This lesson covers Topics 2.2 and 2.6 in the AP Syllabus. Today we will learn about equilibrium and efficiency (welfare) in a market where the forces of supply and demand are permitted to interact freely.
Learning Target
Analyze the ways in which incentives influence what is produced and distributed in a market system.
Evaluate the extent to which competition among sellers and among buyers exists in specific markets.
Describe the consequences of competition in specific markets.
Criteria for Success
I will be able to use ideas related to market equilibrium and elasticities to analyze economic problems.
I will be able to demonstrate this understanding using a graph of the aforementioned model.
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Assignments
Read Krugman (Modules 7 and 49) and watch the following videos.
Watch: The video lecture for today's topic (linked above)
Optional: The videos linked below.
Formative Assessment (MCQ's): You will take a formal assessment during class. The assessment will consist of multiple-choice questions and one FRQ from an old AP Exam. Doing the problem of the day and ensuring that you understand it will help you prepare for today's formative assessment and help to ensure that you understand the concepts in this lesson.
Problem of the Day: Assume that the market for cigarettes is composed of two groups: those who are addicted to cigarettes and those who are not yet. Now assume that the the government permanently raises the price of cigarettes.
Draw a diagram illustrating the effect of the increase in price in the market for addicted smokers.
Draw another diagram illustrating the effect of the increase in price in the market for non-addicted smokers.
Explain why the outcome in each market is different.