Principles of Microeconomics Study Guide

Scarcity, Opportunity Cost, and the Production Possibilities Curve

Foundational economic concepts including trade-offs, efficiency, and graphical analysis of production possibilities essential for AP success.

Comparative Advantage and Gains from Trade

Calculating comparative advantage and understanding how specialization increases total output, a frequent AP calculation topic.

Supply, Demand, and Market Equilibrium

Core market model including determinants, shifts, equilibrium price and quantity, and surplus/shortage analysis for AP graphs.

Elasticity of Demand and Supply

Calculating and interpreting price elasticity, income elasticity, and cross-price elasticity with total revenue applications.

Consumer Choice and Utility Maximization

Marginal utility analysis, utility-maximizing rule, and deriving demand curves from consumer behavior decisions.

Consumer and Producer Surplus and Market Efficiency

Measure welfare using surplus concepts, identify deadweight loss, and evaluate efficiency of market outcomes.

Production Functions and Short-Run Costs

Understanding marginal product, diminishing returns, and calculating MC, ATC, AVC, and AFC cost curves.

Production Functions, Costs, and Profit Maximization

Analyze short-run and long-run costs, marginal product, diminishing returns, and economies of scale for firms.

Long-Run Costs and Economies of Scale

Long-run average total cost curves, economies and diseconomies of scale, and minimum efficient scale concepts.

Perfect Competition: Short-Run and Long-Run Analysis

Apply MR=MC profit maximization, identify shutdown decisions, and explain long-run equilibrium with zero economic profit.

Monopoly: Pricing, Output, and Efficiency

Analyze monopoly behavior, deadweight loss, price discrimination, and compare outcomes to perfect competition graphically.

Monopoly and Price Discrimination

Monopoly profit maximization, deadweight loss, efficiency comparisons to competition, and price discrimination strategies.

Monopolistic Competition and Oligopoly

Examine product differentiation, excess capacity, game theory, Nash equilibrium, and strategic behavior in imperfectly competitive markets.

Factor Markets: Labor, Wages, and Resource Allocation

Apply marginal revenue product, derive labor demand, and analyze wage determination in competitive and monopsony markets.

Factor Markets: Labor, Land, and Capital

Marginal revenue product, profit-maximizing input hiring, wage determination, and derived demand concepts for AP.

Market Failure: Externalities and Public Goods

Identify positive and negative externalities, apply corrective policies, and distinguish public goods from private goods.

Market Failure, Externalities, and Government Intervention

Public goods, externalities, Pigouvian taxes, property rights, and efficiency rationale for government policy responses.

Government Intervention: Taxes, Subsidies, and Price Controls

Analyze tax incidence, efficiency effects of price ceilings and floors, and evaluate government policies using surplus.