Part 3 AP Microeconomicstestbankcollege.eu/sample/Solution-Manual-Economics-14th-Edition... · AP Microeconomics This section has six parts. Each of the first five parts corresponds

305 © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Part 3

AP Microeconomics

This section has six parts. Each of the first five parts corresponds to a unit on the AP Microeco-nomics exam. Each unit part provides a syllabus outline for teaching the unit, information regard-ing the concepts covered in the unit and corresponding text material, practice multiple choice and free response questions. The last part provides a 60 question practice exam.

Full file at http://TestbankCollege.eu/Solution-Manual-Economics-14th-Edition-Gwartney

306 ❖ Part 3/Unit I

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Syllabus Outline for the teaching of AP*

*AP, Pre-AP, Advanced Placement, and Advanced Placement Program are registered trademarks of The College Entrance Examination Board, which was not involved in the production of, and does not endorse, this product.


http://TestbankCollege.eu/Solution-Manual-Economics-14th-Edition-Gwartney


Micro Economics With James D. Gwartney; Richard L. Stroup; Russell S. Sobel; and David MacPherson. Economics Private and Public Choice, 14th Edition. Thomson, Southwestern, 2031

The AP* Micro Economics Instructional Manual is constructed with five instructional teaching units. Each unit of instruction is correlated with the AP* topical outline. Each proposed unit of instruction includes the following parts:

1. Plan: The plan includes: • Identification of the teacher materials to teach each unit of instruction. • Identification of the key instructional objectives for each unit of instruction. • Identification of the computational and graphical skills for each unit of

instruction. • Identification of formative signals, indicating weaknesses, of past student

performance. 2. Teach: A recommended approach to teaching the economic concepts and skills

• Recommended sequence of instruction. • Key conceptual questions that lead to an understanding of the economic concepts

and demonstration of economic skills. • Practice activities that challenge students to apply understanding of the economic

concepts. 3. Assess: Recommendations and test links to assess student understanding of the content

and skills • An index of past objective content questions. • An index of past free response content questions,

The conclusion of each unit of instruction includes a sample of similar and parallel AP* objective test questions and free response questions.





Teaching Unit I: The Economic Problem. The first unit of instruction entails the content area of Basic Economic Concepts as detailed in the AP* Economics Course Description1 (Content Area I, A-F) I. Plan Teaching Materials

Instructors Manual Coursebook Text readings The Economic Approach, Chapter 1

Coursebook, Chapter 1 Chapter 1, The Economic Approach

Some Tools of the Economist Chapter 2

Coursebook, Chapter 2 Chapter 2, Some Tools of the Economist

Gaining from International Trade, Chapter 18 (16)

Coursebook, Chapter 18 Chapter 18 (16), Gaining from International Trade

Key instructional objectives: Students do the following 1. define scarcity, choice and cost. 2. define and compute opportunity cost. 3. list and define the axioms of economic reasoning. 4. distinguish between positive and normative statements. 5. list and define the economic questions facing all nations. 6. construct and interpret production possibility schedules and graphs. 7. list and define the assumptions of production possibility schedules and graphs. 8. define how production possibility schedules and graphs illustrate the issues of scarcity, choice,

and cost. 9. define and calculate absolute and comparative advantages for production and exchange. 10. explain and show the affects of trade on a production possibility model. 11. define allocation, efficiency, and equity. 12. define ways in which societies determine allocation, efficiency, and equity. 13. explain and distinguish between absolute advantage and comparative advantage. 14. calculate the opportunity cost of production. 15. given production possibilities information, identify countries or individuals that possess com-

parative advantages and the gains from trade. 16. using terms of trade, explain the advantages of trade. 17. using comparative advantage concepts and terms of trade, predict the effects of policies that

restrict trade.

1 The College Board: “Economics: Micro Economics, Macro Economics: Course Description” http://apcentral.collegeboard.com/apc/public/repository/ap08_economics_coursedesc.pdf. Last Accessed Tuesday, January 10, 2012



Part 3/Unit I ❖ 309


Computational & graphing skills: Students must complete these tasks 1. Graph a production possibility model. 2. Explain the shapes of the production possibility curves. 3. Explain how the production possibilities model shows scarcity, choice, and cost. 4. Interpret selected points on the production possibility model. 5. Explain and graph economic growth on the production possibility model. 6. Explain and graph the affects of trade on a production possibility model. 7. Calculate opportunity cost. 8. Calculate terms of trade and gains from trade. Formative Signals: The following content and skill areas have been identified as areas of weak-ness for students based upon past objective and free response examinations. Objective Formative Signals: Based upon the released objective AP* Micro Economics examinations, less than 50% of the students have been able to correctly answer questions related to the following

Free response Formative Signals: Past stu-dents have found these to be problematic areas

• recognize and interpret absolute ad-vantage and comparative advantages (and terms of trade) given novel data (output is constant; resources vary).

• calculate opportunity cost given novel data.

• understands and interpret the distinctions between a constant cost and increasing cost production possibility frontier (ppf).

• solve comparative advantage problems us-ing inputs constant with outputs varying AND with outputs constant and inputs var-ying.

• understand and calculate terms of trade – who sells to whom (exports) and for the amount such that marginal benefits >= marginal cost.

• apply the concepts of marginal analysis -- ‘thinking like an economist’

• recognize the determinants of economic growth and how growth can be depicted on the production possibility graph.





II. Teach Recommended sequence of instruction: Teach introductory concepts in this sequence

Chapter 1 The Economic Approach

1. WHAT IS ECONOMICS ABOUT?, P. 3

• The Economic Problem. • Scarcity, choice, cost. • Free lunches vs. trade-offs.

2. THE ECONOMIC WAY OF THINKING, P. 8

Use the production possibilities frontier to illustrate the economic problem.

• Rational decision-making = marginal decision making.

3. POSITIVE AND NORMATIVE ECONOMICS, P. 15 4. PITFALLS TO AVOID IN ECONOMIC THINKING, P. 16

Define distinctions between positive and normative economics

Chapter 2

Some Tools of the Economist

1. WHAT SHALL WE GIVE UP? P. 28

• Opportunity cost. • Production Possibility model. • Increasing vs. constant costs.

2. TRADE CREATES VALUE, P.30 3. THE IMPORTANCE OF PROPERTY RIGHTS, P. 32 Explain the necessary assumptions for trade to occur.

4. PRODUCTION POSSIBILITIES CURVE, P. 36

• Technical or productive efficiency. • Allocative efficiency. • Gains in production/consumption. • Explain how technological change and increases in capital and human capital expand pro-

duction possibilities.

5. TRADE, OUTPUT, AND LIVING STANDARDS, P. 42 6. GAINS FROM SPECIALIZATION AND TRADE, P. 391 (P. 338)



Part 3/Unit I ❖ 311


• Explain how people gain from specialization and trade. • Absolute vs. comparative advantage. • Gains from trade.

6. HUMAN INGENUITY AND THE CREATION OF WEALTH, P. 44 7. ECONOMIC ORGANIZATION, P. 45 Make distinctions among the different kinds of economic organization

• Capitalism. • Command. • Mixed economy.

Key conceptual questions: Students demonstrate their understanding of the material by answer-ing the following key conceptual questions 1. What are the economic goals of any society? 2. What are the different methods used to resolve issues related to economic goals? 3. How does a production possibility model illustrate the economic problems of scarcity, choice,

and cost? 4. What are the guideposts to economic thinking? 5. Why do people trade? Practice: COURSEBOOK Chapter 2. Problems & Projects. The following exercises are repre-sentative of the type of tasks that students will to analyze on the AP*Macro and AP* Micro examination

• 1-Application of opportunity cost and marginal analyses • 3-Marginal benefit versus marginal cost analyses. • 4-Production possibility construction and analyses; application of comparative advantage

with inputs constant and outputs varying. • 5- Application of comparative advantage, with outputs constant and inputs varying. • 6-Production possibility analyses; calculation of opportunity cost, given graphical

information. • 8-Production possibility analysis focusing on economic growth, using graphical infor-

mation. Practice: COURSEBOOK Chapter 18. Problems & Projects. The following exercises are representative of the type of tasks that students will to analyze on the AP*Macro and AP* Micro examination

• 1- Analysis of output data of two countries; computation of opportunity cost; identification of absolute and comparative advantage and the gains from trade between two countries.

(NOTE: It is highly unlikely that alcohol, tobacco, or drugs will be used in questions and prob-lems)





III. Assess: Suggestions for determining what and how much students have learned. Past Objective AP* Test: Based upon released objective examinations, the students have been required to demonstrate the following content related to this unit of instruction. Tasks related to what economists study:

• understand the study of economics. • knows basic assumptions of how markets allocate resources. Tasks related to scarcity, choice, and cost • recognize a novel example of opportunity cost. • distinguish between opportunity cost and fixed cost. • calculate opportunity cost given novel data. • recognize an event or condition of opportunity cost. • recognize opportunity cost (implicit and explicit cost). • understand conditions under which an economy operates on a production possibility frontier;

or inside the production possibility frontier. Tasks related to the production possibility model (graph). • understand the trade-offs of moving from one point to another on a production possibility

curve. • illustrate production possibility graph showing movements from one point to another point. • understand conditions under which an economy operates on a production possibility frontier;

or inside the production possibility frontier. • understand why an economy cannot operate beyond the production possibility frontier. • explain increasing costs(bow out) of production possibility frontier. • calculate opportunity costs given novel data. • understands reason for increase/decrease in the production possibility frontier. • read and interpret a production possibility graph (cost). • understand and interpret the distinctions between a constant cost and increasing cost produc-

tion possibility frontier. • identify/calculate opportunity costs of moving from one point to another on the production

possibility frontier. Tasks related to the logic of trade and economic growth • recognize how growth is illustrated with a production possibilities curve. • recognize impact of comparative advantage on current production possibilities curve. • recognize absolute advantage and comparative advantage (and terms of trade) given novel da-

ta (output is constant; resources vary). • understand concept of comparative advantage (knows definition). • compute and interpret comparative and absolute advantage data.



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3. The opportunity cost of moving from point A to point B in Figure 1 is (A) the loss of some clothing. (B) the loss of some food. (C) the gain of some clothing. (D) the gain of some food. (E) There is no opportunity cost attached to a movement from point A to point B.

Use the production possibilities data below for Econville and Jimonia to answer the following questions. Oranges Apples Econville 0 16 1 12 2 8 3 4 4 0

Oranges Apples Jimonia 0 8 1 6 2 4 3 2 4 0

4. Which of the following is correct? (A) Econville has the comparative advantage in both goods. (B) Jimonia has the comparative advantage in oranges. (C) Econville has the comparative advantage in oranges. (D) Jimonia has a comparative advantage in both goods. (E) It would be impossible for Econville and Jimonia to gain from trade.

5. Which of the following would be a mutually agreeable rate of exchange? (A) Jimonia trades one orange to Econville for every one apple. (B) Jimonia trades one orange to Econville for every two apples. (C) Jimonia trades one orange to Econville for every three apples. (D) Jimonia trades one orange to Econville for every four apples. (E) Jimonia trades four oranges to Econville for every sixteen apples.

6. According to the law of comparative advantage, both Econville and Jimonia could gain if (A) Econville produced all of the apples and oranges and Jimonia did not produce anything. (B) Econville specialized in producing apples, Jimonia specialized in producing oranges, and

they traded. (C) Econville specialized in producing oranges, Jimonia specialized in producing apples, and

they traded. (D) Jimonia produced all of the apples and oranges and Econville did not produce anything. (E) Jimonia and Econville were both were self-sufficient and did not trade.



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9. Points A and B in the figure shown above indicate consumption and investment for two econ-omies. Other things constant, which of the economies is likely to grow more rapidly in the future?

(A) economy A. (B) economy B. (C) They can be expected to grow at the same rate. (D) This is uncertain since growth is not influenced by the factors indicated in this example. (E) Neither economy will experience growth as they are not maximizing their current in-

vestment.

10. When economists say a good is scarce, they mean (A) there are only a limited number of consumers who would be interested in purchasing the

good. (B) the human desire for the good exceeds the amount freely available from nature. (C) most people in poorer countries do not have enough of the good. (D) the production of the good has no opportunity cost for society. (E) there are some things on which it is impossible to put a price, such as human life.

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Teaching Unit II: The Market. The second unit of instruction entails the content areas of The Nature and Functions of Product Markets as detailed in the AP* Economics Course Description1 (Content Area II, A-B) and includes topics of Market Failure and the Role of Government (Content Area IV, A-B)

I. Plan (NOTE: Chapters and pages in (parenthesis) denote reference for the slit text in Micro Economics Teaching Materials

Instructors Manual Course book Text readings Supply, Demand and the Market Process, Chapter 3

Coursebook, Chapter 3

Chapter 3, Supply, Demand and the Market Process

Supply and Demand: Applications and Extensions, Chapter 4

Coursebook, Chapter 4 Chapter 4, Supply and De-mand: Applications and Extensions

The Economic Role of Government Chapter 5

Coursebook, Chapter 5 Chapter 5, Difficult Cases for the Market and the Role of Government

Gaining from International Trade, Chapter 18 (16)


Chapter, 18 (16), Gaining from International Trade

Consumer Choice and Elasticity Chapter 20 (7)


Chapter 20 (7), Consumer Choice and Elasticity

Key instructional objectives: Students do the following

Objectives related to the law of demand

1. define and illustrate demand through schedules and graphs. 2. distinguish between change(s) in demand and change(s) in quantity demanded. 3. explain the inverse relationship between price and quantity demanded. 4. identify and explain the variables which cause a change in demand. 5. illustrate and explain the changes in quantity demanded given a price change.

Objectives related to the law of supply

1. define and illustrate supply through schedules and graphs. 2. distinguish between change(s) in supply and change(s) in quantity supplied. 3. explain the direct relationship between price and quantity supplied. 4. identify and explain the variables that cause a change in supply. 5. illustrate and explain the changes in quantity supplied given a price change. 1 The College Board: “Economics: Micro Economics, Macro Economics: Course Description” http://apcentral.collegeboard.com/apc/public/repository/ap08_economics_coursedesc.pdf.



Part 3/Unit II ❖ 319


Objectives related to the laws of supply and demand

1. explain the role of price in a market economy. 2. define and illustrate equilibrium. 3. define and illustrate surpluses and shortages. 4. define effects of surpluses and shortages on prices and quantities. 5. predict the changes in price and quantities given changes in demand and/or supply. 6. interpret and/or compute equilibrium price and quantities from graphs, mathematical equa-

tions, and/or data. 7. interpret market conditions given novel data.

Objectives related to elasticity

1. define, explain, calculate, and interpret the price elasticity of demand. 2. identify, and interpret the relationship between price elasticity of demand and the effect

of a price change on total revenue. 3. define, calculate and interpret cross elasticity and income elasticity of demand. 4. list and explain the determinants of price elasticity of demand. 5. define and compute total revenue. 6. define and differentiate between normal and inferior goods. 7. calculate and explain the price elasticity of supply.

Objectives related to the applications to supply and demand

1. define and explain the effects of price ceilings and price supports. 2. identify areas and potential areas of market failure. 3. illustrate and explain the effects of a given government policy. 4. analyze the effects of taxation and subsidies in an individual market. 5. identify and calculate tax revenues, deadweight loss.

Objectives related to taxation/subsidies

1. define tax incidence. 2. explain the burden of taxation given elasticity information. 3. identify who benefits from the imposition of a subsidy.

Objectives related to international supply and demand 1. identify and explain the international equilibrium price and quantity. 2. derive an excess demand schedule/graph. 3. derive an excess supply schedule/graph. 4. analyze the effects of tariffs and import quotas on international markets and domestic markets.



320 ❖ Part 3/Unit II


Objectives related to the government’s role in the market economy

1. define and describe the effects of negative and positive externalities. 2. identify methods to solve the problem of externalities, including private and government solu-

tions. 3. use supply and demand analysis to show effects of externalities and to solve externality prob-

lems. 4. define and give examples of public goods. 5. define and give examples of goods that are excludable and/or rival. 6. identify and explain solutions to issues of public goods.

Computational & graphing skills: Students must complete these tasks

1. Graph demand and supply showing equilibrium price and quantities. 2. Given novel changes in demand and /or supply, graph the changes and show the changes in

equilibrium price and quantities. 3. Graph effects of a price ceiling and price floor. 4. Graphically illustrate changes in demand and supply with those of changes in quantity

demanded and quantity supplied. 5. Calculate shortages/surpluses from novel data. 6. Graph and illustrate the tax burden given an elastic and inelastic demand. 7. Calculate shortages/surpluses form novel data. 8. Identify and calculate consumer and producer surplus. 9. Calculate price, income, and cross elasticity, given novel data. 10. Interpret elasticity coefficients. 11. Graph and differentiate an inelastic from elastic demand curve and the affects on total revenues 12. Given various elasticities of demand and a change in supply, graph and explain the effects on

price and quantity. Formative Signals: The following content and skill areas have been identified as areas of weak-ness for students based upon past objective and free response examinations. Objective Formative Signals: Based upon the released objective AP* Micro Economics examinations, less than 50% of the students have been able to correctly answer questions to following

Free response Formative Signals: Past stu-dents have found these to be problematic areas

• characteristics of positive externalities; optimal price and output

• consequences of producing with negative externalities

• reasons for shifting of the demand curve for a factor of production

• understand consumer surplus; identify surplus with a graph

• impose an effective (binding) price ceiling and interpret graphs with ceilings/floors

• understand difference between supply and quantity supplied

• understand consumer surplus and identify graphical area of consumer surplus.

• explain relationship between price and total revenues (expenditures)



Part 3/Unit II ❖ 321


• results of a price ceiling given novel graph of supply and demand

• effects of price ceilings and floors • externalities in the market. • simultaneous changes in supply and demand• impact of secondary effects and externali-

ties in the market in terms of social bene-fit/social cost

• conditions under which an industry will produce the socially efficient level of out-put.

• distinguish between elastic and inelastic demand and supply

• calculate tax revenues using supply and demand models

• calculate consumer and producer surplus and deadweight loss using supply and de-mand graphs.

II. Teach Recommended sequence of instruction: Teach market concepts in this sequence

Chapter 3 Supply, Demand, and the Market Process

1. CONSUMER CHOICE AND THE LAW OF DEMAND, P. 54 2. RESPONSIVENESS OF QUANTITY DEMANDED TO PRICE CHANGES, P. 57 3. CHANGES IN DEMAND VERSUS CHANGES IN QUANTITY DEMANDED, P. 58

(a) Distinguish between quantity demanded and demand and explain what determines demand.

• Law of demand. • Changes in demand.

(b) Distinguish between value and price and define consumer surplus.

• Marginal benefit. (This concept will be reinforced and enhanced in succeeding units of instruction) 5. PRODUCER CHOICE AND THE LAW OF SUPPLY, P. 62 6. Responsiveness of Quantity Supplied to Price Changes, P. 65 7. CHANGES IN SUPPLY VERSUS CHANGES IN QUANTITY SUPPLIED, P. 66 Distinguish between quantity supplied and supply and explain what determines supply.

• Law of supply. • Changes in supply.

(b) Distinguish between cost and price and define producer surplus.

• Cost versus price.

(This concept will be reinforced and enhanced in succeeding units of instruction)



Documents

Part 3 AP Microeconomicstestbankcollege.eu/sample/Solution-Manual-Economics-14th-Edition... · AP Microeconomics This section has six parts. Each of the first five parts corresponds