Section outline

  • Course Information

    Go to section Course Information

    AP Microeconomics is an introductory college-level microeconomics course. Students cultivate their understanding of the principles that apply to the functions of individual economic decision-makers by using principles and models to describe economic situations and predict and explain outcomes with graphs, charts, and data as they explore concepts like scarcity and markets; costs, benefits, and marginal analysis; production choices and behavior; and market inefficiency and public policy.

    The AP Microeconomics framework is organized into six commonly taught units of study that provide one possible sequence for the course. As always, you have the flexibility to organize the course content as you like.

    Unit     Exam Weighting (Multiple-Choice Section)
    Unit 1: Basic Economic Concepts 12%–15%
    Unit 2: Supply and Demand 20%–25%
    Unit 3: Production, Cost, and the Perfect Competition Model  22%–25%
    Unit 4: Imperfect Competition 15%–22%
    Unit 5: Factor Markets 10%–13%
    Unit 6: Market Failure and the Role of Government 8%–13%

    Course Skills

    The AP Microeconomics framework included in the course and exam description outlines distinct skills that students should practice throughout the year—skills that will help them learn to think and act like economists.

    Skill     Description
    1. Principles and Models  Define economic principles and models.
    2. Interpretation  Explain given economic outcomes.
    3. Manipulation Determine outcomes of specific economic situations.
    4. Graphing and Visuals Model economic situations using graphs or visual representations.

       

  • Practice Tests

    Go to section Practice Tests
    Activities: 0

  • UNIT 1: Basic Economic Concepts

    Go to section UNIT 1: Basic Economic Concepts
    Foundational Concepts

    To grasp the principles of economics, students must recognize that the scarcity of resources means individuals and societies are constantly faced with choices. Rational decision-making occurs “on the margin,” with people weighing the additional costs and benefits of each choice. The fundamental economic concepts introduced in this unit serve as the groundwork for more advanced studies of consumer and producer behavior that will be explored later in the course.

    Developing Course Skills

    •    1.A
    •    1.C
    •    1.D
    •    2.C
    •    4.A
    This unit is designed to give students a solid grasp of core economic ideas, necessary for applying these concepts in more challenging subsequent units. As many students are new to the discipline of economics, thinking like an economist—such as analyzing constraints, trade-offs, and making marginal decisions—can feel unfamiliar. Introducing simulations and real-life examples at an early stage helps students start developing these skills. For instance, participating in an activity where students consume successive units of a good and record the utility received from each one (refer to the sample activities for Unit 1 on p. 33) enables them to better comprehend marginal analysis and diminishing marginal utility. By directly engaging with these concepts, students are more likely to describe and apply them confidently as the course progresses.

    Preparing for the AP Exam

    Analyzing quantitative data and performing calculations are common challenges for students on the AP Exam, especially within consumer theory. While students may understand the concept of consumer optimization, applying it in numerical problems can be difficult. To address this, it is essential to first strengthen students’ conceptual understanding, then provide ample practice with numerical problems. Emphasize the importance of showing all steps when performing calculations throughout the course.
    Additionally, this unit introduces graphical models—an essential skill tested in the AP Exam’s free-response section. Begin modeling how to set up and label graphs correctly, and offer students regular opportunities to practice graph construction and to interpret information presented visually.

    Activities: 17

  • UNIT 2: Supply and Demand

    Go to section UNIT 2: Supply and Demand
    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. 

    Activities: 24

  • UNIT 3: Production, Cost, and the Perfect Competition Model

    Go to section UNIT 3: Production, Cost, and the Perfect Competition Model
    Developing Understanding

    Unit 3 focuses on firm behavior and culminates with an introduction to the perfect competition model, which will form a basis of comparison for other market structures in the next unit. This unit builds on the idea of supply, which was introduced in the previous unit, and explores in more detail what drives the decisions that firms make. Thinking like a firm may be challenging for students, who are more used to acting as consumers in their everyday lives. Drawing connections to students’ own experiences and carrying out classroom simulations can help bring these concepts to life. Reminding students of the ways in which the behavior of firms is consistent with the ideas of cost-benefit analysis and marginal decision-making addressed in the first unit of the course may also be helpful in elucidating these concepts.

    Building Course Skills

    1.A 1.C 1.D 2.A 4.A

    In this unit, students will be expected to describe the production function, the costs of production, and firms’ profit-maximizing behavior. Students should be able to represent these concepts graphically and numerically. It is important to devote sufficient time to introducing new vocabulary to students and may be helpful for students to create a vocabulary notebook. Since grasping the behavior of firms is not always intuitive for students, consider beginning this unit by carrying out a factory simulation in the classroom and having students graph the data generated and interpret the outcomes of the simulation. It helps to debrief the simulation during and immediately following the activity to clarify misconceptions and deepen students’ understanding of relevant concepts. Students should have additional opportunities to practice graphing, interpreting given graphs, and doing numerical problems in the context of the content covered in this unit. Proper graphing habits should continue to be reinforced throughout this unit and the entire course.

    Preparing for the AP Exam

    The perfect competition model is foundational to the study of market structures in this course and is frequently tested on the AP Exam. It’s important to ground students in the conceptual underpinnings of perfect competition, including the concept of efficiency and production in both the short run and the long run. Students will benefit from having multiple opportunities to practice drawing and interpreting graphs that represent perfect competition; past AP Exams may be helpful in this exercise. If students are able to grasp the concepts behind perfect competition and how it’s graphically represented, they will be better able to understand imperfect market structures in the next unit. 

    Questions on the AP Exam that cover long-run production costs are often challenging for students. It may be helpful to provide students with opportunities to practice identifying and explaining given situations to reinforce their understanding of long-run production. Keep in mind, though, that while this is a difficult topic for students, it does not comprise a significant portion of the AP Exam.

    Activities: 7