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Part 4
AP Macroeconomics
This section has six parts. Each of the first five parts corresponds to a unit on the AP
Macroeconomics exam. Each unit part provides a syllabus outline for teaching the unit,
information regarding the concepts covered in the unit and corresponding text material, practice
multiple choice and free response questions. The last part provides a 60 question practice exam.
409
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Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney
Teaching Unit I: Introduction to the Economic Problem. Unit I entails the content area of
Basic Economic Concepts as detailed in the AP* Economics Course Description1 (Content Area I,
A-E). This unit duplicates portions of the instruction in Units I and II in this AP* Instructional
Manual for AP* Micro Economics.
NOTE: Teachers who have completed the AP* Micro course may elect to proceed to Unit II,
Measuring the Economic Performance.
I. Plan
Teaching Materials
Instructors Manual
The Economic Approach,
Chapter 1
Some Tools of the Economist
Chapter 2
Supply, Demand and the
Market Process,
Chapter 3
Supply and Demand:
Applications and Extensions,
Chapter 4
Coursebook
Coursebook, Chapter 1
Coursebook, Chapter 2
Coursebook, Chapter 3
Coursebook, Chapter 4
Text readings
Chapter 1, The Economic
Approach
Chapter 2, Some Tools of
the Economist
Chapter 3, Supply, Demand
and the Market Process
Chapter 4, Supply and
Demand: Applications and
Extensions
Key instructional objectives: Students do the following
Objectives related to the economic problem
1.
2.
3.
4.
5.
define scarcity, choice and cost.
define and compute opportunity cost.
list and define the axioms of economic reasoning.
distinguish between positive and normative statements.
list and define the economic questions facing all nations.
Objectives related to analyzing the economic problem
1. construct and interpret production possibility schedules and graphs.
2. list and define the assumptions of production possibility schedules and graphs.
3. define how production possibility schedules and graphs illustrate the issues of scarcity, choice,
and cost.
4. define and calculate absolute and comparative advantages for production and exchange.
5. explain and show the affects of trade on a production possibility model.
6. define allocation, efficiency, and equity.
1
The College Board: “Economics: Micro Economics, Macro Economics: Course Description”
http://apcentral.collegeboard.com/apc/public/repository/ap08_economics_coursedesc.pdf. Last accessed Tuesday,
January 10, 2012
411
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney
412 ❖ Part 4/Unit I
7. define ways in which societies determine allocation, efficiency, and equity.
8. explain and distinguish between absolute advantage and comparative advantage.
9. calculate the opportunity cost of production.
10. given production possibilities information, identify countries or individuals that possess
comparative advantages and the gains from trade.
11. explain the advantages of free trade.
12. predict effects of policies that restrict free trade.
Objectives related to the law of demand
1.
2.
3.
4.
5.
define and illustrate demand through schedules and graphs.
distinguish between change(s) in demand and change(s) in quantity demanded.
explain the inverse relationship between price and quantity demanded.
identify and explain the variable which causes a change in demand.
illustrate and explain the changes in quantity demanded given a price change.
Objectives related to the law of supply
1.
2.
3.
4.
5.
define and illustrate supply through schedules and graphs.
distinguish between change(s) in supply and change(s) in quantity supplied.
explain the direct relationship between price and quantity supplied.
identify and explain the variables that cause a change in supply.
illustrate and explain the changes in quantity supplied given a price change.
Objectives related to the laws of supply and demand
1.
2.
3.
4.
5.
6.
explain the role of price in a market economy.
define and illustrate equilibrium.
define and illustrate surpluses and shortages.
define effects of surpluses and shortages on prices and quantities.
predict the changes in price and quantities given changes in demand and/or supply.
interpret and/or compute equilibrium price and quantities from graphs, mathematical
equations, and/or data.
7. interpret market conditions given novel data.
Objectives related to the applications to supply and demand
1.
2.
3.
4.
5.
define and explain the effects of price ceilings and price supports.
identify areas and potential areas of market failure.
illustrate and explain the effects of a given government policy.
analyze the effects of taxation and subsidies in an individual market.
identify and calculate tax revenues, deadweight loss.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney
Part 4/Unit I ❖ 413
Objectives related to taxation/subsidies
1. define tax incidence.
2. explain the burden of taxation given elasticity information.
3. identify who benefits from the imposition of a subsidy.
Computational & graphing skills: Students must complete these tasks
Model the following mathematical/graphical skills
1. Graph a production possibility model.
2. Explain the shapes of the production possibility curves.
3. Explain how the production possibilities model shows scarcity, choice, and cost.
4. Interpret selected points on the production possibility model.
5. Explain and show economic growth on the production possibility models.
6. Explain and show the affects of trade on a production possibility model.
7. Calculate opportunity cost.
8. Calculate terms of trade and gains from trade.
9. Graph demand and supply showing equilibrium price and quantities.
10. Given novel changes in demand and /or supply, graph the changes and show the changes in
equilibrium price and quantities.
11. Graph effects of a price ceiling and price floor.
12. Graphically illustrate changes in demand and supply with those of changes in quantity
demanded and quantity supplied.
13. Calculate shortages/surpluses from novel data.
14. Graph and illustrate the tax burden.
15. Identify and calculate consumer and producer surplus.
Formative Signals: The following content and skill areas have been identified as areas of
weakness for students based upon past objective and free response examinations.
Objective Formative Signals: Based upon
the released objective AP* Micro Economics
examinations, less than 50% of the students
have been able to correctly answer questions
to following
• recognize and interpret absolute advantage
and comparative advantages (and terms of
trade) given novel data (output is constant;
resources vary)
• calculate opportunity cost given novel data
• understands and interpret the distinctions
between a constant cost and increasing cost
production possibility frontier (ppf)
• understand consumer surplus; identify
surplus with a graph
Free response Formative Signals: Past
students have found these to be problematic
areas
•
•
•
solve comparative advantage problems
using inputs constant with outputs varying
AND with outputs constant and inputs
varying.
understand and calculate terms of trade –
who sells to whom (exports) and for the
amount such that marginal benefits >=
marginal cost
apply the concepts of marginal analysis -‘thinking like an economist’
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney
414 ❖ Part 4/Unit I
•
results of a price ceiling given novel graph
of supply and demand
effects of price ceilings and floors
simultaneous changes in supply and
demand
•
•
•
•
•
•
•
•
•
•
recognize the determinants of economic
growth and how growth can be depicted on
the production possibility graph.
know how to impose an effective (binding)
price ceiling and how to interpret graphs
with ceilings/floors
understand difference between supply and
quantity supplied
understand consumer surplus and identify
graphical area of consumer surplus.
explain relationship between price and
total revenues (expenditures)
distinguish between elastic and inelastic
demand and supply
calculate tax revenues using supply and
demand models
calculate consumer and producer surplus
and deadweight loss using supply and
demand graphs.
II. Teach
Recommended sequence of instruction: Teach market concepts in this sequence
Chapter 1
The Economic Approach
1. WHAT IS ECONOMICS ABOUT? P. 4
•
•
•
The Economic Problem.
Scarcity, choice, cost.
Free lunches vs. trade offs.
2. THE ECONOMIC WAY OF THINKING, P. 8
Use the production possibilities frontier to illustrate the economic problem.
•
Rational decision-making = marginal decision making.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney
Part 4/Unit I ❖ 415
Chapter 2
Some Tools of the Economist
1. WHAT SHALL WE GIVE UP? P. 28
•
•
•
Opportunity cost.
Production Possibility model.
Increasing vs. constant costs.
2. TRADE CREATES VALUE, P.30
3. THE IMPORTANCE OF PROPERTY RIGHTS, P. 32
Explain the necessary assumptions for trade to occur.
4. PRODUCTION POSSIBILITIES CURVE, P. 36
•
•
•
•
Technical or productive efficiency.
Allocative efficiency.
Gains in production/consumption.
Explain how technological change and increases in capital and human capital expand
production possibilities.
5. TRADE, OUTPUT, AND LIVING STANDARDS, P. 42
6. GAINS FROM SPECIALIZATION AND TRADE, P. 391
•
•
•
Explain how people gain from specialization and trade.
Absolute vs. comparative advantage.
Gains from trade.
6. HUMAN INGENUITY AND THE CREATION OF WEALTH, P. 44
7. ECONOMIC ORGANIZATION, P. 45
Make distinctions among the different kinds of economic organization
•
•
•
Capitalism.
Command
Mixed economy.
Chapter 3
Supply, Demand, and the Market Process
1.
2.
3.
4.
CONSUMER CHOICE AND THE LAW OF DEMAND, P. 56
RESPONSIVENESS OF QUANTITY DEMANDED TO PRICE CHANGES, PP. 59
ELASTIC AND INELASTIC DEMAND CURVES, PP, 59
CHANGES IN DEMAND VERSUS CHANGES IN QUANTITY DEMANDED, PP, 60
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Full file at http://TestbanksCafe.eu/Solution-Manual-for-Economics-Private-and-Public-Choice-14th-Edition-Gwartney