Basic Economic Concepts Overview — AP Microeconomics
1. Unit at a Glance
This unit builds from the most basic economic question upward: what do we do when we have unlimited wants but limited resources? We start with the core concept of scarcity, then build out models to measure tradeoffs, explore how different economic systems organize production and exchange, and introduce marginal analysis — the key decision-making framework used throughout all of microeconomics.
Each sub-topic builds on the last, so we recommend moving through them in the order below to connect concepts correctly for free-response and multiple-choice exam questions.
Common Pitfalls
Why: Absolute advantage measures who can produce more total output, not who has the lower opportunity cost (the actual basis for trade gains)
Why: Many students incorrectly think only the optimal consumption tradeoff point is efficient