This lesson covers Topics 2.7-2.8 in the AP Syllabus. Today we will learn about the effects of government intervention in free markets.
Learning Target
Generate possible explanations for a government role in markets when market inefficiencies exist.
Use benefits and costs to evaluate the effectiveness of government policies to improve market outcomes.
Describe the possible consequences, both intended and unintended, of government policies to improve market outcomes.
Describe the roles of institutions such as clearly defined property rights and the rule of law in a market economy.
Criteria for Success
I will be able to use ideas related to government intervention in markets to analyze economic problems.
I will be able to demonstrate this understanding using graphs of the aforementioned model of price controls, taxes and subsidies.
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Assignments
Read: Krugman (Modules 8, 9, and 50).
Watch: The video lecture for today's topic (linked above).
Optional: The videos linked below.
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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
Define equilibrium and allocative efficiency.
Use a different diagram to explain why each of the following government policies would cause allocative inefficiency in the market for lobsters:.
A price floor on lobsters
A price ceiling on lobsters
A per unit subsidy to lobstermen
An excise tax on lobsters