AP Microeconomics Fall 2008

Tiffany Killian killiant@cfbisd.edu

Newman Smith High School

Note: Instructor reserves the right to change the syllabus and calendar as needed.

WELCOME
The purpose of this course is to prepare you for the AP Microeconomics Exam in May.
Throughout this course, you will learn vital skills for achieving success in college. This
course is structured as a college course; you will be expected to keep up with all of your
work, reading, etc. Success in this course stems from your ability to maintain self-
discipline and from a strong work ethic. You MUST keep up with the reading and the
homework assignments.

COURSE OBJECTIVE
Microeconomics is the study of individual players in the circular flow of the economy.
Throughout this course, you will study how consumers, firms and the government make
economic decisions, and the resulting effects these decisions have on the remaining
sectors. Additionally, international trade and international policy is included in this
course as globalization is becoming a key determinant to the success of many industries.
You are expected to know and understand economic models in each unit to the extent that
you can apply those models to various economic situations and changes. Consumers,
firms and the government must consider international markets when making economic
decisions. Understanding and application of all concepts presented is essential to success
in the course.

GRADING POLICY
Your nine weeks average is based on the following:
In class work, quizzes, homework….….30%
Tests, FRQs..……………..……………70%

In class work will consist of problem sets and practice FRQs. Quizzes will be based on
readings, handouts and articles. Homework will be reading notes from the textbook, as
well as some problem sets and analytical thinking assignments.

All tests are timed. Tests will consist of multiple-choice questions which require
application of your knowledge of the material. It is important that you understand
relationships and the graphs, not just definitions and terminology.

FRQs are timed free-response questions. These questions will be formatted similarly to
the FRQs that will be on the AP exam. You will have to draw graphs and show
movements of graphs. You will need to be able to explain the graphs. These are not
essay questions; short explanations of your graphs are sufficient.

-1-
Quizzes can be any variety of short answer, multiple choice or graphs. These will
typically be “checks” to make sure you are keeping up with the reading, notes, and
assignments.

Test dates will be announced at least one week in advance. FRQs and quizzes will be
announced a few days in advance.

MAKEUP WORK
If a student is absent for one day, one day will be given to make up assignments missed.
It is the student’s responsibility to obtain his assignments before or after class on the first
day the student returns to school. NO LATE WORK WILL BE ACCEPTED.
NOTE: Field trips and competitions are not absences. If you are not in class because of
school business, your assignment is due on or before the due date. NO LATE WORK
WILL BE ACCEPTED. All assignments are due with the sound of the tardy bell.

MATERIALS – Bring to class everyday!

1. Textbook – McConnell, Campbell R., and Stanley L. Brue. Economics:
Principles, Problems, and Policies. 15th ed. McGraw Hill; Boston, 2002.
2. Writing materials (pen or pencil, and you may want multiple colors for graphing)
3. Notes and folder OR binder with notebook paper (you will take notes daily and
receive many handouts throughout the semester which you will be responsible for
keeping).
4. Excerpts from other economic resources (The Wealth of Nations, The World is
Flat, etc.) will also be utilized and provided for you. You are responsible for
keeping up with all handouts.
5. Other sources from current events such as The Economist, The Dallas Morning
News and The New York Times will also be utilized.
6. Teacher-created handouts and handouts from various ancillaries will also be
utilized. You are expected to keep these in your binder/folder.

TUTORIALS
Scheduled times (unless I have a meeting):
Monday - Thursday from 6:45-7:15 and 2:40-3:10.
Other times may be scheduled by appointment.

THE AP MICRO EXAM

The AP Microeconomics exam consists of a 70-minute multiple choice section with 60
questions and a 60-minute free response section with one long question and two short
questions (including a 10-minute planning period). Free response questions (FRQs) are
not essay questions; in Economics, the FRQ is based on your knowledge of graphing.
You will answer most of each FRQ with a graph, using a few sentences to explain your
graph. We will practice FRQ techniques throughout the semester. NOTE:
CALCULATORS ARE NOT ALLOWED DURING IN-CLASS
TESTS/FRQS/QUIZZES OR ON THE AP EXAM!!!

-2-
SUCCESS
In order to be successful in this course, YOU MUST KEEP UP WITH THE
READING!!! The textbook readings and supplemental readings are all strongly
correlated to the AP test, and to the exams given in class. Because the chapters tend to be
lengthy, it is recommended that you read a little each night in order to feel
“overburdened” by each chapter.

You must also master understanding of graphs and relationships depicted in graphs. You
need to be able to draw the essential graphs and show appropriate movements on those
graphs. You must also be able to recognize the graphs and the movements in the graphs.

STUDY, STUDY, STUDY!!! This is a college-level course. Take your notes home
each night and study, even if there is not a specific homework assignment or approaching
test.

Ask for help when needed. I am available during tutorial times, and your colleagues can
also be a great source of help. Have a “study buddy” with whom you can exchange
phone numbers. This is especially important for those of you who will miss class often
due to school-related activities.

-3-
COURSE OUTLINE (Note: Dates and topics covered are tentative and subject to change). The pace
within each unit will be determined by the students; we will spend more time with topics on which
students tend to struggle. Additionally, everything in this course carries over into the next unit. The
topics you study in Unit I, for example, will still be addressed and related to material in the final unit.
Throughout each unit, we will do practice FRQs and activities in which we will manipulate graphs and
explore economic relationships. Additionally, you will be asked to do outside reading from the textbook
and other sources.

UNIT I – Basics (3 weeks; Chapters 1-4 and parts of 20)

Normative and positive economics

Logical thinking fallacies
Economic goals
Macro vs. micro
Marginal analysis
Scarcity
Choice
Implicit and explicit costs
Opportunity costs (law of increasing opportunity costs)
Factors of production
Full employment and full production
Productive and allocative efficiency
Production possibilities model
Specialization and trade
Comparative advantage and gains from trade
Circular flow
Markets
Economic Systems
Basic questions
Demand vs. quantity demanded
Supply vs. quantity supplied
Market equilibrium
Surplus
Shortage
Price ceilings and floors
Law of demand
Law of supply
Determinants of demand
Determinants of supply
Diminishing marginal utility
Income effect
Substitution effect
Consumer surplus
Producer surplus
Implications of taxation
Deadweight loss
Elasticity of demand (price, income and cross)
Marginal utility
Total utility
Graphs
Production possibilities model
Market equilibrium (supply and demand)
Surplus/shortage
Circular flow
Marginal utility/total utility

-4-
UNIT II – Business, Labor and Theory of the Firm (5 weeks; Chapters 5, 22-26)

Business organization
Sole proprietorship
Partnership
Corporation profit/loss
Circular-flow diagram
Cost of production
Explicit costs/implicit costs
Normal profits
Economic vs. accounting profit
Long run vs. short run
Law of diminishing returns
Cost of production:
Fixed cost
Variable cost
Total cost
Marginal cost
Average fixed cost
Average variable cost
Average total cost
Short run vs. long run
Market structure
Perfect competition
Monopolistic competition
Oligopoly
Pure monopoly
Barriers to entry
Profit maximization rule: MC = MR
Loss minimization
Profit, loss, break-even, shut-down
Maximum profit output and price determination model
Perfect competition
Monopolistic competition
Oligopoly
Pure monopoly
Allocative and productive efficiency
LRAC and SRAC
Monopoly power
Price-discrimination
Government regulation
Economies and diseconomies of scale
Graphs
Pure competition
Short-run firm and industry
Long-run firm and industry
Pure monopoly short-run firm/industry
X-inefficiency
Regulated monopoly (fair-return and socially-optimal)
Price-discriminating monopolist
Monopolistic competition
Short run
Long run
Oligopoly
Collusion
Game theory matrix

-5-
UNIT III – Factor Markets (3 weeks; Chapters 27, 28 and 29)

Marginal productivity theory of resource demand

Derived demand
Marginal physical product (MPP)
Value of marginal product (VMP)
Demand vs. quantity demanded of a resource
Impact of changes in demand on MRP
Productivity
Economic rent
Rent-seeking behavior
Wage determination
Role of unions (strategy and impact)
Minimum wage argument
Distribution of income
Graphs
Purely competitive resource demand
Monopsony model
Land rent
Loanable funds market
How unions change labor demand

-6-
UNIT IV – Market Failure and the Role of Government (2 weeks; Chapters 5, 30, and 31)

Private goods/public goods

Externalities (spillovers)
Positive
Negative
Coase Theorem
Median voter rule
Market failure
Public sector failure
Tax incidence
Progressivity:
Progressive
Proportional
Regressive
Tax reform
Flat tax
Distribution of income

Graphs
Lorenz curve
Effects of externalities
Marginal cost/marginal benefit
Tax incidence and efficiency loss

UNIT V – International Trade (3 weeks; Chapters 6 and 37)

Globalization
Absolute advantage
Comparative advantage
Specialization
Terms of trade/cost ratio
Trading possibilities frontier
Gains from trade
Imports
Exports
Balance of trade
Trade deficit
Trade surplus
Protectionism vs. free trade
Trade barriers
Tariffs
Quotas
Nonquota barriers
Export subsidies
Infant industries
Foreign Exchange Market
Land-intensive vs. capital-intensive goods

-7-