Download AP Economics – Objectives: Microeconomics: Unit 1 Unit 2.1

2013 – 2014
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AP Economics – Objectives:
Microeconomics:
Unit 1
1. Describe and analyze the "economic way of thinking"
2. Describe the methodology used in economics
3. Graph and interpret data
4. Graph and distinguish between inverse, direct and zero relationships
5. Graph and distinguish between constant and variable relationships
6. Identify the conditions that give rise to the economic problem of scarcity
7. Define Opportunity Cost
8. Identify the Opportunity Costs involved in various courses of action
9. Construct a Production Possibilities curve from sets of hypothetical data
10. Apply the concept of Opportunity Cost to a Production Possibilities Curve
11. Analyze the significance of different locations on, above or below a Production Possibilities Curve
12. Identify the three economic questions every economic system must answer
13. Compare and contrast the economic philosophies of Adam Smith and Karl Marx
14. Describe and analyze the economic goals of different economic systems
15. Analyze the advantages and disadvantages of different economic systems
16. Describe the behavior of buyers and sellers in a competitive marketplace
Unit 2.1
17. List and explain the determinants of Demand
18. List and explain the determinants of Supply
19. Define and distinguish between the Income and Substitution effects
20. Define Diminishing Marginal Utility and explain how the Law of Diminishing Marginal Utility
affects a downward sloping Demand curve
21. Draw a graph of a Supply and Demand schedule from data
22. Define Equilibrium
23. Determine what Equilibrium price and quantity will be when given the Demand and Supply data for a
good
24. Differentiate between a "change in demand" and a "change in quantity demanded"
25. Differentiate between a "change in supply" and a "change in quantity supplied"
26. Analyze factors and situations that cause Supply and Demand curves to shift
27. Predict the effects of changes in the prices and quantities of Substitute and Complementary goods on
the equilibrium price and quantity of a good
28. Explain shifts in the Supply and Demand curves based on changes in Supply and Demand
29. Define Price Elasticity of Demand
30. Distinguish between Elastic and Inelastic Demand
31. Explain the factors that tend to make Demand Elastic or Inelastic
32. Determine the Elasticity of a good at different prices based on changes in Total Revenue
33. Explain the factors that make a good Elastic or Inelastic
34. Define and distinguish between a Normal and an Inferior good
35. Define Price Ceilings and Price Floors
36. Graph Price ceilings and Price Floors
37. Analyze the effects of Price Ceilings and Price Floors on a competitive market
38. Define and describe the concepts of Surplus and Shortage and how they relate to Price Ceilings and
Price Floors
39. Explain how markets allocate resources
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Unit 2.2 – 2.4
40. Distinguish between a fixed cost and a variable cost
41. Define and Graph total fixed cost, total variable cost, average fixed cost, average variable cost,
average total cost and marginal cost
42. Define and plot total revenue, average revenue, marginal revenue and price
43. Define and identify profit, loss, the break-even point and the shutdown point
44. Distinguish between normal profit and economic profit
45. Distinguish between productive and allocative efficiency
46. Distinguish between the short-run and the long-run
47. Distinguish between an implicit and an explicit cost
48. State the Law of Diminishing Returns
49. Explain the Long-run average cost curve
50. Explain the profit-maximizing rule
51. List the characteristics of a Perfectly Competitive, Monopolistically Competitive, Oligopolistic and
Monopolistic market
52. Graph a Perfectly Competitive, Monopolistically Competitive, Oligopolistic and Monopolistic market
53. Distinguish between a Perfectly Competitive, Monopolistically Competitive, Oligopolistic and
Monopolistic market
54. Define the Concentration ratio
55. Describe the effects of different markets on the price of a product, the quantity of a product, the
allocation of society's resources, the distribution of income and the rate of technological progress
56. Distinguish between homogenous and differentiated Oligopoly
57. Define collusion and list the advantages and disadvantages of collusion
58. Describe the Prisoner's Dilemma
59. Describe different types of non-price competition
60. Explain the theory of the regulated market place
61. Identify the socially optimal and fair return price for a regulated monopoly
62. Compare perfect competition and imperfect competition
Unit 3
63. Describe the differences between product markets and factor markets
64. Define Derived Demand
65. Define Marginal Physical Product
66. Define Marginal Revenue Product
67. Given the appropriate data, construct a Marginal Revenue Product Schedule for a resource used for
production in a perfectly competitive market
68. Given the appropriate data, construct a Marginal Revenue Product Schedule for a resource used for
production in an imperfectly competitive market
69. Define Marginal Resource Cost
70. List the factors that would change a firm's demand for a resource
71. State the Profit-Maximizing principle used to determine how much of a given resource a firm will use
72. State the Least-Cost rule for determining which combination of resources a firm will use
73. Explain the major assumptions of the marginal productivity theory
74. Define a Monopsony and explain how resource prices and output would be determined in such a
market
75. Define economic rent
76. Distinguish between interest, rent, wages and profits
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Unit 4
77. Define public goods
78. Describe the characteristics of a public good
79. Develop a rationale for determining which goods should be produced by the private sector and which
goods should be produced by the public sector
80. Develop criteria for evaluating the effectiveness of government programs
81. Define and give examples of externalities and third-party costs
82. Explain overproduction and underproduction
83. Define and differentiate between the progressive, regressive, proportional, ability-to-pay and benefitsreceived theories of taxation
84. Develop criteria for evaluating the effectiveness and fairness of a tax
Macroeconomics
Unit 5
1. Analyze the components of the Circular Flow Diagram and use it to explain how a single purchase can
influence all the Macro flows in the country
2. Describe the purpose of National Income Accounting
3. Define Gross National Product, Gross Domestic Product, Net National Product, National Income,
Personal Income, and Disposable Income
4. Explain how we measure GNP and GDP
5. Explain what Goods and Services are counted in GNP and GDP as Consumption, Investment,
Government Expenditures, and Net Exports
6. Compute GNP, GDP, NI, PI, and DI when given National Income Accounting data
7. Compute GNP and GDP using both the Income and Expenditure methods
8. Describe the purpose of a Price Index
9. Explain how a Price Index is calculated
10. Use a Price Index to calculate the rate of Inflation
11. Distinguish between Demand-Pull inflation and Cost-Push Inflation
12. Describe the difference between Nominal and Real GNP
Unit 6
13. Explain how Unemployment is measured in the United States
14. Calculate Unemployment and Employment Rates from appropriate data
15. Differentiate between Frictional, Cyclical, Structural and Seasonal Unemployment
16. Describe the phases of the Business Cycle
17. Identify the phases of the Business Cycle when given the appropriate economic data
18. Define Aggregate Demand, Aggregate Supply and Equilibrium
19. List and explain the basic causes of shifts in Aggregate Demand and Aggregate Supply
20. Graph Aggregate Demand and Aggregate Supply
21. Describe what determines the amount of goods and services produced and the level of employment in
the Classical theory of Aggregate Supply-Aggregate Demand
22. Describe what determines the amount of goods and services produced and the level of employment in
the Keynesian theory of Aggregate Supply-Aggregate Demand
23. Explain how Consumption and Saving are related to Disposable Income in the Keynesian model
24. Describe and calculate from given data the Marginal Propensity to Consume and the Marginal
Propensity to Save
25. Describe the Multiplier
26. Given values for the marginal Propensity to Consume, calculate the values for the Multiplier
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27. Calculate the change in total spending that occurs from a given change in Business or Government
expenditures when MPC is known
28. Describe Keynesian Equilibrium in words and diagrams
29. Explain the Equilibrium levels of Output and Employment in Keynesian analysis when prices are free
to vary
Unit 7
30. Explain and show graphically how Fiscal Policy can be used to reduce and Inflationary or
Recessionary Gap
31. Describe how Fiscal Policy can be used to stabilize the economy
32. Distinguish between Automatic and Discretionary Stabilizers
33. Distinguish between a Contractionary and and Expansionary Fiscal Policy
34. Evaluate Macroeconomic conditions and determine the Fiscal Policy that can be used to improve
those conditions
35. Use a Keynesian 45° Total Expenditure Diagram to analyze economic problems and proposed
solutions to those problems
36. List and explain the complications encountered in employing Fiscal Policy
37. Define and explain the functions of money
38. Explain what determines the value of money
39. Define and contrast the definitions of M1, M2, and M3
40. Define and compare Required Reserves and Excess Reserves
41. Explain how the banking system creates money
42. Calculate the Money Multiplier and money growth possible from a given value of Excess Reserves
43. Describe the organizational structure of the Federal Reserve System
44. Define and explain Open Market Operations
45. Explain how Open Market Operations, the Discount Rate, and the Reserve Requirement are used to
expand or contract the money supply
46. Evaluate the effectiveness of the three main tools of Monetary Policy
47. Write and explain the Equation of Exchange
48. Compare and contrast the Keynesian and Monetarist views
49. Given a series of data, identify the economic problem and prescribe the proper Monetary Policy to
correct that problem
50. Identify the economic problems and recommend Monetary and Fiscal policies to improve economic
performance when given economic statistics
Unit 8
51. Use Aggregate Demand and Aggregate Supply to analyze the economic problems and proposed
solutions to those problems
52. Analyze the tradeoffs involved in various economic policy prescriptions
53. Use a Phillips Curve to illustrate tradeoffs between inflation and unemployment in the short run and
the long run
54. Compare and contrast the effectiveness of Monetary and Fiscal Policy as tools of economic
stabilization
55. State the assumptions, values, theoretical support, and applicable time periods underlying
recommendations concerning Monetary and Fiscal Policies that are in conflict
56. Describe and discuss the essence of the Classical, Keynesian, Monetarist, Supply-Side, Rational
Expectations, and Neo-Classical theories
57. Compare and contrast the theoretical support for the policy prescriptions of these theories
58. Discuss the various problems and tradeoffs that policymakers face in the real world
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Unit 9 and 10
59. Define Comparative and Absolute Advantage
60. Describe and give examples of the Law of Comparative Advantage
61. Define Specialization and Exchange
62. Explain how both parties to a trade gain from voluntary exchange
63. Explain Comparative Advantage in terms of Opportunity Cost
64. When given necessary data, compute the costs of producing two commodities in two countries,
determine which nation has the Comparative Advantage in the production of each commodity, calculate
the trading ratio, and explain the gains to each nation and the world from Specialization and Trade
65. Describe and evaluate the case for Free Trade
66. Describe and evaluate the case for Protectionism
67. Describe the Balance of Payments
68. Describe how Exchange Rate Systems work and convert currency using current exchange rates
69. Describe the effects of Depreciating or Appreciating Currency Rates on a nation's imports and exports