AP Microeconomics – Resource Allocation

This lesson supports the Nature and Function of Product Markets section of the Advanced Placement Microeconomics Curriculum. In this lesson, students learn how to analyze the effects of a change in demand or supply in one market on the equilibrium position in a related market.

This lesson appears as Lesson 1 in Unit 2: Nature and Function of Product Markets in CEE's Advanced Placement Microeconomics (4th Edition)

Introduction

It is important for students to understand how society’s scarce resources are allocated among their many possible uses. This lesson asks students to analyze the effects of a change in demand or supply in one market on the equilibrium position in a related market. The student activity assumes the product and resource markets are perfectly competitive.
 
Bell Ringer: Can you think of a market for a good or service you use that will be affected by a rapid rise in the price of gasoline? How its this market affected?

Learning Objectives

  • Understand that markets do not exist in isloation from other markets. A change in one market can have an effect on demand and supply in another market. It is important that students recognize these secondary effects of the initial change.
  • Distinguish between a change in demand or supply and a change in quantity demanded or quantity supplied.
  • Understand the role played by price in a competitive market in the allocation of resources to higher value uses.

Resource List

Process

Please refer to the Resource Allocation, Teacher Lesson.

Conclusion

After students complete Activity 2-1, make sure they understand the difference between a shift of a demand or supply curive and a movement along the curve. This lesson gives them valuable practice developing this skill.

Extension Activity

Not available for this lesson.

Assessment

Please refer to the Resource Allocation, Student Resource Manual.