 &2 -- What exactly is perfect competition? Overview of objectives and assessments – (I’ll hand out shopping exercise and market study) 1. Provide an overview for the different markets – a brief outline. 2. Examine why perfect competitors are price takers – some examples? 3. Derive marginal revenue curve, average revenue curve and demand curve for perfect competitor. 4. Show side by side graphs of industry and firm – Show how firm takes the price of the industry. CHECK IN WITH BUDDIES --5. Add in cost curves to the firm graph – HW: Finish reading chapter 14 Day 3 – Perfect Competition decisions – to stay in business in the short run and the long run? 1. Review firm graph/side by side with industry graph 2. Cost curves – short run decisions v. long-run decisions 3. profit maximizing output 4. Three possible profit outcomes in short run 5. Shutdown point PRACTICE! SIDEWALK CHALK HW: Work on problems in packet! Day 4 1. 2. 3. Output, Price and Profit in Perfect Competition Short run equilibrium Long-Run adjustments Entry and exit a. Effects of entry b. effects of exit 4. change in plant size 5. long-run equilibrium Practice –Practice scenarios HW: Packet and do at least the odd problems in the book. Day 5 Changing Tastes and Advancing Technology (and putting it all together) 1. changes in tastes on firm and industry graphs 2. changes in technology on industry and firm graphs. AP Economics syllabus ACTIVITIES: 1. partner work with practice scenarios 3. Side-walk chalk 4. market study Microeconomics DEBATES: EXTENSION OF DEMAND AND SUPPLY ANALYSIS GOAL: Students will examine real political issues and apply demand/supply analysis to debate the merit of political solutions to economic problems. PROCESS: Students will be assigned to one of four groups. You can use chapter 4 to help you tease out some of the demand/supply analysis. We will do much of the analysis in class. 1. Research: You will have Monday and Tuesday to research during class. 2. Find a minimum of three articles per side on your topic. My password for the Wall Street Journal – Login --Otisdinorex password: morris. I hope it works. There are some articles in the Taking Sides which the library here has. You should try the SIRS index as well. Bring your library cards so you can log on to Noblenet.com. You can work with the whole group to find articles. Or you can divide your group immediately and work in separate teams. 3. You should take notes from your sources on index cards. Make certain to keep track of references. 4. Each side will write a 2-3 page position paper that you will pass in to me. You must include a minimum of three-five citations from articles. 5. You must submit a works cited/bibliography – with proper format. 6. DEBATE: Each group and each “team” will present their debate. We will present them as follows: a. Opening statements (theses) b. Each team presents their supporting points c. Each team will present their conclusions d. Each team will have a turn to address questions from the audience. GROUP I. MINIMUM WAGE SIDE A: Minimum Wage is a necessary political tool to help the lower class survive. AP Economics syllabus Side B: Minimum Wage interferes with the free market system and actually causes loss of jobs. GROUP 2: TICKET SCALPING Side A: Ticket Scalpers should be legal because they perform a valuable function to help clear the market. SIDE B: Ticket Scalping interferes with the distribution process of tickets and scalpers should be illegal. GROUP 3: RENT CONTROL Side A: Rent Control is a necessary tool to help lower income people afford a place to live. Side B: Rent Control interferes with the free market process and actually causes loss of homes for many. GROUP 4: AGRICULTURAL PRICE FLOORS Side A: Agricultural supports help the farmers and helping the farmers is key to the economy. Side B: Agricultural Price Floors create havoc with the free market and create a poor distribution of labor and products. AP Economics syllabus SCORING RUBRIC FOR DEMAND/SUPPLY ANALYSIS ACTIVITY Written paper: 1. Paper is typed and three-five pages 2. Writers have a clear thesis 3. Essay has clear subtopics 4. Paper has 3-5 citations that add value to the argument. 5. Paper shows collaboration among group members (no report hogs) 6. Paper shows connection to demand/supply analysis 7. Paper has a correct bibliography. DUE: TOTAL GRADE /50 pts 5pts 10pts 5 pts 10 pts 5 pts 10 pts 5 pts Debate 1. 2. 3. 4. 5. Information is clearly presented Speakers use index cards and make good eye contact Speakers speak clearly and slowly (not to slowly) All group members participate Speakers can address questions and think on their feet. DUE: TOTAL POINTS: /25pts. 5 pts 5 pts. 5 pts. 5 pts. 5 pts.