AP Microeconomics Online Single Semester

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This course is the equivalent of an introductory college-level course. Students explore the behavior of individuals and businesses as they exchange goods and services in the marketplace. Students learn why the same product can cost different amounts at different stores, in different cities, and at different times. Students also learn to spot patterns in economic behavior and learn how to use those patterns to explain buyer and seller behavior under various conditions. Lessons promote an understanding of the nature and function of markets, the role of scarcity and competition, the influence of factors such as interest rates on business decisions, and the role of government in the economy. Students prepare for the AP Exam and for further study in business, history, and political science.

Chapter 1: Ten Principles of Economics

·         economics is about the allocation of scarce resources.

·         individuals face trade-offs.

·         the meaning of opportunity cost.

·         how to use marginal reasoning when making decisions.

·         how incentives affect people’s behavior.

·         why trade among people or nations can be good for everyone.

·         why markets are a good, but not perfect, way to allocate resources.

·         what determines some trends in the overall economy.


Chapter 2: Thinking Like an Economist

·         how economists apply the methods of science.

·         how assumptions and models can shed light on the world.

·         two simple models—the circular flow and the production possibilities frontier.

·         the difference between microeconomics and macroeconomics.

·         the difference between positive and normative statements.

·         the role of economists in making policy.

·         why economists sometimes disagree with one another.

Chapter 3: Interdependence and the Gains from Trade

·         how everyone can benefit when people trade with one another.

·         the meaning of absolute advantage and comparative advantage.

·         how comparative advantage explains the gains from trade.

·         how to apply the theory of comparative advantage to everyday life and national policy.

Chapter 4: The Market Forces of Supply and Demand

·         what a competitive market is.

·         what determines the demand for a good in a competitive market.

·         what determines the supply of a good in a competitive market.

·         how supply and demand together set the price of a good and the quantity sold.

·         the key role of prices in allocating scarce resources in market economies.

Chapter 5: Elasticity and Its Application

·         the meaning of the elasticity of demand.

·         what determines the elasticity of demand.

·         the meaning of the elasticity of supply.

·         what determines the elasticity of supply.

·         the concept of elasticity in three very different markets (the market for wheat, the market for oil, and the market for illegal drugs).

Chapter 6: Supply Demand and Government Policies

·         the effects of government policies that place a ceiling on prices.

·         the effects of government policies that put a floor under prices.

·         how a tax on a good affects the price of the good and the quantity sold.

·         that taxes levied on sellers and taxes levied on buyers are equivalent.

·         how the burden of a tax is split between buyers and sellers.

Chapter 7: Consumers Producers and the Efficiency of Markets

·         the link between buyers’ willingness to pay for a good and the demand curve.

·         how to define and measure consumer surplus.

·         the link between sellers’ costs of producing a good and the supply curve.

·         how to define and measure producer surplus.

·         that the equilibrium of supply and demand maximizes total surplus in a market.

Chapter 8: Application: The Costs of Taxation

·         how taxes reduce consumer and producer surplus.

·         the meaning and causes of the deadweight loss from a tax.

·         why some taxes have larger deadweight losses than others.

·         how tax revenue and deadweight loss vary with the size of a tax.

Chapter 9: Application: International Trade

·         what determines whether a country imports or exports a good.

·         who wins and who loses from international trade.

·         that the gains to winners from international trade exceed the losses to losers.

·         the welfare effects of tariffs and import quotas.

·         the arguments people use to advocate trade restrictions.

Chapter 10: Externalities

·         what an externality is.

·         why externalities can make market outcomes inefficient.

·         the various government policies aimed at solving the problem of externalities.

·         how people can sometimes solve the problem of externalities on their own.

·         why private solutions to externalities sometimes do not work.

Chapter 11: Public Goods and Common Resources

·         the defining characteristics of public goods and common resources.

·         why private markets fail to provide public goods.

·         some of the important public goods in our economy.

·         why the cost–benefit analysis of public goods is both necessary and difficult.

·         why people tend to use common resources too much.

·         some of the important common resources in our economy.

Chapter 12: The Design of the Tax System

·         how the U.S. government raises money.

·         the efficiency costs of taxes.

·         alternative ways to judge the equity of a tax system.

·         why studying tax incidence is crucial for evaluating tax equity.

·         the trade-off between efficiency and equity in the design of a tax system.

Chapter 13: The Costs of Production

·         what items are included in a firm’s costs of production.

·         the link between a firm’s production process and its total costs.

·         the meaning of average total cost and marginal cost and how they are related.

·         the shape of a typical firm’s cost curves.

·         the relationship between short-run and long-run costs.

Chapter 14: Firms in Competitive Markets

·         what characteristics make a market competitive.

·         how competitive firms decide how much output to produce.

·         how competitive firms decide when to shut down production temporarily.

·         how competitive firms decide whether to exit or enter a market.

·         how firm behavior determines a market’s short-run and long-run supply curves.

Chapter 15: Monopoly

·         why some markets have only one seller.

·         how a monopoly determines the quantity to produce and the price to charge.

·         how the monopoly’s decisions affect economic well-being.

·         why monopolies try to charge different prices to different customers.

·         the various public policies aimed at solving the problem of monopoly.

Chapter 16: Monopolistic Competition

·         what market structures lie between monopoly and competition.

·         competition among firms that sell differentiated products.

·         how the outcomes under monopolistic competition and under perfect competition compare.

·         the desirability of outcomes in monopolistically competitive markets.

·         the debate over the effects of advertising.

·         the debate over the role of brand names.

Chapter 17: Oligopoly

·         what outcomes are possible when a market is an oligopoly.

·         the prisoners’ dilemma and how it applies to oligopoly and other issues.

·         how the antitrust laws try to foster competition in oligopolistic markets.

Chapter 18: The Markets for the Factors of Production

·         the labor demand of competitive, profit-maximizing firms.

·         the household decisions that lie behind labor supply.

·         why equilibrium wages equal the value of the marginal product of labor.

·         the effects of immigration on the labor market.

·         how the other factors of production—land and capital—are compensated.

·         how a change in the supply of one factor alters the earnings of all of the factors.

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