Welker's Wikinomics Page - Recently Updated Pages

cen71ugu — Sun, 21 Aug 2011 08:43:42 CDT

Cialis (Tadalafil)

AP Macroeconomic FRQ topics

welkerjason — Tue, 24 May 2011 04:12:26 CDT

	1	2	3
2011 FRQ / Rubric	Phillips Curve (SR and LR), AD/AS, fiscal policy, OMO, money market, SR to LR in AD/AS	Loanable funds market, investment demand and real interest rates, forex market, determinant of exchange rates	RRR, OMO, money multiplier, bond market,
2011 B FRQ / Rubric	AD/AS, determinants of AD, Phillips Curve (SR and LR), automatic fiscal policy, loanable funds market with crowding-out, SR to LR in the AD/AS model	Forex markets, impact of exchange rates on AD/AS, monetary policy's effects on exchange rates	Calculating GDP, nominal and real, price indexes, nominal and real wages, nominal and real interest rates
2010 FRQ / Rubric	AD/AS, fiscal policy, SR to LR in AD/AS, loanable funds market with crowding-out, Investment demand	Money market, money demand, bond market, OMO	Forex markets, impact of exchange rates on AD/AS, determinants of exchange rates
2010 B FRQ / Rubric	AD/AS, Fiscal policy, SR Phillips Curve, crowding-out, PPC	OMO, money market, effect of monetary policy on exchange rates	Determinants of AD/AS, impact of various supply and demand shocks
2009 FRQ / Rubric	Phillips Curve (SR/LR) OMO, Money Market, AD/AS	Forex market, loanable funds market, determinants of exchange rates	RRR, money multiplier, OMO
2009 B FRQ/Rubric	AS/AD, Phillips Curve, Fiscal Policy, Long Run Adjustment	Multiple Deposit Expansion, Inflation, Money Market	FOREX, Loanable Funds
2008 FRQ/Rubric	Phillips Curve, Budget, Multipliers, Loanable Funds, Growth	Balance of Payments, FOREX	Trade
2008 B FRQ/Rubric	AS/AD, Fiscal policy, Loanable Funds, FOREX	Trade Barriers, Balance of Payments	GDP, Inflation
2007 FRQ/Rubric	Money Market, FOREX, AS/AD	Monetary Policy, Multiple Deposit Expansion, Nominal v. Real Interest rates	GDP
2007 B FRQ/Rubric	AS/AD, Money Market, Long run adjustment	Loanable Funds, Growth	Balance of Payments, FOREX
2006 FRQ/Rubric	AS/AD, FOREX	Money Market, Loanable Funds, Nominal v. Real interest rates	Unemployment, Phillips Curve
2006 B FRQ/Rubric	AS/AD, Long run adjustment, Loanable Funds, Growth	Multiple Deposit Expansion	FOREX
2005 FRQ/Rubric	AS/AD, Monetary Policy, Nominal v. Real interest rates	Loanable Funds, FOREX	Phillips Curve
2005 B FRQ/Rubric	Policy Mix, AS/AD, Phillips Curve	Growth	Loanable Funds, FOREX
2004 FRQ/Rubric	AS/AD, Monetary Policy, Long run adjustment	Interest rates, FOREX	Multiple Deposit Expansion
2004 B FRQ/Rubric	AS/AD, Phillips Curve, Monetary Policy, Supply – side	Balance of Payments, FOREX, interest rates, investment	Trade
2003 FRQ/Rubric	AS/AD, Policy Mix	Inflation	Trade
2003 B FRQ/Rubric	AS/AD, Fiscal Policy, Loanable Funds, FOREX, Growth	Trade	Phillips Curve
2002 FRQ/Rubric	Policy Mix, AS/AD	Growth	Balance of Payments, FOREX
2002 B FRQ/Rubric	AS/AD, Policy Mix, FOREX	Consumption & Saving, Loanable Funds, Growth	Balance of Payments, FOREX
2001 FRQ/Rubric	AS/AD, Fiscal Policy, Supply-side, Growth	Interest rates, FOREX	Multiple Deposit Expansion
2000 FRQ/Rubric	AS/AD, Fiscal Policy, Investment	FOREX	Money Market, AS/AD
1999 FRQ/Rubric	Interest rates, FOREX, AS/AD, Policy Mix	GDP, Growth	Growth

Short-run Production Relationships

29dec07 — Sun, 22 May 2011 21:01:20 CDT

9Total Product (TP): total output of a particular good/service producedMarginal Product (MP): extra output or added product associated with adding a unit of a variable resource to the production process MP = (Change in TP/ Change in Labor Input )
Average Product (AP): output per unit of labor input (a.k.a. labor productivity)

AP = (TP / Units of Input)

Law of Diminishing Returns: As successive units of a variable resource (eg. labor) are added to a fixed resource (eg. capital or land), beyond some point the marginal product that can be attributed to each additional unit of variable resource will decrease.

Rationale:
If a factory hires more workers to work with a constant amount of capital (ex. equipment), marginal output start to rise as the factory specialize and become more efficient. However, after a certain point, output will increase at a decreasing rate. This is when diminishing returns sets in, because additional workers do not add to as much efficiency per worker. Then at one point, total efficiency is lost because of overcrowding, and marginal product will decrease.
This is why the world CANNOT be fed from a single flower pot.
The law of diminishing returns assumes that all units of labor are of equal quality, each successive worker is presumed to have the same innate ability, motor coordination, education, training, and work experience.

Graphical Portrayal:

Both marginal product (MP) curve and average product (AP) curve presents the Law of Diminishing Returns. At first additional worker yields increasing MP, but when diminishing returns is encountered, MP will decrease, eventually causing AP to decrease as well.

When MP lies above AP, AP rises.
When MP lies below AP, AP falls.
MP intersects AP at its maximum value
When MP crosses the X-axis, it signifies a move from diminishing marginal returns to negative marginal returns.

Price Elasticity of Demand

marcelaelena — Mon, 09 May 2011 15:55:18 CDT

The Price-Elasticity Coefficient and Formula:

Price elasticity of demand = consumers' responsiveness/sensitivity to a product's price change
- A product is elastic if a small change in its price elicits very large changes in the quantity demanded.
- - Movement on the demand curve
    ex. products that are not required in people's daily lives are often elastic products. (not necessity but luxury)
- A product is inelastic if a big price change elicits very little influence on the quantity demanded.
  - Minimal movement on the demand curve
  - ex. products that are required in people's daily lives are often inelastic products. (not luxury but necessity)
It is important to keep in mind that elasticity involves percentage change in price and quantity demanded; not absolute change.

Midpoint Formula for calculating elasticity:

We use the formula in computing the price-elasticity coefficient.

Ex: A change of $4-$5 along a demand curve is a 25% increase, but the opposite price change from $5-$4 along the same curve is a 20% decrease. Since elasticity should be the same whether price rises or falls, the midpoint formula is needed.

This formula simply averages the two prices and the two quantities as the reference points for computing the percentages.

Ex: the reference point for the $5-$4 and $4-$5 price range is $4.50.

Eliminates the "up vs. down" problem

Drop the negative sign.

Ed = %Change in quantity ÷ %Change in price

(Sum of quantities/2) (Sum of prices/2)

Interpretations of Ed:

Elastic: Ed> 1 ; When % change in price elicits a larger % change than from change in quantity demanded
Inelastic: Ed < 1 ; When % change in price elicits a smaller % change than % change from quantity demanded
Unit elasticity: Ed = 1 ; When % change in price will cause the exact same % change in quantity demanded; i.e. % change in quantity demanded = % change in price.
Perfectly Inelastic: If a price change creates no change at all in quantity demanded.
- Ed= 0, change in price is irrelevant to demand.
- Graph: Demand line = parallel to the vertical axis.
- Example: Insulin for diabetes; insulin is essential for diabetics to live, therefore, if the price increases by any amount they still have to buy it.
Perfectly Elastic:
- Ed= Infinite; a small price reduction causes buyers to change purchases from zero to all they can get.
- Graph: Demand line = parallel to the horizontal axis.
- Example: Gift certificates; if gift certificates that are worth $100 are being sold for $90 people will buy as much as they can because they are getting a free $10.

The Total-Revenue Test:

Total Revenue = Total amount a seller receives for a product during a certain time period.
- TR = Price x Quantity demanded and sold
Total revenue and price elasticity of demand are related (see below) .

Price Elasticity and the Total-Revenue Curve:

Elastic (Ed>1)	Price ↑; TR ↓ Price ↓; TR ↑ [Price and revenue move in opposite directions]	Percentage of quantity demanded is larger than percentage on change of price
Inelastic (Ed<1)	Price ↑; TR ↑ Price ↓; TR ↓ [Price and revenue move in same direction]	Percentage of the average quantity demanded is smaller than percentage of the average price
Unitary (Ed=1)	Price ↑; TR unchanged Price ↓; TR unchanged	Percentage of the average quantity demand = percentage of average price

Price Elasticity along a Linear Demand Curve: elasticity varies in different price ranges of the same demand curve.

Determinants of Price Elasticity of Demand:
(remember SPLAT!)

1. Substitutability: Direct relationship between the number of substitute goods of a product and the elasticity of the product

# of substitutes up = elasticity up
# of substitutes down= elasticity down

(ex): If Reebok running shoes are the only choice of running shoes available, its number of substitutes is low and people would not be very sensitive towards its price changes because they need running shoes anyway. Hence, elasticity goes down.
If other companies such as Nike and Adidas start to manufacture running shoes as well, the number of substitutes would go up and if Reebok still increases its prices, people would buy the substitutes instead. Hence, elasticity goes up.

2. Proportion of Income: If other things are equal, there's a direct relationship between the price of good relative to income and the elasticity of demand of the good.
The higher the price of a good relative to consumer's incomes, the greater the price elasticity of demand.

(ex) Price of toothpaste up by 10% = few dollars extra. Consumers will still buy the toothpaste since its still relatively cheap.
Price of sports car up by 10% = few thousand dollars extra. Consumers will react sharply to the price increase because the original price of the good is already so high.

3. Luxuries vs. Necessities:
Necessities = inelastic, we NEED it no matter what price; ex: food
Luxuries = elastic, we can do without it; ex: Designer handbag

4. Addictiveness: If the product is very addictive (i.e. cigarettes) people will continue to buy the product regardless of price

5. Time: Basically,
Short time (Less durable) to consider whether to buy a product = inelastic. No time to adjust to price change
Long time ( durable) to consider whether to buy a product = elastic. Plenty of time creates consumer sensitivity (The longer the time the more elastic the good becomes.)

Applications of Price Elasticity of Demand:

Large crop yields:

Demands for a majority of farm products are mostly inelastic, with Ed around 0.20 or 0.25.
An increase in output of farm products causes a decrease in their prices and the incomes of farmers.
- Therefore, farmers find large crop yields undesirable

- The government focuses on products with high Ed
  - If products with high elasticity are greatly affected by taxes enforced by the government, total revenue of these products will decrease and affect the market greatly.
  - Higher taxes on elastic products are therefore undesirable.
Decriminalization of Illegal Drugs:
- Debates have been going on about whether or not drugs should be legalized, like alcohol and cigarettes. Many are now saying that the government is losing too much money on the war against drugs: the need for more prison cells, a larger police force and the increasing number of people dying. If drugs are legalized, the government could gain some money through taxes.
- Some argue that drugs are more elastic than people think. Besides the portion of consumers that are inelastic, there are also some people who are "occasional users" and can abstain from or substitute drugs with other things such as alcohol.

AP Economics Syllabus

meadowlands — Sat, 30 Apr 2011 05:33:31 CDT

Semester 1: Microeconomics
(the percentages indicate the proportion of the multiple choice AP exam will be consist of questions from each section)

Unit 1: Basic Economic Concepts – 8-14%

Scarcity, choice, and opportunity cost
Production possibilities curve
Comparative advantage, absolute advantage, specialization, and trade
Economic systems
Property rights and the role of incentives
Marginal analysis

Unit 2: The Nature and Functions of Product Markets - 55-70%
2.1. Supply and demand – 9 days. 15 - 20%

Market equilibrium
Determinants of supply and demand
Price and quantity controls
Consumer surplus, producer surplus, and market efficiency
Tax incidence and deadweight loss

2.2 Elasticity

i. Price, income, and cross-price elasticities of demand
ii. Price elasticity of supply

2.2.1. Theory of consumer choice – 5-10%

1. Total utility and marginal utility

2. Utility maximization: equalizing marginal utility per dollar

3. Individual and market demand curves

4. Income and substitution effects

2.3. Firm behavior and market structure -25-35%

2.3.1. Production and costs -10-15%

1. Production functions: short and long run

2. Marginal product and diminishing returns

3. Short-run costs

4. Long-run costs and economies of scale

5. Cost minimizing input combination
6. Profit:

a. Accounting versus economic profits

b. Normal profit

c. Profit maximization: MR=MC rule

2.3.2 Perfect competition

1. Profit maximization

2. Short-run supply and shutdown decision

3. Behavior of firms and markets in the short run and in the long run

4. Efficiency and perfect competition

2.3.3 Monopoly

1. Sources of market power

2. Profit maximization

3. Inefficiency of monopoly

4. Price discrimination

5. Natural monopoly

2.3.4 Oligopoly

1. Interdependence, collusion, and cartels

2. Game theory and strategic behavior

2.3.5 Monopolistic competition

1. Product differentiation and role of advertising

2. Profit maximization

3. Short-run and long-run equilibrium

4. Excess capacity and inefficiency

Unit 2.4. Market Failure and the Role of Government - 12-18%
A. Externalities

1. Marginal social benefit and marginal social cost

2. Positive externalities

3. Negative externalities

4. Remedies

B. Public goods

1. Public versus private goods

2. Provision of public goods

C. Public policy to promote competition

1. Antitrust policy

2. Regulation

D. Income distribution

1. Equity

2. Sources of income inequality

Unit 2.5: Factor Markets – 10-18%

1. Derived factor demand
2. Marginal revenue product
3. Labor market and firms’ hiring of labor
4. Market distribution of income

Semester 2: Macroeconomics

Unit 3.1: Measurement of Economic Performance - 12–16%
A. National income accounts

1. Circular flow

2. Gross domestic product

3. Components of gross domestic product

4. Real versus nominal gross domestic product

B. Inflation measurement and adjustment

1. Price indices

2. Nominal and real values

3. Costs of inflation

C. Unemployment

1. Definition and measurement

2. Types of unemployment

3. Natural rate of unemployment

Unit 3.3: National Income and Price Determination - 10–15%
A. Aggregate demand

1. Determinants of aggregate demand

2. Multiplier and crowding-out effects

B. Aggregate supply

1. Short-run and long-run analyses

2. Sticky versus flexible wages and prices

3. Determinants of aggregate supply

C. Macroeconomic equilibrium

1. Real output and price level

2. Short and long run

3. Actual versus full-employment output

4. Economic fluctuations

Unit 3.4: Financial Sector - 15–20%
A. Money, banking, and financial markets

1. Definition of financial assets: money, stocks, bonds

2. Time value of money (present and future value)

3. Measures of money supply

4. Banks and creation of money

5. Money demand

6. Money market

7. Loanable funds market

B. Central bank and control of the money supply

1. Tools of central bank policy

2. Quantity theory of money

3. Real versus nominal interest rates

Unit 3.5: Inflation, Unemployment, and Stabilization Policies - 20–30%
A. Fiscal and monetary policies

1. Demand-side effects

2. Supply-side effects

3. Policy mix

4. Government deficits and debt

B. Inflation and unemployment

1. Types of inflation

a. Demand-pull inflation

b. Cost-push inflation

2. The Phillips curve: short run versus long run

3. Role of expectations

Unit 3.6: Economic Growth and Productivity - 5–10%
A. Investment in human capital
B. Investment in physical capital
C. Research and development, and technological progress
D. Growth policy

Unit 4: Open Economy: International Trade and Finance -10–15%
A. Balance of payments accounts

1. Balance of trade

2. Current account

3. Capital account

B. Foreign exchange market

1. Demand for and supply of foreign exchange

2. Exchange rate determination

3. Currency appreciation and depreciation

C. Net exports and capital flows
D. Links to financial and goods markets

International Economics

shefalika — Tue, 22 Feb 2011 04:53:36 CST

Below are the chapters we will cover for our unit on International Economics

Unit 4.1: Reasons for Trade and Unit 4.8: Terms of Trade	Unit 4.2: Free Trade and Protectionism	Unit 4.3: Economic Integration and Unit 4.4: World Trade Organization	Unit 4.5: Balance of Payments and Unit 4.6: Exchange Rates	Unit 4.7: Balance of Payments Problems
Chapter 35: International Trade Ch. 35 Wiki Key Q's 4, 7			Chapter 36: Exchange Rates, the Balance of Payments, and Trade Deficits Ch. 36 Wiki Key Q's 2, 7, 10

AP Macroeconomics Syllabus

MikeSherman — Sun, 23 Jan 2011 18:29:58 CST

Semester 1:
(the percentages indicate the proportion of the multiple choice AP exam will be consist of questions from each section)

Unit 1: Basic Economic Concepts – 8-14%

Scarcity, choice, and opportunity cost
Production possibilities curve
Comparative advantage, absolute advantage, specialization, and trade
Economic systems
Property rights and the role of incentives
Marginal analysis

Unit 2: The Nature and Functions of Product Markets - 5-7%
A. Supply and demand – 9 days. 15 - 20%

Market equilibrium
Determinants of supply and demand
Price and quantity controls

Unit 3.1: Measurement of Economic Performance - 12–16%
A. National income accounts

1. Circular flow

2. Gross domestic product

3. Components of gross domestic product

4. Real versus nominal gross domestic product

B. Inflation measurement and adjustment

1. Price indices

2. Nominal and real values

3. Costs of inflation

C. Unemployment

1. Definition and measurement

2. Types of unemployment

3. Natural rate of unemployment

Unit 3.3: National Income and Price Determination - 10–15%
A. Aggregate demand

1. Determinants of aggregate demand

2. Multiplier and crowding-out effects

B. Aggregate supply

1. Short-run and long-run analyses

2. Sticky versus flexible wages and prices

3. Determinants of aggregate supply

C. Macroeconomic equilibrium

1. Real output and price level

2. Short and long run

3. Actual versus full-employment output

4. Economic fluctuations

Unit 3.4: Financial Sector - 15–20%
A. Money, banking, and financial markets

1. Definition of financial assets: money, stocks, bonds

2. Time value of money (present and future value)

3. Measures of money supply

4. Banks and creation of money

5. Money demand

6. Money market

7. Loanable funds market

B. Central bank and control of the money supply

1. Tools of central bank policy

2. Quantity theory of money

3. Real versus nominal interest rates

Unit 3.5: Inflation, Unemployment, and Stabilization Policies - 20–30%
A. Fiscal and monetary policies

1. Demand-side effects

2. Supply-side effects

3. Policy mix

4. Government deficits and debt

B. Inflation and unemployment

1. Types of inflation

a. Demand-pull inflation

b. Cost-push inflation

2. The Phillips curve: short run versus long run

3. Role of expectations

1. Balance of trade

2. Current account

3. Capital account

B. Foreign exchange market

1. Demand for and supply of foreign exchange

2. Exchange rate determination

3. Currency appreciation and depreciation

C. Net exports and capital flows
D. Links to financial and goods markets

FRQ topics - Microeconomics

welkerjason — Thu, 16 Dec 2010 02:34:14 CST

2009-2002 exams are available HERE
2002-1999 exams are available HERE

To access exams, you must enter:

Username: saseconomics
Password: password

Year and form (A or B)	FRQ #1 topic	FRQ #2 topic	FRQ #3 topic
2010 A	Perfect Competition, elasticity, related goods' prices, determinants of demand,	Resource markets, derived demand, MRP=MRC,	Consumer and Producer surplus, negative exernalities, MSB=MSC, excise tax
2010 B	Natural Monopoly, allocative efficiency, accounting profit vs economic profit, elasticity and the TR test, effects of increased competition in a monopolistic market	Labor market, MRP=MRC, Law of Diminishing Marginal Returns, derived demand	PED, PES, Excise tax and tax burden, YED
2009 B	Monopolistic Competition, MR=MC, shut-down rule, long-run equilibrium in imperfect competition, economies of scale	Utility Maximization, XED, income and substitution effects	Oligopoly, game theory, payoff matrix, dominant strategy, subsidy
2008 A	Perfect Competition, subsidy, long-run equilibrium, MR=MC	Utility maximization, PED, excise tax	Price ceiling, natural monopoly, allocative efficiency
2008 B	Natural Monopoly, MR=MC, Price ceiling, allocative efficiency, consumer surplus	Market failure, positive externalities, MSC/MPC, MSB/MPB. Excise tax	Diminishing returns, MRP=MRC, Resource markest
2007 A	Market models, Monopoly, tax vs. subsidy	PC Labor market, MRP=MRC, productivity	Oligopoly, game theory, payoff matrixes, dominant strategy, collusion
2007 B	Market models, monopolistic competition, MR=MC, elasticity, allocative efficiency	Oligopoly, game theory, payoff matrixes, dominant strategy, collusion	ATC vs. AVC, profit maximization and ATC, shutdown decision
2006 A	Market Models, Monopoly, MR=MC, elasticity, subsidy	MC, profit maximization, MR=MC, impact of tax	S&D, determinants of D, subsidies, determinants of S, externalities, socially optimal level of output
2006 B	Market models, Monopoly, MR=MC, shutdown decision	Perfect Competition, S&D, consumer and produce surplus, price ceiling	Labor Market, perfect competition, MRP=MRC
2005 A	Market Models, MR=MC, Perfect competition, barriers to entry	S&D, compliments, elasticity, consumer surplus DWL	Labor Market, Perfect competition, MRP=MRC, Diminishing marginal returns
2005 B	Market Models, MR=MC, Labor Markets, Monopoly, MRP=MRC	Market Models, MR=MC, Perfect competition, cost curves, SR supply curve	S&D, copmliments, elasticity, TR test
2004 A	Market Models, externalities, Monopoly, PC, allocative efficiency	S&D, trade and tariffs, consumer/producer surplus	Market Models, MR=MC, monopolistic competition, LR changes in fixed costs
2004 B	Market Models, MR=MC, monopoly, price/MR relationship, profits, elasticity	Tax incidence, S&D, elasticity	S&D, trade and tariffs, consumer/producer surplus
2003 A	Market models, externalities, MR=MC, P=MC	Market Models, MR=MC, monopoly, consumer surplus and DWL	Market Models, Labor market, MRP=MRC, productivity
2003 B	Market Models, MR=MC, PC/Monopoly, DWL, long-run profits	S&D, tariffs and trade, consumer/producer surplus	Labor market in perfect competition, MRP=MRC, changes in price and wages
2002 A	Market Models, Labor market, PC in product and labor markets, long-run PC	Negative externalities, S&D, free riders, MSC=MSB	Marginal utility, equimarginal principal, MU/P = MU/P = 1
2002 B	Market Models, MR=MC, PC, monopolistic competition, consumer/producer surplus	Negative externalities, S&D, MSC=MSB	Labor market, MRP=MRC, S&D, derived demand, price floor
2001	Perfect competition, MR=MC, price ceiling, supply curve in PC	Negative externalities, P=MC, S&D, socially-optimal output level	Labor market, MRP=MRC, PC
2000	Market models, MR=MC, PC/Monopoly, allocative efficiency	Labor market, MRP=MRC, costs, profit	S&D, tariffs and trade, world price, substitute goods, elasticity
1999	S&D, substitute goods, derived demand	Comparative and absolute advantage, PPC, grid for comp. advantage, terms of trade	Market models, MR=MC, PC/Monopoly, relationship b/w MR and P

Pure Competition: Characteristics and Occurrence

p0ppers23 — Sun, 10 Oct 2010 21:30:28 CDT

Very large numbers

There is a large number of of independently acting sellers, each offering their products in large national or international markets
- ex. farm commodities, the stock market, the foreign exchange market

Standardized product

The product is standardized because it is either identical to each other, or homogeneous
As long as the price is the same, consumers will be indifferent about which seller to buy the product from
The producer would not lower the price, since it will not earn anything by shrinking its profit.
Buyers view the products of firms B, C, D, and E as perfect substitutes for the product of firm A
- Thus, each firm is a price taker since consumers will simply buy from another firm if one firm raises their prices.
Because the firms sell standardized products, they make no attempt to differentiate their products and do not engage in other forms of nonprice competition
Any changes made to a product would result in a unified change throughout all firms because one major characteristic of pure competition industries is that there is perfect knowledge of the product.

"Price takers"

Individual firms exert no significant control over product price
Each firm produces such a small fraction of total output that increasing or decreasing its output will not perceptibly influence total supply or product price
The individual competitive producer is at the mercy of the market; asking a price higher than the market price would be futile
Because the market is filled with an infinite number of firms all selling the same product, any single firm represents a minuscule portion of the whole market causing:
- No single firm can change market price by adjusting output as it makes up a small percentage of the entire market supply
Competitive firm is a price taker, because it cannot change market price; it can only adjust to it
There is no profit to be made because the price each business operates at is only enough to cover a unified normal profit, therefore going below the price would result in an economic loss.

Free entry and exit

There are no legal, technological, financial, or other obstacles that prevent firms from entering or leaving a competitive market.
It is easy for firms to enter or exit the industry (especially if it has small economies of scale).
This is only possible in a purely competitive market because firms in this type of market are "price takers," and the number of firms does not affect the price of a product.
This characteristic is key in determining that in the long-run, firms have no economic profit, as the price would eventually equal minimal ATC (average total cost)

Pure competition is rare in the real world, but the model is important because it provides a standardized against which to compare and evaluate the efficiency of the real world. A realistic example, closest to pure competition, would be the agriculture industry.

Buy Targeted Website Traffic
Harry Potter Movie

Law of Diminishing Marginal Utility

JoannaVavaua — Thu, 19 Aug 2010 19:44:07 CDT

Definition: Consumers will buy as much as pleases them, with their income. As each additonal unit is purchased, the excess satisfaction gained from each purchase decreases, until it becomes irrational to continue purchasing. For example, one slice of pizza may give you much satisfaction, as does the second slice. The third slice makes you extremely full, while the fourth slice makes you nauseous. At this point, it becomes irrational for you to purchase additional slices of pizza.

"Utility": satisfaction or pleasure one gets from consuming it.
- Utility is subjective, as a specific product can vary from person to person.
  - Ex. eyeglasses have utility to someone who has poor eyesight but has no utility with a person with perfect vision.
- Utils - imaginary unit of measurement for utility
- Utility is not the same as "usefulness"

Total Utility: TU the total amount of satisfaction or pleasure a person derives from consuming some specific quantity.Total Utility is equal to all of the marginal utilities added together.
Marginal Utility: the extra satisfaction a consumer realizes from an additional unit of that product.
Consumers want to maximize the total utility not marginal utility.

Marginal Utility and Demand: The diminishing marginal utility provides a simple rationale for the law of demand. Itsupports the idea that price must decrease in order for quantity demand to increase. Therefore, the downward slope of the demand slope is due to the behavior of consumers, as well as the decreasing amount of marginal utility for each good purchased. There are many factors that affect this, including price of good and the situation utility of each good.

The Interest Rate - Investment Relationship

ddbrahmbhatt — Mon, 26 Jul 2010 16:04:13 CDT

The investment decision is a marginal benefit-marginal cost decision

The marginal benefit from investment is the expected rate of return (r)
The marginal cost is the interest rate (i) that must be paid for borrowed funds; the two are the determinants ofinvestment spending.
An investment is made if the expected rate of return exceeds the interest rate (r > i). Investments are not made when interest rate exceeds the expected rate of return (r < i)

Expected rate of return:

Businesses only make investments when they expect to recieve profits.
r = (TR - cost of investment) / cost of investment.
Firms are risk takers. therefore, can't guarantee profits.
Firms have to think about expected rate of return must be greater than the real interest rate.

The real interest rate:
Business only invest when the rate of return is greater than the interest rate (r>i)

Ex: Taking out a loan for a 1000 dollar machine. If the interest rate is 7%, you pay $70 dollars in interest (1000 x 0.07). If the rate of return is 10%, then you gain $100 from buying the machine (1000 x 0.1).
- Your net profit is $30 ($100-$70)
- Notice that the rate of return > interest rate, therefore the investment is worth it.

Real interest rate = Nominal Interest Rate - Inflation
Interest cost= interest rate x cost

Investment demand curve:

This curve shows the amount of investment forthcoming at each real interest rate.
- The level of investment depends on the expected rate of return and the real interest rate.
- Marginal-benefit, marginal-cost rule is applied to determine which investment projects should be undertaken
- there is an inverse relationship between the interest rate (price) and dollar quantity of investment demanded
- We apply the rule of undertaking all investment up to the point where the expected rate of return, r, equals the interest rate, i.
- Investment demand at one level includes prior investment having the level of expected rate of return and higher

Shifts of the investment demand curve
Generally, any factor that leads businesses collectively to expect greater rates of return on their investments increases investment demand

Acquisition, maintenance and operating costs:
- When these costs increase, expected rate of return from prospective investment decreases
  - causes the investment demand curve to shift to the left
- When costs fall, expected rate of return from prospective investment increase
  - causes the investment demand curve to shift to the right
Business taxes:
- An increase in business taxes results in decreasing expected profitability of investments
  - causes the investment demand curve to shift to the left
- A decrease in business taxes results in an increase of expected profitability of investments
  - causes the investment demand curve to shift to the right
Technological change:
- The development of new products, improvements in existing products, and the creation of new machinery can stimulate investment.
  - cause the investment demand curve to shift to the right.
Stock of capital goods on hand:
- When firms are overstocked with capital, there is no incentive to invest so investments decline and the curve shifts to the left
- When firms are running low with capital goods, firms tend to increase investment, therefore, shifting the ID curve to the right
- Inventory that isn't moving costs the firm money for every second it sits on the shelf, so it would obviously be ill-advised to invest without moving inventory.
Expectations:
- If businesses expect the future sales, future operating costs, and future profitability to be poor, they won't increase their investment.
  - cause the investment demand curve to shift to the left
- If businesses expect profits in the future, then they will increase their investment.
  - cause the investment demand curve to shift to the right.
- The expected rate of return on capital investment depends on the firm’s expectations of future sales, future operating costs, and future profitability of the product that the capital helps produce

Instability of Investment

Durability
- Since investments are durable, they can be reused.
- During hard times, firms do not have to buy new capital
- If firms anticipate a good future, they may buy a lot of new capital now
- Depending on expectations for the future, a firm may choose to fix capital rather than purchase new units, thus spending less.
Irregularity of innovation
- When there is a new advancement in technology, this causes a surge in capital investment; however, innovation occurs at irregular times
Variability of Profits
- Future profitability is based on the firm's current profit but that in itself is variable
- When a firm is expanding, it invests more whereas a firm with declining profits do the opposite
Variability of Expectations
- Businesses tend to react to future expectations but that is unpredictable and can change quickly
- The stock market helps as one of the indicators of society's confidence in businesses so this influences the decisions made by firms. However, stocks themselves are unpredictable and fluctuates greatly.

Ingredients of Growth

aminmkt — Thu, 22 Jul 2010 11:21:26 CDT

There are 6 main ingredients of economic growth.

Supply factor:

Four of the ingredients of economic growth relate to the physical ability of the economy to expand:
- (1) Increases in the quantity and quality of natural resources.
- (2) Increases in the quantity and quality of human resources.e.g. through education
- (3) Increases in the supply of capital goods.
- (4) Improvements in technology. e.g. info sectors, computers can help the service industry, typically something paired with workers.

These supply factors (changes in the physical and technical agents of production) enable an economy to expand its potential GDP.
*Changes in supply factors have the largest impact on economic growth.

To increase the production, AD should increase, if not products supplies will become extra stockpiles.
Demand factor: 5th ingredient of economic growth and relies on this basic idea:

To achieve the higher production potential created by the supple factors: households, businesses, and government must purchase the economy's expanding output of goods and services.
There will be no unplanned increases in inventories and resources will remain fully employed
Economic growth requires increases in total spending to realize the output gains made available by increased production capacity.

Efficiency factor:The sixth ingredient of economic growth.

To reach its production potential, an economy must achieve economic efficiency and full employment.
Productive efficiency: use of resources in least costly way.
Allocative efficiency: specific combination of goods/services that maximize people's well being.

The supply, demand, and efficiency factors in economic growth are all interrelated:

Unemployment caused by insufficient total spending (demand factor) may lower the rate of new capital accumulation (supply factor) and delay expenditures on research (supply factor).
- Less spending-->no incentive to invest in new capitals-->stagger growth(stagflation).
Low spending on investment (supply factor) may cause insufficient spending (demand factor) and unemployment.
- Less investment decreases aggregate demand and move aggregate supply leftward when economy loses productivity.
Inefficiency in the use of resources (efficiency factor) may cause higher costs of goods and services and thus lower profits, which may in turn slow innovation and reduce the accumulation of capital (supply factor).

reff: C R McConnel and S L Brue_ Macroeconomics

Unemployment

claudiamac — Sun, 13 Jun 2010 17:51:52 CDT

Measurement of unemployment

Unemployment rate = (unemployed / labor force) × 100
Part-time employment:
- Part-time workers counted as fully employed
- Understate unemployment rate
Discouraged workers:
- Labor force who give up employment after continuous unsuccessful job search
Population:
- 1) Under 16 or institutionalized (not considered potential members of the labor force)
- 2) Those not in labor force (adults who are potential workers but are not employed and are not seeking work)
- 3) Labor force (consists of people who are able and willing to work. Both those who are employed and those who are unemployed but actively seeking work are counted as being in the labor force)

Types of unemployment

Frictional - Occurs when unemployed workers and firms are searching for the best available job-match (including new labor force entrants looking for first jobs and workers who are temporarily between jobs because of moving to new location or occupation to be more productive). The term 'frictional' is appropriate for the type of unemployment at hand as it shows that there is no system that is smooth in all aspects.
Structural - Changes in technology that alter the "structure" of the demand for labor cause structural unemployment- the skills of a worker is no longer demanded. eg. blacksmiths making horseshoes were no longer demanded as much after automobiles were invented because it made horses, as transportation, obsolete.
- **The key difference between frictional and Structural unemployment
  - Frictional unemployed workers have salable skills, while structurally unemployed workers find it hard to obtain new jobs without retraining
  - Frictional unemployment is short-term, structural unemployment is more likely to be long-term and consequently more serious.
Cyclical - Caused by a decline in total spending.
- This begins during the recession phase of the business cycle
- It is a result of an insufficient demand for goods

Full-employment

Full Employment is something less than 100 percent employment of the labor force. It occurs when there is no cyclical unemployment. Some frictional and structural unemployment is necessary for short-term growth.
Potential output occurs at the Natural Rate of Unemployment (NRU); this is when the economy is said to be proudcing its greatest potential output.
- The NRU occurs when the number of job seekers equals the number of job vacancies.
- The economy can operate for a while at an unemployment rate below the NRU.
- The NRU is different between countries; Canada's NRU, for instance, is not the same as the United States

Economic costs of unemployment

GDP gap= actual GDP- potential GDP
- A positive GDP gap occurs when acutal GDP exceeds potential GDP, however, positive GDP gaps create inflationary pressure.
Okun's Law - for every one percentage point increase in unemployment rate above the natural rate, a negative GDP gap of about 2 percent occurs.
Unequal Burdens - Part of the burden of unemployment is that its cost is unequally distributed.
- Occupation: Workers in lower-skilled occupations have higher unemployment rates than workers in higher-skilled occupations. Lower-skilled workers have more and longer structural unemployment, and are less likely to be self-employed than are higher-skilled workers.
- Age: Teenagers have higher unemployment rates than adults. Teenagers have lower skill levels, quit their jobs more frequently, are more frequently fired, and have less geographic mobility than adults.
- Race and ethnicity: Unemployment rate for African-Americans and Hispanics is higher than that for whites. This is because of lower rates of educational attainment, greater concentration in lower-skilled occupations, and discrimination in the labor market.
- Gender: The employment rates for men and women are very similar.
- Education: Less educated workers, on average, have higher unemployment rates.
- Duration:The number of persons unemployed for long periods (15 weeks or more) as a percentage of the labor force is much lower than the overall unemployment rate.
Non-economic Costs
- A depression and severe cyclical unemployment means idleness. When workers are idle, they lose skills, self-respect and morale. It also leads to the breakup of families and unrest in the country
- Poverty increases
- Racial/ethnic tensions increase
  - Ex: The rise of Hitler when Germany suffered from severe unemployment
Individual level:
- Increased suicide, homicide, fatal heart attacks, strokes, mental illness
International Comparison

Unemployment rates differ greatly among nations at any given time ecause the different natural rates of unemployment and different phases of business cycle. Also, nations may be in different phases of their business cycles, which can explain why between 1995 and 2005, the US unemployment rate was considerable lower than the rates in Italy, France, and Germany.

The Fractional Reserve System

BjornBorgers — Wed, 12 May 2010 09:18:21 CDT

The U.S., like most other countries today has a fractional reserve banking system in which only a portion of ceckable deposits are backed up by cash in bank vaults or deposits at the central bank.

Illustration the idea: the Goldsmiths:

Early traders used gold to make transactions, but realizing that it was unsafe and inconvenient to negotiate with gold, they began to deposit their gold with goldsmiths. These goldsmiths issued receipts to the depositers after receiving the gold deposit charging them a certain fee for allowing them to store their gold in the vaults. Eventually, the goldsmiths' receipts were used to pay for goods, and became the first type of currency.
At this time, goldsmiths backed their circulating paper money receipts fully with the gold they held in their vaults (it was a 100% reserve system). However, goldsmiths realized that gold was rarely redeemed, and that the public had completely accepted the receipts as paper money, and that the amount of gold being deposited in their "reserves" exceeded the amount that was being withdrawn.
The goldsmiths began to issue paper receipts in excess of the amount of gold being held in their vaults. They put these receipts into circulation by making interest-earning loans to merchants, producers and consumers. Lenders willingly accepted loans in the form of gold receipts (receipts were accepted as a medium of exchange in the market).
The goldsmiths began the fractional reserve system of banking; the reserves in bank vaults are a fraction of the total money supply; the gold reserves would be a fraction of the circulating paper money.

Characteristics of fractional reserve banking:

Banks create money through lending.
Banks lend money at higher interest rates than the ones they pay out to create money.
Banks have a system of deposit insurance and operate on the basis that fractional reserves are vulnerable to "runs" or "panics." This is when all the holders demand for their money all at the same time. Although this is highly unlikely, banks still take measures to protect themselves from this disaster that has ruined banks in the past (e.g. in the Great Depression).

A Single Commercial Bank:

Balance sheet: statement of assets, liabilities, and net worth (capital stock) of the bank at a certain time (value of assets must equal the amount of claims against the assets).
When federal reserve ratios change, the balance sheet for banks is skewed, therefore they must do call backs on loans as well as take out loans to ballance their accounts.
assets = liabilities + net worth. Every $1 change in assests must equal a $1 change in liabilities + net worth and vice versa.

Vault cash = cash held by a bank, aka. till money.

Macroeconomics

welkerjason — Wed, 28 Apr 2010 07:17:38 CDT

Below are the chapters we will cover in during our unit on Macroeconomics. Key Questions from the end of each chapter must be completed and turned in at the end of each unit to earn the unit's 10 point homework grade.

Click on the Unit link to visit that unit's main Wiki page.

Click on the Chapter links to visit that chapter's website, where you can access lots of study tools to enhance your understanding of the chapter's topics.

To access premium content on the text's Online Leraning Center, you need to enter the following information:

Username: welkerjason@yahoo.com
Password: password

Long-run Production Costs

AlexHan — Mon, 26 Apr 2010 07:41:24 CDT

The Long-run:

Period of time long enough for firms to change the quantities of all resources employed including capital and new factories.
In the long run, there is no distinction between FC and VC because all resources (therefore costs) are variable in the long run
In the long run, an industry and the individual firms it comprises can undertake all desired resource adjustments or in other words, they can change the amount of all inputs used.
The long run allows sufficient time for new firms to enter or for existing firms to leave an industry.

Firm size and costs
Change from small scale to large scale, ATC will decrease at first, but it increase after.

All resources and costs are variable

The long-run cost curve

The green, orange, yellow, pink, blue curves are separate short run curves. The long run curve is created by combining all the lowest ATC at any output of the short run curves.
* If the number of possible plant sizes is very large, the long-run average-total-cost curve approximates a smooth curve. Economies of scale, folowed by diseconomies of scale, cause the curve to be U-shaped.

Economies and Diseconomies of Scale
Economies of Scale: A firm achieves economies of scale when it is able to decrease the per unit cost of production (ATC) as output increases. This can be achieved through cost advantages such as:

Labor Specialization: as plant size increases, more workers are hired and labor becomes increasingly specialized. workers work fewer and fewer tasks and thus become more skilled at those tasks, and production is efficient
- For example: Workers assemble specific parts of cars in an assembly line. Compared to many workers working on one car at a time, the assembly line is much more efficient.
- Workers become more proficient in their specialized area, making him highly efficient in that one area.
- Greater labor specialization eliminates the loss of time that comes with each worker's shift from one task to another.
Managerial Specialization: a larger plant means an increasingly specialized management.
- For example, sales specialists will solely supervise sales, marketing specialists will solely supervise marketing. Overall, efficiency increases and unit costs decrease
Efficient Capital: larger plants can afford better, more efficient equipment
Other: advertising costs fall per unit of output as more units are produced and sold. Production and marketing skills increase as the firm produces and sells more output. (learning by doing)

Example: The Daily Newspaper.
Reporters, delivery trucks, photographers, editors, management, printers, and all the paper resources go into making a newspaper. However, in most large cities, this newspaper only costs 50 cents. The reason for this is that the fixed costs are spread out and that economies of scale is achieved. The large number of consumers allows the publisher to specialize labor and large printing presses.

Diseconomies of Scale: This is an increase in ATC as output increases. This is usually attributed to the difficulty of efficiently controlling and coordinating a firm's operations as it becomes a large-scale producer. (The beast becomes too big to handle!)

Overexpansion of management leads to:
- Bureaucratic red tape
- Miscommunication
- Slower decision-making
- Lower action in the face of changes in consumer tastes or technology
Workers are more inclined to slack or shirk if they are far removed or alienated from employers. This also leads to greater dissatisfaction with work. More costs are needed to hire more managers.
- A good example of this is with General Motors. It became far too big to handle, and thus split into smaller, far more profitable companies such as Cadillac etc.

Constant Returns to Scale:

exist between where economies of scale end and diseconomies scale begin.

long run AC(average cost) does not change --> ATC range constant

5 types of Economies of Scale:
1. Managerial Economies of scale:
The ability of a business to outsource and hire new people depending on its size
2. Technological:
The ability of a business to require new capital
3. Marketing:
The ability of a business to get discounts for supplies
4. Financial:
The ability to get loans from banks or use assets in order to purchase more technology
5. Risk Bearing:
The ability of a company to diversify

Minimum efficient scale and industry structure

Minimum efficient scale: lowest level of output at which a firm can minimize its long-run ATC. This is where economies of scale are reached and where, past this point, diseconomies of scale beging to appear. The shape of the LATC and where the MES lies determines the industry structure.

LATC1: Where economies of scale are reached quickly and where diseconomies of scale quickly begin, i.e. where MES is reached at a low level of input, the industry supports many small producers.
- Examples: apparel, food processing, furniture, wood products, snowboard, and small-appliance industries
LATC2: Where economies of scale exist over a wide range and MES occurs only at high output, efficient production will only be achieved by a few very large firms. Smaller firms, unable to produce at small quantities efficiently, cannot compete. This can, in extreme cases, lead to a natural monopoly.

Examples: the aircraft, information technology and internet service provider industries.
A natural monopoly is a relatively rare market situation in which average total cost is minimized when only one firm produces the particular good or service.

LATC3: Where there is an extended range of constant returns to scale, many quantities produced have the same level of efficiency, allowing for many firms of different sizes to coexist.
- Examples: the apparel, small-appliance and furniture industries.

Intro to Economics and Microeconomics

welkerjason — Mon, 11 Jan 2010 05:04:19 CST

Research Project: Microeconomics Podcast - CLICK HERE

Below are the chapters we will cover in during our semester of Microeconomics. Key Questions from the end of each chapter must be completed and turned in at the end of each unit to earn the unit's 10 point homework grade.

Click on the Unit links to visit that unit's main wiki page.

Click on the Chapter links to visit that chapters website, where you can access lots of study tools to enhance your understanding of the chapter's topics.

To access premium content on the text's Online Leraning Center, you need to enter the following information:

Username: welkerjason@yahoo.com
Password: password

Chapter 8: Basic Macroeconomic Relationships

mikewilkes — Wed, 16 Dec 2009 13:09:08 CST

The Income Consumption / Income Saving Relationship

The consumption, saving schedule.
Average and marginal propensities to save/consume.
- APC=consumption/income
- APS=savings/income
- MPC=change in consumption/change in income
- MPS= change in savings/change in income
Non income determinants of consumption and saving.
- wealth
- expectations
- real interest rates
- household debt

The Interest Rate - Investment Relationship

Expected rate of return.
The real interest rate.
Investment demand curve.
Shifts of the investment demand curve.
- Acquisition, maintenance and operating costs
- business taxes
- technological change
- stock of capital goods on hand
- expectations

The Multiplier Effect

Explanation
Rationale
The multiplier and marginal propensities.

Four Market Models

DrewBV — Wed, 02 Dec 2009 02:27:15 CST

From most competitive to least competitive:

Pure Competition:

Involves very large numbers of firms producing identical products.
Standardized product (a product identical to that of other producers--ex. corn or cucumbers).

no attempt to advertise or differentiate

Free Entry and Exit: no significant legal, technological, financial, or other obstacles prohibiting new firms from selling their output in any competitive market
No control over the price: "Price Takers"
(i.e. the firms have no market power) .
- The individual firm has very little to no impact on the market.
Demand is perfectly elastic.

Maximizes productive and allocative efficiency.

ex. Agriculture
pure competition markets do not actually exist.

Note: Pure competition does not actually exist in our society, and the agriculture industry is the closest industry to being purely competitive. The pure competition model is used as a standard to evaluate the efficiency of our economy (something to compare to and help our understanding of economy.)

Monopolistic Competition:

Involves large number of firms, but not as many as in pure competition.
Produces differentiated products (ie. clothing, furniture, books)
- Nonprice competition - a selling strategy in which firms try to distinguish their product or service on the basis of attributes such as design and workmanship (product differentiation)
- Focuses mostly on advertising, brand names, and trademarks
Firms can easily enter or leave this market, although not as easily as firms in a purely competitive market.
Imperfect Competition.
Limited control over prices
- ex. retail trade, dresses, shoes

Oligopoly:

Involves a few firms that exert considerable influence over the industry
Produces either standardized or differentiated products.
NONPRICE COMPETITION: emphasis on product differentiation
Existing firms are strong rivals and affects each other's price and output.
Control over price limited by mutual interdependence; considerable with collusion (the decision of rivals).
Harder for a firm to enter or exit.
Imperfect competition.

A great deal of nonprice competition, especially with differentiated products
- ex. steel, automobiles, household appliances

Pure Monopoly:

Only one firm is involved.
Products are unique with no substitutes.
NONPRICE COMPETITION: mostly public relations
Entry of additional firms is not possible--one firm constitutes the entire industry.
Entry to the industry is often blocked by government. It requires patent or licenses.
Since the monopolist produces a unique product, it makes no effort to differentiate its product.
Imperfect Competition.
There is total control over price "Price Makers"
- ex. local electric utility
- Oil, John D. Rockefeller
- diamonds

Course Information

welkerjason — Tue, 03 Nov 2009 05:10:44 CST

Introduction

Welcome to Mr. Welker's Advanced Placement and International Baccalaureate Economics. This course will prepare you for two either the AP exam in Micro or Macroeconomics, or the IB standard level or higher level examination in Economics.

This website play a major role in your Econ studies in Welker's. This is your class Wiki, where you will make regular contributions to a comprehensive study guide covering the topics from the AP and IB Econonomics courses.
In addition, this wiki will serve as a discussion forum to extend class discussions beyond the classroom, a chat room to gather and talk economics with one another and your teacher, a study center to review for unit tests and exams, and a social network for enhancing your understanding of the principles of economics.
The Wiki is to be used in partnership with Welker's Wikinomics Blog, where Mr. Welker and other Economics educators write regular posts aimed at extending the content knowledge learned in AP and IB Economcis beyond the classroom and into the real world.
Contributions to the Wiki and the Blog are a required part of your grade in Welker's class. Scroll down for details.

Mr. Welker's Courses

AP Courses

AP Economics Course Syllabus (Micro and Macro in one year)

AP Macroeconomics Course Syllabus (Macro in one year)

IB Course

Introduction to Economics and Microeconomics Unit Overview (IB Units 1 & 2)

Microeconomics Units homepage

Macroeconomics Unit Overview (IB Unit 3)

Macroeconomics Units homepage

International Economics Unit Overview (IB Unit 4)

Development Economics Unit Overview (IB Unit 5)

Books used in Welker's Econ classes

McConnell and Brue’s Economics: Principles, Problems, and Policies provides a clear and concise perspective on economics. The 17th Edition builds on their tradition of leadership by sticking to three main goals: help the beginning student master the principles essential for understanding the economizing problem; help the student understand and apply the economic perspective accurately and objectively; and promote a lasting student interest in economics and the economy.

Student Edition - CLICK HERE
Instructor Edition (password required) - CLICK HERE

IB Diploma Programme Economics Course Companion This Course Companion has been specifically designed to support the student through the IB Diploma Programme in Economics. It supports the course content and provides students with materials and activities as well as advice and guidance for the portfolio of four commentaries. In addition it provides activities integrated with study and learning approaches, TOK, and the IB learner profile. Examples, features, and case studies drawn from around the world will encourage students to
develop an international perspective.

Advanced Placement Economics (aka the Rainbow Book) teaches a college-level economics course that prepares high school students for the AP Economics Exam. The Teacher Resource Manual introduces the key concepts, and the Student Activities booklets -- Microeconomics and Macroeconomics -- reinforce the principles with activity-based lessons.

Favorite ways to Learn Economics: See economics in action with FAVORITE WAYS TO LEARN ECONOMICS! This manual of experiments and problem sets uses hands-on experiments to reinforce the principles of microeconomics and macroeconomics. With relevant problems, follow-up experiments, opportunities of real-world decision making, and problem sets, mastering economic principles has never been easier!

Your Grade in Welker's Economics Class

50% Unit tests

Unit tests will be given every two to four weeks
Assessments will consist of multiple choice, short and long response, data and document based questions, and free response questions (AP only).

30% Quizzes and Commentaries (for IB Econ).

20% Contributions to the Econ Wiki, the teacher's blog, and your class blog and Key Questions from textbook.

The Wiki and the Blog as part of your grade

During each unit (every 2-3 weeks), each student is required to sumit online a "Wiki and Blog Log", for which you must:

contribute to at least THREE pages from the unit's Wiki,
respond to or begin at least ONE thread in the wiki's discussion forum,
post comments to at least THREE posts on Welker's blog or the class blog, and
Write at least ONE blog post on his or her class's group blog.

Wiki & Blog Grade components:

Contributed to at least three pages from the the current Unit's Wik: 5 points per contribution = 15 points
Responded to or start at least one thread in the wiki's discussion forum: 10 points
Commented on at least three blog articles: 15 points
Authored at least one new post for your class's group blog relating to the topics covered in the class: 20 points

Total Wiki/Blog grade for each unit = 60 points

Wiki and Blog Rubric

Student: ___________________ Unit: _____________________ Period:_______

Blog comment rubric:

Criteria	Low marks	High marks
Length and quality of response (5 marks)	Less than three posts, comments do not meet the word requirement, comments are reasonably well thought 0-3	3 posts commented on, 75-150 words each, clearly articulated response to blog post, referencing previous comments 4-5
References to blog post and previous comments (5 marks)	Comments make only minimal reference to blog posts. Little attempt is made to respond to previous comments and/or discussion questions. 0-3	Comments contain concise reference to the blog post. Student responds clearly to previous comments and/or discussion questions. 4-5
References to topics from class (5 marks)	Comments demonstrate only minimal connections between topics from class and the post and previous comments. 0-3	Comments contain clear references and connections between the posts and topics learned or discussed in class 4-5

Total score for blog comments: _____/15

Blog post rubric:

Criteria	Low marks	High marks
Length, connection to syllabus (2 marks)	Post EITHER does not relate to the current unit OR is not between 400-600 words 0-1	Post relates to the current unit AND meets the word limit of between 400-600 words 2
Organization and presentation (4 marks)	Post is poorly organized and presented. Quotes from article are missing or used only minimally 0-2	Post is well organized and presented. Author makes effective use of quotes from the article 3-4
Economics Terminology (5 marks)	The post demonstrates minimal use of appropriate economic terminology and there are only limited attempts to define terms 0-3	The post demonstrates appropriate use of economic terminology. Terms requiring definitions are correctly defined. 4-5
Application and Analysis of Economic concepts and theories (5 marks)	The application or analysis of relevant concepts and theories has been attempted, but the linkages to the article are inappropriate or superficial 0-3	Relevant concepts and theories have been identified and suitably applied in the blog post. 4-5
Evaluation (4 marks)	The author attempts to evaluate the economic theories and concepts applied, but the evaluation is limited 0-2	The author demonstrates evaluation of the economic theories and concepts applied with 3-4

Total score for blog post: _____/20

Wiki and Forum contributions:
Added new content or edited existing content at least three wiki pages: 1 - 2 - 3 ____/15

Created or contributed to at least one thread in the discussion forum: YES - NO ____/10

Total Wiki & Blog Score: ____/60

Welker’s Wikinomics™

Unit 3.1: Measuring National Income and Unit 3.2 Intro to Development	U nit 3.3: Macroeconomic Models	Unit 3.4: Demand-side and Supply-side Policies	Unit 3.5: Unemployment and Inflation and Unit 3.6: Distribution of Income	Unit 4: International Economics
Unit 3.1: Measuring Domestic Output and National Income Wiki E-text ch. 6: Key Q's 3, 8, 11	Unit 3.3: Basic Macroeconomic Relationships Wiki E-text ch. 8: Key Q's 7, 8, 9	Unit 3.4: Fiscal Policy, Deficits, and Debt Wiki E-text ch. 11: Key Q's 2, 3, 10	Unit 3.5: Extending the Analysis of Aggregate Supply Wiki E-text ch. 15: Key Q's 3, 4, 6, 7	Unit 4: International Trade Wiki E-text ch. 35
Unit 3.1: Introduction to Economic Growth and Instability Wiki E-text ch. 7: Complete all the Key Q's from ch. 7	Unit 3.3: Aggregate Demand and Aggregate Supply Wiki E-text ch. 10: Key Q's 4, 6, 7	Unit 3.4: Money and Banking (AP only) Wiki E-text ch. 12: Key Q's 4, 6, 8	Income Inequality and Poverty Wiki E-text ch. 32: Key Q's 2, 5, 10, 12	Unit 4: Exchange Rates and Balance of Payments Wiki E-text ch. 36
	Unit 3.3: Economic Growth Wiki E-text ch. 16: Key Q's 5, 6	Unit 3.4: Money Creation (AP only) Wiki E-text ch. 13: Key Q's 2, 4
	Unit 3.3: Disputes over Macro Theory and Policy Wiki E-text ch. 17: No Key Q's	Unit 3.4: Interest Rates and Monetary Policy Wiki E-text 14: Key Q's 1, 2, 8

Unit 1: Introduction to Economics	Unit 2.1: Markets and Unit 2.2: Elasticities and 2.2.1 Theory of Consumer Choice (AP only)	Unit 2.3 Theory of the Firm	Unit 2.4 Market Failure and the Role of Government	Unit 2.5 Resource Markets (AP only)
Unit 1: Scarcity, Choice, Opportunity Cost and the PPC Wiki E-text ch. 1 Key Q's 5, 10, 13	Unit 2.1: Demand, Supply and Market Equilibrium Wiki E-text ch. 3: Key Q's 3, 6, 8, 9 14	Unit 2.3.1: The Costs of Production Wiki E-text ch. 20: Key Q's 2, 4, 7, 10	Unit 2.4: Government and Market Failure Wiki E-text ch. 28: Key Q's 3, 4, 7	Unit 2.5: Resource Markets Wiki E-text ch. 25: Key Q's 2, 5, 6, 7
Unit 1: Economic Systems and the Circular Flow Wiki E-text ch 2: Key Q's 8, 9	Unit 2.2.1: Consumer Behavior and Utility Maximization (AP only) Wiki E-text ch. 19: Key Q's 1, 3, 4	Unit 2.3.2: Pure Competition Wiki E-text ch. 21: Key Q's 3, 4, 6, 7	Unit 2.4: Public Choice Theory and the Economics of Taxation Wiki E-text ch. 29: Key Q's 7, 9	Unit 2.5: Wage Determination Wiki E-text ch. 26: Key Q's 3, 4, 6
The US in the Global Economy p. 84-92 Wiki E-text ch. 5: Key Q 4	Unit 2.2: Elasticities Wiki E-text ch. 18: Key Q's 4, 5, 9, 10 and 15	Unit 2.3.3: Pure Monopoly Wiki E-text ch. 22: Key Q''s 4, 5, 6		Unit 2.5: Rent, Interest, and Profit (AP only) NO WIKI E-text ch. 27:
		Unit 2.3.4 and 2.3.5: Monopolistic Competition and Oligopoly WIki E-text ch. 23: Key Q's 2, 8, 11		Web Chapter 27: Resource and Energy NO WIKI
Econ in the News	Econ in the News	Econ in the News