ACDC Econ - AP/College Intro to Microeconomics Review

Introduction

• Presenter: Jacob Clifford
• Focus on preparing for AP test/final exam in microeconomics
• Offers a review pack with practice questions and additional videos
• Encourages supporting the channel if the content is helpful

Core Economic Concepts

Scarcity

• Unlimited wants vs. limited resources

Opportunity Cost

• Every decision has a cost

Production Possibilities Curve (PPC)

• Shows combinations of two goods using all resources
  • Efficient points: On the curve
  • Inefficient points: Inside the curve
  • Impossible points: Outside the curve
• Shapes:
  • Straight line: Constant opportunity cost (similar resources)
  • Bowed out: Law of increasing opportunity cost (dissimilar resources)
• Curve shifts due to changes in resources, technology, or trade

Comparative Advantage

• Specialization based on lower opportunity cost
• Absolute Advantage: Who produces more
• Comparative Advantage: Calculations needed
• Terms of Trade: Beneficial exchange rates between countries

Economic Systems

Types

• Free market (capitalism)
• Command economy
• Mixed economy
• Focus in class: Capitalism

Circular Flow Model

• Interaction between businesses, individuals, and government
• Product market vs. Resource market
• Key terms:
  • Transfer payments
  • Subsidies
  • Factor payments

Unit 1: Introduction to Economics

• Quick overview
• Difficulty: 3/10

Unit 2: Demand and Supply

Demand

• Downward sloping curve
• Law of demand: Price ↑, Quantity demanded ↓
• Influences: Substitution effect, income effect, diminishing marginal utility

Supply

• Upward sloping curve
• Law of supply: Price ↑, Quantity supplied ↑

Market Equilibrium

• Price moves along the curve, doesn't shift it
• Shortage vs. Surplus

Shifts in Curves

• Demand and supply shifts impact price and quantity
• Double Shift Rule: One variable becomes indeterminate

Elasticity

• Elastic: Sensitive to price changes
• Inelastic: Insensitive to price changes
• Elasticity Coefficient: Percent change in quantity/price

Price Controls

• Ceilings and Floors affect equilibrium
• Impact on consumer and producer surplus

Taxes and Total Revenue

• Impact on supply curve
• Division of tax burden

Consumer Choice

• Marginal utility per dollar

• Maximizing total utility

• Difficulty: 5/10

Unit 3: Cost Curves and Theory of the Firm

Inputs and Outputs

• Law of diminishing marginal returns

Costs

• Types: Fixed, Variable, Total
• Per unit cost curves: Average total, variable, fixed, and marginal cost

Short Run vs. Long Run

• Short run: Some fixed resources
• Long run: All resources variable

Perfect Competition

• Many small firms
• Price takers
• Produce where MR = MC
• Long run equilibrium: No economic profit

Efficiency

• Productive: Lowest ATC

• Allocative: MC = Demand

• Difficulty: 9/10

Unit 4: Market Structures

Monopolies

• One firm, high barriers
• Price makers
• Graph: Downward sloping demand and MR curve

Oligopolies and Game Theory

• Few large firms
• Strategic pricing
• Use of game theory matrices

Monopolistic Competition

• Many firms, differentiated products

• Long run adjustments

• Difficulty: 8/10

Unit 5: Resource Market

Supply and Demand for Labor

• Derived demand
• Minimum wage impacts

Marginal Revenue Product (MRP) and Marginal Resource Cost (MRC)

• Charts and calculations
• Hiring decisions: MRP = MRC

Monopsony

• Single buyer of labor
• Impact on wages and employment

Least Cost Rule

• Optimizing resource use

• Difficulty: 6/10

Unit 6: Market Failures

Public Goods

• Characteristics: Shared consumption, non-exclusion

Externalities

• Negative: Additional societal costs
• Positive: Additional societal benefits

Lorenz Curve and Income Inequality

• Graphs income distribution

Types of Taxes

• Progressive: Higher income, higher percent

• Regressive: Higher burden on lower income

• Proportional: Same percent for all

• Difficulty: 4/10

Conclusion

• Encouragement for exam success
• Importance of supporting educational content