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MICROECONOMICS AP Mr. Woodworth The purpose of the AP course in microeconomics is to give students a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers, within the economic system. It places primary emphasis on the nature and functions of product markets and includes the study of factor markets and of the role of government in promoting greater efficiency and equity in the economy. The underlying purpose of the course if to prepare the students to be successful on the AP Microeconomics test in May. The course is divided into four units: I. BASIC ECONOMIC CONCEPTS Basic Economic Concepts require students to understand the existence of limited resources along with unlimited wants necessitates some form of allocation system. II. THE NATURE AND FUNCTIONS OF PRODUCT MARKETS The Nature and Functions of Product Markets studies supply and demand models, consumer choice, production and costs and the theory of the firm. Determinants of supply and demand are analyzed as well as how changes in factors affect equilibrium price and output while emphasizing the difference in shifts versus movements along the curves. The impact of various government policies is studied as they affect equilibrium status and market efficiency. The theory of consumer and producer surplus is introduced as well as the various concepts of elasticity. Consumer choice is studied as well as how market and firm demand curves are derived concentrating on the law of demand and the income and substitution effects. Production and cost analysis are studied in the short and long run. The study of cost analysis focuses on average and marginal cost concepts as applied to equilibrium and efficiency. The theory of the firm studies the different market structures and how they differ. Focus is placed on the difference between demand and marginal revenue curves for the various market structures and how the structures affect price and output decisions. Allocative and productive efficiency is studied for each market structure as well as for the basis of, and difference in, decision making for perfect or pure competition, monopoly, oligopoly and monopolistic competition. III. FACTOR MARKETS The study of Factor Markets involves the application of supply and demand concepts to markets for land, labor and capital. Derived demand is analyzed as well as how the factor’s marginal product and marginal revenue product affect the demand for and price of factors. IV. MARKET FAILURE AND THE ROLE OF GOVERNMENT Market Failure and the Role of Government concentrate on the arguments for and against government intervention in the marketplace. Marginal social benefit and marginal social cost concepts are analyzed as they apply to externalities, public goods and market distribution of income to determine the need for government intervention. TEXT and RESOURCES McConnell and Brue. Economics. 17th edition. New York: McGraw-Hill, 2008. Morton, John S. Advanced Placement ECONOMICS. New York: National Council on Economic Education, 2003. AP Central Website – Free Response Questions and other relevant information Released AP Microeconomic Tests REQUIREMENTS: Daily attendance is essential. The course teaches many new concepts and vocabulary that are not easily transferable from other courses; therefore it is essential to be in class every day to stay current on new material. If you are absent, see the teacher for missed assignments and to schedule time for extra help if needed. There will be regular homework reading assignments and work to be completed outside of class. EVALUATION: Each marking period, the student’s grade will be determined by the following formula: the number of points earned divided by the total number of points available. Out of the number of points available: Summative: (90%) - Each unit will conclude with a test. Other forms of assessments are probable. Formative: (10%) – homework assignments and other assessments. .