Unit 1: Basic Economic Concepts

AP Microeconomics

Scarcity and choice

The production possibilities curve (PPC)

2040608010020406080100Good BGood AInefficientEfficientUnattainablePPC

Production Possibilities Curve: efficient points lie ON the curve, inefficient points inside, unattainable points outside

Calculating opportunity cost from the PPC

PPC shifts

Comparative advantage and trade

How to find comparative advantage

Demand

2468101224681012QuantityPrice ($)Demand (D)

Demand curve: downward-sloping because of the law of demand

Movement vs. shift

Supply

2468101224681012QuantityPrice ($)Supply (S)

Supply curve: upward-sloping because higher prices make production more profitable

Market equilibrium

2468101224681012QuantityPrice ($)Equilibrium (Pe, Qe)DemandSupply

Market equilibrium where supply and demand intersect

How shifts change equilibrium

Vocabulary

Unit 1 topics

Unit 1 overview1.1Scarcity1.2Opportunity Cost and the Production Possibilities Curve1.3Comparative Advantage and Gains from Trade1.4Demand1.5Supply1.6Market Equilibrium, Disequilibrium, and Changes in Equilibrium
Next →1.1 Scarcity
Practice AP Microeconomics questions →