Principals of Microeconomics for AP Courses 2e

Principles of Microeconomics for AP® Courses 2e covers the scope and sequence requirements for an Advanced Placement® microeconomics course and is listed on the College Board’s AP® example textbook list. The second edition includes many current examples and recent data from FRED (Federal Reserve Economic Data), which are presented in a politically equitable way. The outcome is a balanced approach to the theory and application of economics concepts.

The second edition was developed with significant feedback from current users. In nearly all chapters, it follows the same basic structure of the first edition. General descriptions of the edits are provided in the preface, and a chapter-by-chapter transition guide is available for instructors.

Senior Contributing Authors

Steven A. Greenlaw, University of Mary Washington
David Shapiro, Pennsylvania State University

Contributing Authors

Craig Richardson, Winston-Salem State University
Ralph Sonenshine, American University
Diane Keenan, Cerritos College
Dan MacDonald, California State University, San Bernardino
Eric Dodge, Hanover College
Cynthia Gamez, University of Texas at El Paso
Andres Jauregui, Columbus State University
Amyaz Moledina, The College of Wooster

Chapter 1 Welcome to Economics!
• Introduction
• 1.1 What Is Economics, and Why Is It Important?
• 1.2 Microeconomics and Macroeconomics
• 1.3 How Economists Use Theories and Models to Understand Economic Issues
• 1.4 How To Organize Economies: An Overview of Economic Systems
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions

Chapter 2 Choice in a World of Scarcity
• Introduction to Choice in a World of Scarcity
• 2.1 How Individuals Make Choices Based on Their Budget Constraint
• 2.2 The Production Possibilities Frontier and Social Choices
• 2.3 Confronting Objections to the Economic Approach
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 3 Demand and Supply
• Introduction to Demand and Supply
• 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services
• 3.2 Shifts in Demand and Supply for Goods and Services
• 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process
• 3.4 Price Ceilings and Price Floors
• 3.5 Demand, Supply, and Efficiency
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 4 Labor and Financial Markets
• Introduction to Labor and Financial Markets
• 4.1 Demand and Supply at Work in Labor Markets
• 4.2 Demand and Supply in Financial Markets
• 4.3 The Market System as an Efficient Mechanism for Information
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 5 Elasticity
• Introduction to Elasticity
• 5.1 Price Elasticity of Demand and Price Elasticity of Supply
• 5.2 Polar Cases of Elasticity and Constant Elasticity
• 5.3 Elasticity and Pricing
• 5.4 Elasticity in Areas Other Than Price
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 6 Consumer Choices
• Introduction to Consumer Choices
• 6.1 Consumption Choices
• 6.2 How Changes in Income and Prices Affect Consumption Choices
• 6.3 Labor-Leisure Choices
• 6.4 Intertemporal Choices in Financial Capital Markets
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 7 Production, Costs and Industry Structure
• Introduction to Production, Costs, and Industry Structure
• 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit
• 7.2 Production in the Short Run
• 7.3 Costs in the Short Run
• 7.4 Production in the Long Run
• 7.5 Costs in the Long Run
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 8 Perfect Competition
• Introduction to Perfect Competition
• 8.1 Perfect Competition and Why It Matters
• 8.2 How Perfectly Competitive Firms Make Output Decisions
• 8.3 Entry and Exit Decisions in the Long Run
• 8.4 Efficiency in Perfectly Competitive Markets
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 9 Monopoly
• Introduction to a Monopoly
• 9.1 How Monopolies Form: Barriers to Entry
• 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 10 Monopolistic Competition and Oligopoly
• Introduction to Monopolistic Competition and Oligopoly
• 10.1 Monopolistic Competition
• 10.2 Oligopoly
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 11 Monopoly and Antitrust Policy
• Introduction to Monopoly and Antitrust Policy
• 11.1 Corporate Mergers
• 11.2 Regulating Anticompetitive Behavior
• 11.3 Regulating Natural Monopolies
• 11.4 The Great Deregulation Experiment
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 12 Environmental Protection and Negative Externalities
• Introduction to Environmental Protection and Negative Externalities
• 12.1 The Economics of Pollution
• 12.2 Command-and-Control Regulation
• 12.3 Market-Oriented Environmental Tools
• 12.4 The Benefits and Costs of U.S. Environmental Laws
• 12.5 International Environmental Issues
• 12.6 The Tradeoff between Economic Output and Environmental Protection
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 13 Positive Externalities and Public Goods
• Introduction to Positive Externalities and Public Goods
• 13.1 Why the Private Sector Underinvests in Innovation
• 13.2 How Governments Can Encourage Innovation
• 13.3 Public Goods
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 14 Poverty and Economic Inequality
• Introduction to Poverty and Economic Inequality
• 14.1 Drawing the Poverty Line
• 14.2 The Poverty Trap
• 14.3 The Safety Net
• 14.4 Income Inequality: Measurement and Causes
• 14.5 Government Policies to Reduce Income Inequality
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 15 Labor Markets and Income
• Introduction to Labor Markets and Income
• 15.1 Market Power on the Supply Side of Labor Markets: Unions
• 15.2 Employment Discrimination
• 15.3 Immigration
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions

Chapter 16 Information, Risk, and Insurance
• Introduction to Information, Risk, and Insurance
• 16.1 The Problem of Imperfect Information and Asymmetric Information
• 16.2 Insurance and Imperfect Information
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 17 Financial Markets
• Introduction to Financial Markets
• 17.1 How Businesses Raise Financial Capital
• 17.2 How Households Supply Financial Capital
• 17.3 How to Accumulate Personal Wealth
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 18 Public Economy
• Introduction to Public Economy
• 18.1 Voter Participation and Costs of Elections
• 18.2 Special Interest Politics
• 18.3 Flaws in the Democratic System of Government
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems

Chapter 19 International Trade
• Introduction to International Trade
• 19.1 Absolute and Comparative Advantage
• 19.2 What Happens When a Country Has an Absolute Advantage in All Goods
• 19.3 Intra-industry Trade between Similar Economies
• 19.4 The Benefits of Reducing Barriers to International Trade
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems
Chapter 20 Globalization and Protectionism
• Introduction to Globalization and Protectionism
• 20.1 Protectionism: An Indirect Subsidy from Consumers to Producers
• 20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions
• 20.3 Arguments in Support of Restricting Imports
• 20.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally
• 20.5 The Tradeoffs of Trade Policy
• Key Terms
• Key Concepts and Summary
• Self-Check Questions
• Review Questions
• Critical Thinking Questions
• Problems