1. Models in AP Economics adapted from Sally Meek adapted from Sally Meek Sally.meek@pisd.edu Sally.meek@pisd.edu

2. Production Possibility Frontier or Curve Increasing Cost

3. Production Possibility Frontier Good X Good Y Increasing opportunity costs

4. Production Possibility Frontier or Curve Constant Cost

5. Production Possibility Frontier Good X Good Y Constant opportunity costs

6. Using PPFs and comparative advantage Radios Wheat 3 12 2 4 Country A Country B

7. Comparative Advantage Matrix

8. RadiosWheat Country A 312 Country B 24

9. Supply and Demand Model

10. P Q S D P1 Q1

11. Determinants of Demand and Supply

12. Non-price determinants Demand Demand Changes in: T aste and preferenceT aste and preference R elated Goods:R elated Goods: Δ in prices = Δ in demand for other goodsΔ in prices = Δ in demand for other goods complements or substitutescomplements or substitutes I ncomeI ncome B uyer numbersB uyer numbers E xpectationsE xpectations Supply Changes in: T echnologyT echnology R elated Goods:R elated Goods: Δ in prices = Δ inΔ in prices = Δ in supply of other goods complements orcomplements orsubstitutes I nput CostsI nput Costs C ompetitor numbersC ompetitor numbers E xpectationsE xpectations

13. Market Welfare CS=consumer surplus PS=producer surplus

14. Market Welfare CS=consumer surplus PS=producer surplus P P1 Q D S Q1 PS CS

15. Cost Curves

16. Cost structure for a firm Q MC ATC AVC P

17. Perfectly Competitive Firm

18. The Firm – Perfect competition $ Q MC ATC AVC MR=d MR=d1 MR=d2 Q profitQ loss P P1 P2

19. The Market and the PC Firm in the short run

20. PP Q Q ATC MC P MR=d Q Q ATC S D

21. The Market and the PC Firm in the long run

22. PP Q Q LRATC MC P1 D The Market and the PC Firm in the long run: no economic profits MR=d1 S1 Q1

23. LRATC

24. The Firm $ Q LRATC

25. Monopoly Firm

26. Monopoly P Q D MR MCP Q ATC

27. Monopolistic Competitive Firm Short Run

28. Monopolistic Competition short run P D MR MC P Q ATC

29. Monopolistic Competitive Firm Long Run

30. Monopolistic Competition long run P D MR MC P=ATC Q LRATC

31. Oligopoly and game theory Blue Mart Red Shop North South $900, $1,800 North South $5,000, $4,000 $1,500, $1,000 $3,000,$3,500 1 st entry in cell is Red Shop’s daily profits and 2 nd entry is Blue Mart’s

32. Oligopoly and game theory Blue Mart North South $900, $1,800 North South $5,000, $4,000 $1,500, $1,000 $3,000,$3,500 1 st entry in cell is Red Shop’s daily profits and 2 nd entry is Blue Mart’s Red Shop

33. Factor Market—Perfect Competition Market and Firm

34. Perfect Competition in the Factor Market W Q labor W S=MRC Q Q S labor D labor W MRP=d

35. Factor Market— Monopsony

36. Monopsony W Q labor MRC S MRP W1 q1

37. Externalities Negative Externality and Internalized Scenario

38. Externalities Qm=market quantity Qs =Socially optimal quantity P Q MPC MPB MSC Qm Qs dwl Negative production externality

39. Externalities Positive Externality and Internalized Scenario

40. Externalities Qm=market quantity Qs =Socially optimal quantity Q PMPC MPB MSB QmQs dwl Positive consumption externality