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AP Microeconomics

Study notes
1.1.1 Scarcity, Needs, and Wants
1.1.2 Factors of Production and Scarcity
1.1.3 Constraints, Trade-Offs, and Non-Rival Knowledge
1.2.1 The Three Basic Allocation Questions
1.2.2 Resource Allocation in a Command Economy
1.2.3 Resource Allocation in a Market Economy
1.2.4 Mixed Economies and Coordination Mechanisms
1.3.1 What the PPC Shows
1.3.2 Opportunity Cost and Trade-Offs on the PPC
1.3.3 Efficiency, Inefficiency, and Underutilized Resources
1.3.4 Why the PPC’s Shape Matters
1.3.5 PPC Shifts, Growth, and Contraction
1.4.1 Absolute Advantage
1.4.2 Comparative Advantage and Opportunity Cost
1.4.3 Finding Advantage from Tables and PPCs
1.4.4 Specialization and Gains from Trade
1.4.5 Mutually Beneficial Terms of Trade
1.5.1 Opportunity Cost and Economic Decision-Making
1.5.2 Explicit and Implicit Costs
1.5.3 Total Benefits for Consumers and Firms
1.5.4 Net Benefits and the Optimal Choice
1.5.5 Total Analysis Versus Marginal Analysis
1.6.1 Consumer Constraints and Rational Choice
1.6.2 Utility Maximization in Consumer Choice Theory
1.6.3 Diminishing Marginal Utility
1.6.4 Marginal Utility per Dollar Spent
1.6.5 Marginal Analysis for Consumers and Firms
1.6.6 MB, MC, and the Optimal Quantity
1.6.7 Why Sunk Costs Should Be Ignored
2.1.1 Incentives, Constraints, and Property Rights in Demand
2.1.2 The Law of Demand and Movement Along the Curve
2.1.3 Why Demand Curves Slope Downward
2.1.4 Market Demand and Shifts in Demand
2.2.1 The Law of Supply and Movement Along the Curve
2.2.2 Market Supply and the Upward-Sloping Supply Curve
2.2.3 Determinants of Supply and Supply Shifts
2.3.1 Measuring Responsiveness with Elasticity
2.3.2 Calculating Price Elasticity of Demand
2.3.3 Elastic, Inelastic, and Unit Elastic Demand
2.3.4 Determinants of Elasticity and Total Revenue
2.4.1 Calculating Price Elasticity of Supply
2.4.2 Elastic, Inelastic, and Unit Elastic Supply
2.4.3 What Determines Elasticity of Supply
2.5.1 Elasticity Beyond Price
2.5.2 Income Elasticity: Normal and Inferior Goods
2.5.3 Cross-Price Elasticity: Substitutes and Complements
2.6.1 Using the Supply-and-Demand Model
2.6.2 Market Equilibrium and Market Clearing
2.6.3 Consumer Surplus, Producer Surplus, and Resource Allocation
2.6.4 Why Equilibrium Is Efficient
2.7.1 Surpluses, Shortages, and Disequilibrium
2.7.2 How Shifts Change Equilibrium
2.7.3 Effects on Surplus and the Role of Elasticity
2.8.1 Price Floors, Price Ceilings, and Quantity Controls
2.8.2 Taxes and Subsidies as Market Interventions
2.8.3 Government Intervention and Allocative Efficiency
2.8.4 Deadweight Loss from Intervention
2.8.5 Tax Incidence, Subsidy Incidence, and Elasticity
2.9.1 Trade, Autarky, and Market Equilibrium
2.9.2 Trade and Economic Surplus
2.9.3 Tariffs and Their Market Effects
2.9.4 Quotas and Course Scope
3.1.1 Inputs, Outputs, and the Production Function
3.1.2 Total, Marginal, and Average Product
3.1.3 Diminishing Marginal Returns in the Short Run
3.2.1 Fixed, Variable, and Total Cost
3.2.2 Average and Marginal Cost Measures
3.2.3 Why Total Fixed Cost Stays Constant
3.2.4 Diminishing Returns and the Upward-Sloping MC Curve
3.2.5 Specialization, Productivity, and Lower Marginal Cost
3.2.6 Why Cost Curves Shift
3.3.1 All Inputs Are Variable in the Long Run
3.3.2 Returns to Scale and Output Growth
3.3.3 Economies and Diseconomies of Scale
3.3.4 Minimum Efficient Scale and Market Structure
3.4.1 Accounting Profit vs. Economic Profit
3.4.2 Implicit Costs and Normal Profit
3.4.3 Calculating Profit and Loss
3.5.1 The Profit-Maximizing Rule
3.5.2 Choosing the Profit-Maximizing Output Level
3.5.3 Using Graphs and Data to Find Profit Maximization
3.6.1 The Shutdown Decision in the Short Run
3.6.2 Producing, Shutting Down, and Zero Output
3.6.3 Entry into a Market in the Long Run
3.6.4 Exit from a Market in the Long Run
3.7.1 Characteristics of a Perfectly Competitive Market
3.7.2 Prices, Information, and Efficient Outcomes
3.7.3 Why Firms Are Price Takers
3.7.4 Profit Maximization in Competitive Equilibrium
3.7.5 Allocative Efficiency in Perfect Competition
3.7.6 Short-Run Profits, Losses, and Market Adjustment
3.7.7 Long-Run Equilibrium and Productive Efficiency
3.7.8 Industry Cost Conditions and Long-Run Prices
4.1.1 Types of Imperfect Competition
4.1.2 Why Firms Must Lower Price to Sell More
4.1.3 Why Imperfect Markets Are Inefficient
4.1.4 Barriers to Entry and Market Power
4.2.1 Why Monopolies Exist
4.2.2 Profit Maximization in Monopoly
4.2.3 Monopoly Price, Output, and Market Inefficiency
4.2.4 Consumer Surplus, Producer Surplus, and Profit in Monopoly
4.2.5 Natural Monopoly and Economies of Scale
4.3.1 When Firms Use Price Discrimination
4.3.2 Profit and Surplus Effects of Price Discrimination
4.3.3 Perfect Price Discrimination
4.3.4 Deadweight Loss Under Perfect Price Discrimination
4.4.1 Product Differentiation and Nonprice Competition
4.4.2 Short-Run Profit or Loss
4.4.3 Long-Run Equilibrium in Monopolistic Competition
4.4.4 Excess Capacity
4.4.5 Allocative Inefficiency in Monopolistic Competition
4.5.1 Oligopoly Characteristics
4.5.2 Collusion and Cartels
4.5.3 What Is a Game in Economics?
4.5.4 Strategies and Payoff Matrices
4.5.5 Dominant Strategy
4.5.6 Nash Equilibrium
4.5.7 Prisoner’s Dilemma and Oligopoly Outcomes
4.5.8 Oligopoly vs. Perfect Competition
5.1.1 What Are Factor Markets?
5.1.2 Demand and Supply in Labor Markets
5.1.3 What Determines Resource Demand?
5.1.4 Calculating MRP and MRC
5.2.1 How Output Price Shifts Labor Demand
5.2.2 How Worker Productivity Shifts Labor Demand
5.2.3 How Population and Skills Shift Labor Supply
5.2.4 How Incentives and Preferences Shift Labor Supply
5.2.5 Market Effects of Shifting Labor Demand and Supply
5.3.1 Characteristics of Perfectly Competitive Labor Markets
5.3.2 The Firm's Hiring Rule in Competitive Labor Markets
5.3.3 When Firms Continue or Stop Hiring Workers
5.3.4 Competitive Labor Markets with Imperfect Output Markets
5.3.5 Allocating Inputs to Minimize Costs
5.3.6 Calculating MRP and VMPL
5.4.1 Characteristics of Monopsonistic Labor Markets
5.4.2 Why MFC Is Greater Than the Wage
5.4.3 The Monopsony Hiring Rule
5.4.4 Wage Increases for Existing Workers
5.4.5 Calculating and Graphing Monopsony Outcomes
6.1.1 Social Efficiency and the Optimal Quantity
6.1.2 Why Perfect Competition Can Be Socially Efficient
6.1.3 Private Incentives and Socially Undesirable Outcomes
6.1.4 Inefficient Quantities and Deadweight Loss
6.1.5 Using Cost-Benefit Analysis to Improve Efficiency
6.2.1 Defining Externalities and Socially Optimal Output
6.2.2 Why Private Markets Ignore External Costs and Benefits
6.2.3 Property Rights, Transaction Costs, and Externalities
6.2.4 The Free Rider Problem
6.2.5 Government Policies for Externalities
6.3.1 Classifying Goods: Rivalry and Excludability
6.3.2 Why Public Goods Create a Free Rider Problem
6.3.3 Why Governments Provide Some Private Goods
6.3.4 Common Resources and Overconsumption
6.4.1 Per-Unit Taxes and Subsidies in Market Outcomes
6.4.2 Elasticity and the Size of Policy Effects
6.4.3 Lump-Sum Taxes and Subsidies
6.4.4 Price Ceilings and Floors Across Market Structures
6.4.5 Government Policy and Efficiency in Imperfect Markets
6.4.6 Regulating Monopoly and Natural Monopoly
6.4.7 Antitrust Policy and Competition
6.5.1 Measuring Income and Wealth Inequality
6.5.2 Lorenz Curves and Gini Coefficients
6.5.3 Marginal Product and Income Inequality
6.5.4 Causes of Income and Wealth Inequality

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