AP_Macro_Economics_Practice_Tests copy

宏观经济学英文版Macro Economics in EnglishMacro economics is a fascinating field that studies the overall economy and its various components and interactions It helps us understand how largescale economic phenomena such as economic growth, inflation, unemployment, and business cycles affect our lives and the world at largeTo start with, let's consider economic growth This is a crucial aspect of macroeconomics Economic growth refers to the increase in the production of goods and services in an economy over a period of time It is typically measured by the growth rate of the gross domestic product （GDP) A growing economy means more jobs, higher incomes, and an improved standard of living for the people But achieving and maintaining sustainable economic growth is not an easy task It requires a combination of factors such as investment in physical and human capital, technological progress, and sound economic policiesInflation is another important concept in macroeconomics It occurs when the general level of prices of goods and services in an economy rises over time Moderate inflation can be a sign of a healthy economy, but high or runaway inflation can cause serious problems It erodes the purchasing power of money, makes planning for the future difficult for businesses and individuals, and can lead to economic instability Central banks often use monetary policies to try to control inflation and keep it within a target rangeUnemployment is a significant concern in any economy When people are unemployed, it not only affects their livelihoods but also has broader implications for the economy There are different types of unemployment, such as frictional unemployment （which occurs when people are in the process of moving between jobs)， structural unemployment （due to changes in the structure of the economy, such as technological advancements or shifts in consumer demand)， and cyclical unemployment （associated with the ups and downs of the business cycle) Government policies and economic strategies aim to reduce unemployment and create job opportunitiesBusiness cycles are the recurrent patterns of expansion and contraction in economic activity They include periods of economic boom when production, employment, and income are rising, followed by periods of recession or depression when economic activity slows down Understanding business cycles is important for policymakers to take appropriate measures to mitigate the negative impacts and promote economic recoveryMacroeconomics also looks at the role of fiscal policy, which involves government spending and taxation, and monetary policy, which is managed by the central bank and influences the money supply and interest rates Fiscal policy can be used to stimulate the economy during downturns or to cool it down when there is overheating Monetary policy affects borrowing costs and the availability of credit, thereby influencing investment and consumption decisionsAnother important area in macroeconomics is international trade and finance The global economy is highly interconnected, and countries tradegoods and services with each other Changes in exchange rates, trade barriers, and international capital flows can have significant impacts on an economy's performance For example, a strong domestic currency can make exports more expensive and imports cheaper, affecting a country's trade balanceThe study of macroeconomics is not just about theoretical concepts but has practical implications for decisionmaking at various levels For governments, it helps in formulating economic policies to achieve macroeconomic stability, promote growth, and address social issues Businesses use macroeconomic indicators and forecasts to make strategic decisions regarding investment, production, and pricing Individuals also benefit from understanding macroeconomics as it affects their job prospects, savings, and investment decisionsIn conclusion, macroeconomics provides a framework for understanding the complex workings of the economy at a large scale It helps us make sense of the economic trends and policies that shape our lives and the world we live in By studying macroeconomics, we can better prepare for and respond to the economic challenges and opportunities that lie ahead。

1复习思考题1．答：微观经济学（Micro-economics）以单个经济单位（即作为消费者的单个家庭，单个厂商或企业，以及单个产品市场）的经济行为作为研究对象。

宏观经济学（Macro-economics）以一个社会的整个国民经济活动作为研究对象，通过研究经济总量的决定及其变化，来说明资源的充分利用问题。

2．答：稀缺是经济学的中心问题，因为相对于人的欲望，资源总是不够的。

3．略。

4．答：（一）资源配置问题（二）资源利用问题（三）经济体制问题。

5．实证经济学是利用实证分析，指排除任何价值判断，首先明确规定所研究的变量的含义，然后在一定假设条件下提出假说并依此预测未来，最后用经验和事实来验证预测的经济学。

规范分析经济学是利用规范分析，指以一定的价值判断为基础，提出一些分析经济现象的标准，作为确立经济理论的前提和制定经济政策的依据，研究如何才能符合这些标准的理论和政策的经济学。

6．略。

2复习思考题1．答：一种商品的需求是指在一定时期内，在各种可能的价格水平下，消费者愿意而且能够购买的商品数量。

一种商品的需求是由许多因素共同决定的，其中主要的因素有：商品本身的价格、消费者的收入水平、相关商品的价格、消费者的偏好、人口的数量与结构、政府的经济政策、消费者对商品价格的预期等。

2．答：需求量的变动是指在其他条件不变时，由某商品的价格变动所引起的该商品需求数量的变动。

需求的变动是指在某商品价格不变的条件下，由于其他因素的变动所引起的该商品的需求数量的变动。

3．答：一种商品的供给是指生产者在一定时期内在各种可能的价格下愿意并且能够提供出售的该种商品的数量。

一种商品的供给数量取决于多种因素的影响，其中主要的因素有：商品自身的价格、生产的成本、生产的技术水平、相关商品的价格、生产者对未来的预期和政府的政策等。

4．答：供给量的变动是指在其他条件不变时，由某商品的价格变动所引起的该商品供给数量的变动。

供给的变动是指在商品价格不变的条件下，由于其他因素变动所引起的该商品供给数量的变动。

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Use your time effectively, working as quickly as you can without losing accuracy. Do not spend too much time on any one question. Go on to other questions and come back to the ones you have not answered if you have time. It is not expected that everyone will know the answers to all of the multiple-choice questions.
Instructions
Section I of this exam contains 59 multiple-choice questions. Fill in only the ovals for numbers 1 through 59 on your answer sheet.
Indicate all of your answers to the multiple-choice questions on the answer sheet. No credit will be given for anything written in this exam booklet, but you may use the booklet for notes or scratch work. After you have decided which of the suggested answers is best, completely fill in the corresponding oval on the answer sheet. Give only one answer to each question. If you change an answer, be sure that the previous mark is erased completely. Here is a sample question and answer.

EcoNomIcs mIcroEcoNomIcsmacroEcoNomIcsCourse DescriptionE f f e c t i v eF a l l2010AP Course Descriptions are updated regularly. Please visit AP Central®() to determine whether a more recent CourseDescription PDF is available.The College BoardThe College Board is a not-for-profi t membership association whose mission is to connect students to college success and opportunity. Founded in 1900, the College Board is composed of morethan 5,700 schools, colleges, universities and other educational organizations. Each year, the College Board serves seven million students and their parents, 23,000 high schools, and 3,800 colleges through major programs and services in college readiness, college admission, guidance, assessment, fi nancial aid, and enrollment. Among its widely recognized programs are the SAT®, the PSAT/NMSQT®, the Advanced Placement Program® (AP®), SpringBoard® and ACCUPLACER®. The College Board is committed to the principles of excellence and equity, and that commitment is embodied in all of its programs, services, activities and concerns.For further information, visit .The College Board and the Advanced Placement Program encourage teachers, AP Coordinators and school administrators to make equitable access a guiding principle for their AP programs.The College Board is committed to the principle that all students deserve an opportunity to participate in rigorous and academically challenging courses and programs. All students whoare willing to accept the challenge of a rigorous academic curriculum should be considered for admission to AP courses. The Board encourages the elimination of barriers that restrict access to AP courses for students from ethnic, racial and socioeconomic groups that have been traditionally underrepresented in the AP Program. Schools should make every effort to ensure that their AP classes refl ect the diversity of their student population.© 2010 The College Board. College Board, ACCUPLACER, Advanced Placement Program, AP, AP Central, SAT, SpringBoard and the acorn logo are registered trademarks of the College Board. PSAT/NMSQT is a registered trademark of the College Board and National Merit Scholarship Corporation. All other products and services may be trademarks of their respective owners. Permission to use College Board materials may be requested online at: /inquiry/cbpermit.html.contentsWelcome to the AP Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 AP Course Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 AP Development Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AP Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AP Exam Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Credit and Placement for AP Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Setting Credit and Placement Policies for AP Scores . . . . . . . . . . . . . . . . . . . . . . .3 AP Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 The Courses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Teaching the Courses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 College Courses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 The Exams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 AP Microeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6I . Basic Economic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6II . The Nature and Functions of Product Markets . . . . . . . . . . . . . . . . . . . . .6III . Factor Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7IV . Market Failure and the Role of Government . . . . . . . . . . . . . . . . . . . . . . .8 Topic Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Sample Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Answers to Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Sample Free-Response Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 AP Macroeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22I . Basic Economic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22II . Measurement of Economic Performance . . . . . . . . . . . . . . . . . . . . . . . . .22III . National Income and Price Determination . . . . . . . . . . . . . . . . . . . . . . . .23IV . Financial Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23V . Inflation, Unemployment, and Stabilization Policies . . . . . . . . . . . . . . . .24VI . Economic Growth and Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 VII . Open Economy: International Trade and Finance . . . . . . . . . . . . . . . . . .25 Topic Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Sample Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Answers to Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Sample Free-Response Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Teacher Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 AP Central (apcentral .collegeboard .com) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Additional Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Welcome to the AP ®ProgramAP® is a rigorous academic program built on the commitment, passion and hard work of students and educators from both secondary schools and higher education. With more than 30 courses in a wide variety of subject areas, AP provides willing and academically prepared high school students with the opportunity to study and learn at the college level.Through AP courses, talented and dedicated AP teachers help students develop and apply the skills, abilities and content knowledge they will need later in college. Each AP course is modeled upon a comparable college course, and college and university faculty play a vital role in ensuring that AP courses align with college-level standards. For example, through the AP Course Audit, AP teachers submit their syllabi for review and approval by college faculty. Only courses using syllabi that meet or exceed the college-level curricular and resource requirements for each AP course are authorized to carry the “AP” label.AP courses culminate in a suite of college-level assessments developed and scored by college and university faculty members as well as experienced AP teachers. AP Exams are an essential part of the AP experience, enabling students to demonstrate their mastery of college-level course work. Strong performance on AP Exams is rewarded by colleges and universities worldwide. More than 90 percent of four-year colleges and universities in the United States grant students credit, placement or both on the basis of successful AP Exam scores. But performing well on an AP Exam means more than just the successful completion of a course; it is the gateway to success in college. Research consistently shows that students who score a 3 or higher typically experience greater academic success in college and improved graduation rates than their non-AP student peers.AP Course AuditThe intent of the AP Course Audit is to provide secondary and higher education constituents with the assurance that an “AP” designation on a student’s transcript is credible, meaning the AP Program has authorized a course that has met or exceeded the curricular requirements and classroom resources that demonstrate the academic rigor of a comparable college course. To receive authorization from the College Board to label a course “AP,” teachers must participate in the AP Course Audit. Courses authorized to use the “AP” designation are listed in the AP Course Ledger made available to colleges and universities each fall. It is the school’s responsibility to ensure that its AP Course Ledger entry accurately refl ects the AP courses offered within each academic year.The AP Program unequivocally supports the principle that each individual school must develop its own curriculum for courses labeled “AP.” Rather than mandating any one curriculum for AP courses, the AP Course Audit instead provides each AP teacher with a set of expectations that college and secondary school faculty nationwide have established for college-level courses. AP teachers are encouraged to develop or maintain their own curriculum that either includes or exceeds each of these expectations; such courses will be authorized to use the “AP” designation. Credit for the success of AP courses belongs to the individual schools and teachers that create powerful, locally designed AP curricula.Complete information about the AP Course Audit is available at www.collegeboard .com/apcourseaudit.AP Development CommitteesAn AP Development Committee is a group of nationally renowned subject-matter experts in a particular discipline that includes professionals in secondary and postsecondary education as well as from professional organizations. These experts ensure that AP courses and exams refl ect the most up-to-date information available, as befi tting a college-level course, and that student profi ciency is assessed properly. To fi nd a list of current AP Development Committee members, please visit: /developmentcommittees.AP ReadingAP Exams — with the exception of AP Studio Art, which is a portfolio assessment — consist of dozens of multiple-choice questions scored by machine, and free-response questions scored at the annual AP Reading by thousands of college faculty and expert AP teachers. AP Readers use scoring standards developed by college and university faculty who teach the corresponding college course. The AP Reading offers educators both signifi cant professional development and the opportunity to network with colleagues. For more information about the AP Reading, or to apply to serve as a Reader, visit /readers.AP Exam ScoresThe Readers’ scores on the free-response questions are combined with the results of the computer-scored multiple-choice questions; the weighted raw scores are summed to give a composite score. The composite score is then converted to a score on AP’s 5-point scale. While colleges and universities are responsible for setting their own credit and placement policies, AP scores signify how qualifi ed students are to receive college credit or placement:AP SCORE QUALIFICATION5 Extremely well qualifi ed4 Well qualifi ed3 Qualifi ed2 Possibly qualifi ed1 No recommendationAP Exam scores of 5 are equivalent to A grades in the corresponding college course. AP Exam scores of 4 are equivalent to grades of A–, B+ and B in college. AP Exam scores of 3 are equivalent to grades of B–, C+ and C in college.Credit and Placement for AP ScoresThousands of two- and four-year colleges and universities grant credit, placement or both for qualifying AP Exam scores because these scores represent a level ofachievement equivalent to that of students who have taken the comparable college course. This college-level equivalency is ensured through several AP Program processes:• College faculty are involved in course and exam development and other AP activities. Currently, college faculty:•Serve as chairs and members of the committees that develop the CourseDescriptions and exams for each AP course.•Are responsible for standard setting and are involved in the evaluation of student responses at the annual AP Reading. The Chief Reader for each AP exam is acollege faculty member.•Lead professional development seminars for new and experienced AP teachers.•Serve as the senior reviewers in the annual AP Course Audit, ensuring APteachers’ syllabi meet the curriculum guidelines for college-level courses.• AP courses and exams are reviewed and updated regularly based on the results of curriculum surveys at up to 200 colleges and universities, collaborations among the College Board and key educational and disciplinary organizations, and theinteractions of committee members with professional organizations in theirdiscipline.• Periodic college comparability studies are undertaken in which the performance of college students on a selection of AP Exam questions is compared with that of AP students to ensure that grades earned by college students are aligned with scores AP students earn on the exam.For more information about the role of colleges and universities in the AP Program, visit the Value of AP to Colleges and Universities section of the College Board website at /higher-ed/placement/ap.Setting Credit and Placement Policies for AP ScoresThe College Board website for education professionals has a section specifi cally for colleges and universities that provides guidance in setting AP credit and placement policies. Visit /higher-ed/placement/ap/policy. Additional resources, including links to AP research studies, released exam questions and sample student responses at varying levels of achievement for each AP Exam are also available. To view student samples and scoring guidelines, visit http://apcentral/apc/public/exam/exam_questions/index.html.To review recent validity research studies, visit http://professionals.collegeboard.com/data-reports-research/cb/ap.The “AP Credit Policy Info” online search tool provides links to credit and placement policies at more than 1,000 colleges and universities. This tool helps students fi nd the credit hours and/or advanced placement they may receive for qualifying exam scores within each AP subject at a specifi ed institution. AP Credit Policy Info is available at /ap/creditpolicy. If the information for your institution is not listed or is incorrect, please contact aphighered@.aP EconomicsI n T r o d u C T I o nThe AP Program offers two separate exams in economics: one in microeconomics and one in macroeconomics . Each exam is intended for qualified students who wish to complete studies in secondary school equivalent to a one-semester college introductory course . Each exam presumes at least one semester of college-level preparation . Students may take one or both exams in a given year . A separate score is reported for each .The material included in the Course Descriptions and in the two exams has been selected by economists who serve as members of the AP Economics Development Committee . In establishing the courses and exams, the committee surveyed the economics departments of more than 200 institutions receiving the most AP scores in economics . Using the information obtained about the content of typical introductory college courses, the committee developed the course outline and had the multiple-choice questions covering the outline pretested on college students enrolled in the appropriate economics courses . The AP Course Descriptions and exams are thus representative of college courses and are, therefore, considered appropriate for the measurement of skills and knowledge in the fields of introductory microeconomics and macroeconomics . Inclusion of the content, ideas and values expressed in the material is not intended as an endorsement of them by the College Board or ETS .T h e C o u r s e sTeaching the CoursesAP classes require extra time on the part of the teacher for preparation, personal consultation with students and the reading of a much larger number of assignments than would normally be given to students in regular classes . Accordingly, some schools assign reduced teaching hours to any teacher offering such a class or classes . If a teacher has only one semester to teach an AP Economics course, the Development Committee recommends that the teacher not attempt an integrated course but concentrate either on microeconomics or macroeconomics . To facilitate the teaching and learning of economics, the committee also suggests that AP Economics teachers have recent college-level economics courses as background preparation and that schools augment the resource materials available to teachers and students in classrooms and libraries .Although many schools are able to set up special college-level courses, in some schools AP study may consist of tutorial work associated with a regular course, or an individually tailored program of independent study .Examples of the organization and content of the AP courses in micro e conomics and macroeconomics and of equivalent college courses, as well as suggestions for appropriate resource materials, can be found in the AP Economics Teacher’s Guide and at AP Central (apcentral .collegeboard .com) . The Teachers’ Resources sectionof AP Central offers reviews of textbooks, articles, websites and other teachingMicroeconomicsresources . The electronic discussion groups (EDGs) accessible through AP Central also provide a moderated forum for exchanging ideas, insights and practices among members of the AP professional community . At the back of this booklet, you will find descriptions of these and other AP publications and resources and information about how to order them .College CoursesAn introductory college course in microeconomics or in macroeconomics is generally one semester in length . In both subject areas there is some variety among the courses offered by colleges . The AP topic outline does not reflect any one specific college curriculum for either microeconomics or macroeconomics . Rather, the aim of an AP Economics course is to provide the student with a learning experience equivalent to that obtained in a typical college introductory microeconomics or macroeconomics course .T h e e x a M sThe AP Microeconomics Exam and the AP Macroeconomics Exam are each a little over 2 hours long . Each exam consists of a 70-minute multiple-choice section and a 60-minute free-response section . Some questions in the free-response section require graphical analysis . The free-response section begins with a mandatory 10-minute reading period . During this period, students are advised to read each of the questions, sketch graphs, make notes and plan their answers . Stu d ents then have 50 minutesto write their answers . The multiple-choice section accounts for two-thirds of the student’s exam score and the free-response section for the remaining one-third . Major areas covered in each exam are discussed in this book .a P M I C r o e C o n o M I C sThe purpose of an AP course in microeconomics is to give students a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers, within the economic system . It places primary emphasis on the nature and functions of product markets and includes the study of factor markets and of the role of government in promoting greater efficiency and equity in the economy . The following is a brief discussion of these topics and some aspects of them that a teacher may choose to explore .MicroeconomicsTopicsI. Basic economic ConceptsThe study of microeconomics requires students to understand that, in any economy, the existence of limited resources along with unlimited wants results in the needto make choices . An effective AP course, therefore, begins by introducing the concepts of opportunity costs and trade-offs, and illustrates these concepts by using the production possibilities curve or other analytical examples . The course can then proceed to a consideration of how different types of economies determine which goods and services to produce, how to produce them and to whom to distribute them . It is also important that students understand why and how specialization and exchange increase the total output of goods and services . Students need to be ableto differentiate between absolute and comparative advantage, to identify comparative advantage from differences in opportunity costs and to apply the concept of comparative advantage, in order to determine the basis under which mutually advantageous trade can take place between countries . Specific examples from actual economic situations can be used to illustrate and reinforce the principles involved . The importance of property rights, the role of incentives in the functioning of free markets and the principle of marginal analysis should be highlighted .II. The nature and Functions of Product MarketsThe study of the nature and functions of product markets falls into four broad areas: supply and demand models, consumer choice, production and costs and theory of the firm .A well-planned AP course requires an analysis of the determinants of supply and demand and the ways in which changes in these determinants affect equilibrium price and output . In particular, the course helps students make the important distinction between movements along the curves and shifts in the curves . The course also emphasizes the impact of government policies, such as price floors and ceilings, excise taxes, tariffs and quotas on the free-market price and quantity exchanged . The concepts of consumer surplus and producer surplus should also be introduced . Students are expected to comprehend and apply the concepts of elasticity, including calculating price, cross-price, income elasticities of demand and the price elasticity of supply .The next area covered in the course is the theory of consumer choice . Students should gain an understanding of the basic postulates underlying consumer choice: utility, the law of diminishing marginal utility and utility-maximizing conditions, and their application in consumer decision-making and in explaining the law of demand . By examining the demand side of the product market, students learn how incomes, prices and tastes affect consumer purchases . Here it is important that students under-stand how to derive an individual’s demand curve, how individual and market demand curves are related and how the income and substitution effects explain the shape of the demand curve .MicroeconomicsThe third area covers production and cost analysis both in the short run and in the long run . This section begins with an introduction of the short-run production function, describing the relationship between the quantity of inputs and the quantity of output . Within the context of the production function, students should understand average and marginal products as well as the law of diminishing marginal returns . Students learn the link between productivity and costs and examine the relationships among the short-run costs: total, average and marginal . With an introduction ofthe concept of cost minimization, this section also includes a discussion of long-run costs and an examination of economies and diseconomies of scale, as well as returns to scale .The fourth area covers the behavior of firms in different types of market structures . This section begins with the definition of profits, making the distinction between accounting and economic profits, and establishing the profit-maximizing rule, using marginal analysis . In covering perfect competition, the course focuses on determining short-run and long-run equilibrium, both for the profit-maximizing individual firm and for the industry, and on the equilibrium relationships among price, marginaland average revenues, marginal and average costs, and profits . Students should understand the adjustment process to long-run equilibrium .In considering the market behavior of a monopolist, students identify and examine the sources of monopoly power and understand the relationship between a monopolist’s demand curve and its marginal revenue curve . Students learn how a monopoly’s total revenue changes along its demand curve as price varies . Having learned the behavior of monopolies and perfect competition, students should compare a monopolist’s price, level of output and profit with those of a firm operating in a perfectly competitive market . By paying particular attention to the concept of allocative efficiency, students learn how and why competitive markets achieve an efficient allocation of resources, whereas monopolists do not . The concept of deadweight loss is a good device to show the efficiency loss due to monopoly . The model of price discrimination provides another dimension of monopoly behavior that students need to learn and understand . In covering oligopoly, the course stresses the interdependency of firms andtheir tendency to collude or to form a cartel . With a simple payoff matrix, the basic game-theory model should be used to enhance a student’s understanding of the interdependent behavior of firms in an oligopolistic market and identification of dominant strategies .Finally, the course considers the market structure of monopolistic competition and highlights the importance of product differentiation and the role of advertising in the behavior of firms . The course then proceeds to examine firm behavior in the short run and in the long run and the existence of excess capacity and its implication for efficiency .III. Factor MarketsIn this section of the course, students also apply the concepts of supply and demand to markets for factors such as labor, capital and land . Students analyze the conceptof derived demand, understand how a factor’s marginal product and the marginal revenue product affect the demand for the factor, and consider the role of factor pricesMicroeconomicsin the allocation of scarce resources . When the markets for different factors are considered separately, most attention should be given to the labor market, particularly labor supply and wage and employment determination . Although the course may emphasize perfectly competitive labor markets, the effect of deviations from perfect competition, such as minimum wages, unions, monopsonies and product market monopolies, can also be considered . The principles studied in the analysis of the labor market should be applied to the markets for land and capital to explain the determination of economic rent and the price of capital . By studying the determination of factor prices, students gain an understanding of how the market determines the distribution of income and the sources of income inequality in a market economy .IV. Market Failure and the role of GovernmentIt is important for students to understand the arguments for and against government intervention in an otherwise competitive market . Students examine the conditionsfor economic efficiency, using the marginal social benefit and marginal social cost principle, and the ways in which externalities, public goods and the market distribution of income create market failures even in competitive free-market economies . In addition, students are expected to study the effectiveness of government policies such as subsidies, taxes, quantity controls and public provision of goods and services, which are designed to correct market failures and achieve economic efficiency . It is also important both to emphasize that monopolies can cause market failures when they use their market power to engage in behavior that restrains competition and to examine the government’s attempt to solve such problems by using antitrust policy and regulations . Although there is not a generally accepted standard for judging the equity of an economy’s income distribution, a well-designed course will incorporate key measures of income distribution (Lorenz curve and Gini coefficient) and examine the impact of government tax policies and transfer programs, both on the distribution of income and on economic efficiency .Topic outlineOn the next page is an outline of the major content areas covered by the AP Micro-economics Exam . The percentages indicated reflect the approximate percentage in the multiple-choice section of the exam devoted to each content area . The outline is a guide and is not intended as an exhaustive list of topics .。