AP Audit
AP Micro-Economics
"[Economics] is a method rather than a doctrine, an apparatus of the mind, a technique of
thinking which helps its possessor to draw correct conclusions."
John Maynard Keynes
General Theory
Course Description: Micro Economics is two trimester study of how individuals, firms, and organizational
structures make economic decisions. Demand and supply analysis will be developed to demonstrate how
market prices are determined; how they determine an economy's allocative mix of goods and services and
factors of production; and how goods and services are distributed throughout the economy. We will
evaluate the strengths and weaknesses of economic decision-makers by employing concepts of efficiency
and equity. We also analyze and evaluate the effects of government intervention. Throughout the course,
learning emphasis is placed on reasoned, logical argument. As the quote by Keynes suggests, the purpose
of this course is not to develop or solicit a normative or political point of view, but rather to use economics
as a method and model for decision-making.
Micro Economic Topics & Percentage Weight for Final Examination
I.
Basic economic concepts (8-14%)
A. Scarcity, choice and opportunity cost
B. Production possibilities curve
C. Comparative advantage, specialization, and trade
D. Economic systems
E. Property Rights and the role of incentives
F. Marginal analysis
II.
The nature and functions of product markets (55-70%)
A. Supply and demand (15-20%)
1. Market equilibrium
2. Determinants of supply and demand
3. Price and quantity controls
4. Elasticity
(a)
Price, income, and cross-price elasticities of demand
(b)
Price elasticity of supply
5. Consumer surplus, producer surplus, and allocative efficiency
6. Tax incidence and deadweight loss
B. Theory of consumer choice (5-10%)
1. Total utility and marginal utility
2. Utility maximization: equalizing marginal utility per dollar
3. Individual and market demand curves
4. Income and substitution effects
C. Production and costs (10-15%)
1. Production functions: short and long-run
2. Marginal product and diminishing returns
3. Short run costs
4. Long run costs and economies of scale
5. Cost minimizing input combination and productive efficiency
D. Firm Behavior and Market Structure (25-35%)
1. Profit:
a. Accounting versus economic profits
b. Normal profit
c. Profit maximization: MR=MC rule
2. Perfect competition
a. Profit maximization
b. Short-run supply and shutdown decision
c. Firm and market behaviors in short-run and long run
d. Efficiency and perfect competition
3. Monopoly
a. Sources of market power
b. Profit maximization
c. Inefficiency of monopoly
d. Price discrimination
e. Natural Monopoly
4. Oligopoly
a. Interdependence, collusion, and cartels
b. Game theory and strategic behavior
c. Dominant Strategy
d. Nash Equilibrium
5. Monopolistic competition
a. Product differentiation and role of advertising
b. Profit maximization
c. Short run and long-run equilibrium
d. Excess capacity and inefficiency
III.
Factor Markets (10-18%)
A. Derived factor demand
B. Marginal revenue product
C. Hiring decisions in the markets for labor and capital
D. Market distribution of income
IV.
Efficiency, equity and the role of government (12-18%)
A. Externalities
1. Marginal social benefit and marginal social cost
2. Positive externalities
3. Negative externalities
4. Remedies
B. Public goods
1. Public versus private goods
2. Provision of public goods
C. Public policy to promote competition
1. Antitrust policy
2. Regulation
D. Income Distribution
1. Equity
2. Sources of income inequality
Required Text: Ray, Margaret & Anderson, David Krugman’s Economics for AP
Supplemental Text: McConnell, Brue, & Flynn (McConnell) Economics 18th ed
Study Procedure: While the syllabus details the topics and assignments, students have found it helpful to
follow these study procedures.
1. For each unit topic, preview the objectives. You will want to read your text and use your class time to
master the objectives. Objectives provide a focus for your learning and detail my expectations. Please
note that some objectives require you to draw graphs or to perform mathematical calculations in order to
illustrate and explain economic reasoning.
2. For each unit topic, preview the vocabulary and the key conceptual questions (KCQ). Read your text so
that you can define the terms and answer the KCQ.
3. For each unit topic, read and study the charts, illustrations, and graphs in the text. Reading the charts and
graphs is as important as reading the text.
4. Your personal notes become your best text. You are encouraged to share your notes with other students;
to check the accuracy of your own notes; to clarify misunderstandings; to assist in solving all practice
exercises; and in completing some of the KCQ. A set of colored pencils is desirable (blue, green, red,
black, especially)
5. Do practice exercises and homework. Sometimes you will be given time to work problems in class so
that I may monitor your understanding and performance.
Evaluation:
Weight Scale:
Term Weight
75 % = Test/Quiz averages
25 % = Practice exercises (homework and class work)
Course Weight
20 % = Final Exam
80 % Term Grade
Grade Assignment:
90-100
80-89
70-79
65-69
64 
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A
B
C
D
F
HELPFUL INFORMATION
Frying your brain...
 Assume you know nothing about economics so we have an equal playing field
 New vocabulary with very precise meaning: pay close attention
 Economics is like studying geometry: axiomatic – conclusions follow premises, with precise use
of language and vocabulary. This is referred to as the “economic way of thinking”.
 The course is highly sequential – ideas one day will show up continuously throughout the course
 Some computation – adding, subtracting, division, multiplication. The trick is knowing when to
apply it; some elementary algebra and trig
 Graphical analysis is used frequently; it is an absolute requirement. How to read, construct, and
analyze graphs is needed to explain economic modeling and predictions. Make sure you read the
graphs used in the text and handouts.
How Unit Introductions and the Syllabus Works:
 Table of contents helps you locate data
 Readings, exercises, and key conceptual questions (KCQ) help you understand the material
 Practice exercises at the end of each section in the text: you should do these for every unit!
Tips:
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Help:
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DO NOT be absent! Absences will kill you! Especially after the first couple of weeks. The
material gets very difficult and being in class to see and hear the explanations is vital.
Keep up with the class. Do not miss assignments or let questions go unasked.
Read the textbook. Your book explains some items differently than my lectures. For most
students this helps. Do not allow dust to settle on your book!
Formulate study groups. Exchange phone numbers and emails and use each other. Explaining
concepts to others helps you to understand better. Having others explain things to you gives a
different view and often helps! Lean on each other. Share notes; try to teach each other; help each
other with practice exercises.
Engage your parents in economic thinking, but do not let them try to help you – it has been a long
time since they took such a course as this. Engage in discussions but realize that most people are
economically educated through the mass media which is horribly ignorant of how economics
actually works.
WEBSITE: www.mrrobinson.org - USE IT!!!! It is very helpful!!!
Mr. Robinson’s email is [email protected]
o I am available every morning after 7:15 and Tues-Wed Period 6
Ms. Howrey’s email is [email protected]
o I am available every day during period 5 and Tues, Wed, Thurs period 6
Use us! We am here to help you. Feel free to seek help any morning... even if it is simply to
verify whether you understand what you think you understand!
Purchase an AP Microeconomics (or AP Economics – Micro and Macro) review guide from a
book store or online. These are great tools.
GOOD LUCK!!!