The following unit was specifically designed to fit within the Advanced Placement (AP) Microeconomics framework. AP Microeconomics is the high school equivalent to a college Introduction to Microeconomics course (Econ 101). The course familiarizes students with key economic principles like the laws of supply and demand, market structures and market efficiency. Throughout the year, the AP content focuses primarily on market structures and market efficiency, with little discussion of how to overcome inefficiencies that arise. The culminating unit in the curriculum, however, delves into the topics of externalities and government intervention. The curriculum attempts to answer the questions:
1. What is market failure, and why does it arise?
2. How can market failure be overcome?
3. What role does the government play in overcoming market failure?
For the first time, students are encouraged to not only ask whether a market is producing at an allocatively efficient level of output, but also at a socially efficient level of output. When the private market yields an under- or overproduction of goods and services, how does the government attempt to intervene so as to shift production closer to the socially efficient level of output? In other words, how does the government regulate markets so society is better off? For once, the focus is not on profit maximization, but maximizing social utility.
To answer these questions, students will explore several markets, including the markets for fishing, energy, public education, housing, and labor. These topics have been chosen to demonstrate the breadth at which the key economic concepts affect society. Students will cycle through a set of stations to learn more about each topic. By the end of this unit, students should not only be able to explain the theory behind each of the economic concepts, but provide context to the theories. What is outlined in this specific curricular unit is merely the section on energy, with a focus on petroleum consumption. Background information includes explanations of the overarching content (classification of goods and services, externalities, social efficiency, levels of production, and regulation) and relevant research on greenhouse gases, their externalities, and the current regulations that exist within the market.
Students will essentially take on the role of policy makers. Their job is simple in premise: to identify strategies for regulating the energy market. What regulations currently exist? How effective are these regulations? What makes these regulations either effective or ineffective? To aid in their research, students will read Chapters 10 and 11 in Bade and Parkin's
Foundations of Economics AP* Edition
This unit is graph intensive and requires students to interpret and analyze graphs of various markets and how government regulation impacts these graphs.