20–25% of the AP exam. Key topics: Law of demand and determinants (shifters) of demand, Demand vs. quantity demanded (shift vs. movement along curve), Law of supply and determinants (shifters) of supply, Market equilibrium: equilibrium price and quantity, Effects of supply and demand shifts on equilibrium, Price elasticity of demand (PED): formula, determinants, relationship to total revenue, Price elasticity of supply (PES), Income elasticity of demand, Cross-price elasticity of demand (substitutes vs. complements), Price ceilings and price floors: effects on markets, Tax incidence: consumer vs. producer burden, deadweight loss, Subsidies: effects on markets, Comparative advantage, tariffs, and quotas in international trade, Gains and losses from trade (consumer surplus, producer surplus).
Study guide content for this unit is being prepared. Check back soon for complete lesson notes, formula sheets, and worked examples.
