AP Microeconomics, 2014-2015 Edition

242 Pages·2013·27.84 MB·English

by  Eric Dodge

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5 STEPS TO A 5
AP Microeconomics
2014–2015
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5
TM
5 STEPS TO A
AP Microeconomics
2014–2015
Eric R. Dodge, PhD
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ABOUT THE AUTHOR
Eric R. Dodge was born in Portland, Oregon, and attended high school in Tigard, Oregon.
He received a bachelor’s degree in Business Administration from the University of Puget
Sound in Tacoma, Washington, before attending the University of Oregon for his master’s
and doctoral degrees in Economics. While at the University of Oregon, he received two
graduate student awards for teaching and became a die-hard fan of the Ducks. Since 1995,
he has been teaching economics at Hanover College in Hanover, Indiana, the oldest private
college in the state. The author teaches principles of microeconomics and macroecon omics,
intermediate microeconomic theory, labor economics, environmental economics, industrial
organization, statistics, econometrics, and the economics of dams.
Since 2000, Eric Dodge has served as a faculty consultant for the AP economics pro-
gram, and has been a reader and writer of free-response questions, table leader, and ques-
tion leader at the annual AP Economics Reading. With coauthor Melanie Fox, he has also
written three recently published books: Economics Demystified, 500 Microeconomics
Questions: Ace Your College Exams, and 500 Macroeconomics Questions: Ace Your College
Exams. He lives in historic Madison, Indiana, with his son Eli, a neurotic cat, a small frog,
and perhaps a poltergeist or two.
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CONTENTS
Preface ix
Acknowledgments xi
Introduction: The Five-Step Program xiii
STEP 1 Set Up Your Study Program
1 What You Need to Know About the AP Microeconomics Exam 3
2 How to Plan Your Time 12
STEP 2 Determine Your Test Readiness
3 Take the Diagnostic Exam 19
Diagnostic Exam: AP Microeconomics 23
STEP 3 Develop Strategies for Success
4 How to Approach Each Question Type 33
Section I: Multiple-Choice Questions 33
Section II: Free-Response Questions 36
STEP 4 Review the Knowledge You Need to Score High
5 Fundamentals of Economic Analysis 41
5.1 Scarce Resources 42
5.2 Production Possibilities 45
5.3 Functions of Economic Systems 51
6 Demand, Supply, Market Equilibrium, and Welfare Analysis 55
6.1 Demand 55
6.2 Supply 61
6.3 Market Equilibrium 64
6.4 Welfare Analysis 69
7 Elasticity, Microeconomic Policy, and Consumer Theory 74
7.1 Elasticity 75
7.2 Microeconomic Policy and Applications of Elasticity 83
7.3 Trade Barriers 90
7.4 Consumer Choice 93
8 The Firm, Profit, and the Costs of Production 102
8.1 Firms, Opportunity Costs, and Profits 103
8.2 Production and Cost 104
9 Market Structures, Perfect Competition, Monopoly, and Things Between 116
9.1 Perfect Competition 117
9.2 Monopoly 127
9.3 Monopolistic Competition 132
9.4 Oligopoly 134
Ü vii