AP Unit IV. Product Markets

EQ: How do markets equilibrate and why should they be allowed to?
Readings: Modules 7, 8, 9, 47, 48, 49, 50

  • Product Markets
    • Market equilibrium
    • Determinants of producer supply and consumer demand
  • The Gains of Trade: Consumer & producer surplus, and allocative efficiency
  • Price and quantity controls erode the gains of trade
  • Slope matters: Elasticity
    • Price, income, and cross-price elasticities of demand
    • Price elasticity of supply
  • Tax incidence and deadweight loss

Price Floors and Ceilings
Cross Price Elasticity
Tax Incidence

Class notes
Consumer Choice & Elasticity
Article #2 “Where do Prices Come From”

Practice Problems
Practice Problems Answer Form