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AP Microeconomics tutor

Basic Economic Concepts

How economists reason about choices under scarcity: opportunity cost and the tradeoffs scarcity forces, the production possibilities curve as a model of tradeoffs, efficiency, and growth, comparative advantage and the gains from specialization and trade, and marginal cost-benefit analysis of rational decisions. Topics: Scarcity and Economic Systems, Production Possibilities Curve, Comparative Advantage and Gains from Trade, Cost-Benefit and Marginal Analysis.

Supply and Demand

How competitive markets set prices and quantities: the determinants of demand and supply and the difference between a shift and a movement, market equilibrium and how it changes, price elasticity of demand and supply and what makes demand elastic or inelastic, income and cross-price elasticities, consumer and producer surplus, and the effects of price ceilings, price floors, taxes, and subsidies. Topics: Demand, Supply, Elasticity, Market Equilibrium and Change, Consumer and Producer Surplus, Government Intervention in Markets, International Trade and Policy.

Production, Cost, and the Perfect Competition Model

How a firm decides what and how much to produce: the production function and diminishing marginal returns, the family of short-run and long-run cost curves, total, average, and marginal revenue, and how a profit-maximizing firm in a perfectly competitive market chooses output and responds to profit, loss, and the shutdown decision in the short run and to entry and exit in the long run. Topics: The Production Function, Production Costs, Profit and Profit Maximization, Perfect Competition.

Imperfect Competition

Markets where firms have power to set price: how a monopoly chooses price and output and the resulting inefficiency, the sources of market power, price discrimination, monopolistic competition and product differentiation in the short and long run, and oligopoly and strategic behavior including game theory and the payoff matrix. Topics: Market Power and Market Structures, Monopoly, Price Discrimination, Monopolistic Competition, Oligopoly and Game Theory.

Factor Markets

How the markets for labor and other inputs set resource prices and quantities: input demand as demand derived from the output market, marginal revenue product and the least-cost hiring rule, and how competitive and imperfectly competitive (monopsony) factor markets determine wages and the payments to land and capital. Topics: Factor Demand and Marginal Revenue Product, Factor Supply, Perfectly Competitive Factor Markets, Monopsony.

Market Failure and the Role of Government

When markets fail to allocate resources efficiently and how government responds: positive and negative externalities and the tools that correct them, public goods and common resources, the distribution of income and how inequality is measured, and how taxes, subsidies, and regulation trade off efficiency against equity. Topics: Socially Efficient and Inefficient Market Outcomes, Externalities, Public and Private Goods, The Effects of Government Intervention in Different Market Structures, Inequality.