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You will be expected to demonstrate the following:
- An understanding of how free market works and allocate resources efficiently
- An understanding of how individual consumers make economic decisions to maximize utility
- An understanding of how individual firms make decisions to maximize profits
- The ability to identify the characteristics of the different market structures and analyze the behavior of firms in terms of price and output decisions
- The ability to evaluate the outcome in each market structure with respect to economic efficiency and identify cases in which private markets fail to allocate resources efficiently, including how government intervention fixes or fails to fix resource allocation problems
- An understanding of wages and other input prices in factor market and to analyze and evaluate the distribution of income
- An understanding of important economic terms and concepts
- The ability to interpret and manipulate economic graphs and data
- The ability to apply simple economic models
Topics covered include:
- Basic Economic Concepts
- Scarcity: nature of economic systems
- Opportunity costs and production possibilities
- Comparative advantage
- The Nature and Function of the Product Market
- Supply and demand
- Consumer demand
- Firm’s production, cost, and revenue
- Profit maximization: pricing, revenue, and output both in the long run and the short run and in the firm and the market
- Market Failures and the Role of Government
- Externalities
- Public good
- Information economics
(Taken from “Principles of Microeconomics,” CLEP: Principles of Microeconomics Exam—collegeboard.com