Section outline

  • Developing Understanding

    This unit will provide the basis for understanding how markets work by introducing the supply and demand model. Students will build on the concepts of scarcity and choice that were introduced in the first unit and explore the factors that influence consumer and producer behavior. They will learn how the interaction of consumers and producers in competitive markets determines market prices and results in the most efficient allocation of scarce resources. At the end of the unit, students will also begin exploring the effects of government policy on market outcomes, laying the groundwork for additional analysis in the last unit of the course.

    Building Course Skills

    2.A 3.A 3.C 4.A 4.C

    It is important for students to continue to build on their graphing skills in this unit. Many students lose points on the AP Exam for not properly labeling axes and curves on graphs and for not properly demonstrating the effects of changes on graphs. It can help to model the appropriate setup of graphs, stressing the importance of proper labeling, and to provide opportunities for guided practice drawing and manipulating graphs. Help students to see from the beginning of the course how graphs can be used as tools for making sense of economic situations and predicting and explaining economic outcomes. These are important skills in this unit in the context of learning about supply and demand. Even if a graph is not asked for on the exam, drawing one may help to answer a given question or explain a situation.

    Preparing for the AP Exam

    On the AP Exam, students frequently have difficulty answering questions that require them to analyze numbers and do calculations that are relevant to the content of this unit (e.g., calculating and interpreting measures of elasticity and calculating areas of consumer surplus, producer surplus, and deadweight loss). Students may apply the wrong formula or mathematical process, such as when they incorrectly calculate the elasticity of demand as the change in quantity divided by the change in price, when they should instead calculate the percentage change in quantity divided by the percentage change in price. Providing students with opportunities to practice carrying out these calculations and emphasizing the importance of showing their work can help identify these types of mistakes and correct them before the AP Exam.

    In other cases, though, calculation errors reveal a lack of understanding of the underlying concept, which manifests itself in an incorrect calculation. For example, students might know how to calculate the area of a triangle when asked to calculate consumer or producer surplus from a given graph but then they calculate the area of the wrong triangle. Analyzing numbers and  doing calculations in this course require an understanding of the content itself.