Basic Economic Concepts

Name: AP Microeconomics Unit 1: Basic Economic Concepts
Availability: InStock

12–15% of the exam3 lessons · 41 min

What this unit covers

The topics below follow the published Micro course framework for Unit 1. This unit is worth 12–15% of the exam, so budget your time against that rather than against how long the unit takes to teach.

ScarcityPPCComparative advantageMarginal analysis

Lessons in this unit

Scarcity, Trade-offs & Marginal Analysis13 min · 3 objectivesExplain how scarcity forces trade-offs and creates opportunity cost · Apply marginal analysis by comparing marginal benefit and marginal cost · Identify the utility-maximizing choice using diminishing marginal utility
The Production Possibilities Curve14 min · 3 objectivesInterpret the PPC as a model of scarcity, trade-offs, and efficiency · Calculate opportunity cost from points on a PPC · Explain why the PPC bows outward and how it shifts with growth
Comparative Advantage & the Gains from Trade14 min · 3 objectivesDistinguish absolute advantage from comparative advantage · Determine comparative advantage from output or input data · Identify mutually beneficial terms of trade

Formulas in Unit 1

Utility-maximizing rule

MUx / Px = MUy / Py

A consumer maximizes utility when the marginal utility per dollar is equal for every good. If MUx/Px > MUy/Py, buy more of X (and less of Y) until they equalize.

Opportunity cost along a PPC

OC of gaining Good X = (units of Good Y given up) / (units of Good X gained)

Read the trade-off between two points directly off the axes. Constant along a straight-line PPC; increasing along a bowed-out PPC.

Opportunity cost from output data

OC of 1 unit of Good A = (output of Good B) / (output of Good A) → "Other over Own"

Lower opportunity cost = comparative advantage. With input (per-unit time) data instead, flip to "Own over Other."

What examiners penalize here

For utility-maximization problems, always convert to **marginal utility per dollar** (MU ÷ price) before comparing goods — never compare raw marginal utilities when prices differ. Buy from whichever good has the higher MU-per-dollar until they equalize and the budget is spent.
Label PPC diagrams fully: both goods on the axes, and be explicit about whether a change is a **movement along** (reallocation) or a **shift/rotation** (capacity change). Biased technology rotates the curve along one axis — a favorite AP variation.
On comparative-advantage free-response items, always (1) compute each party’s opportunity costs, (2) assign each good to the lower-cost producer, and (3) give a specific trade rate *between* the two costs. Showing the numbers, not just naming the winner, earns the points.

Practice Micro

Our practice bank is drawn from across the whole course rather than filtered to one unit, which is closer to how the exam asks anyway — it will not tell you which unit a question is testing.

26 practice questionsEvery one with a written explanation FRQ trainerWritten answers scored against the rubric Micro study guideAll units, weights and score data in one place All 6 Micro unitsThe full course

Questions about this unit

How much of the AP Microeconomics exam is Unit 1?

Unit 1, Basic Economic Concepts, is worth 12–15% of the Micro multiple-choice section according to the published course framework. Across all 6 units that makes it a substantial share — heavier than an even split would give it.

What topics are covered in Micro Unit 1?

Basic Economic Concepts covers Scarcity, PPC, Comparative advantage and Marginal analysis.

How should I study Micro Unit 1?

Read the 3 lessons below first — about 40 minutes — then work practice questions on these topics. Finish with practice questions and read the explanation for every one you get right by elimination as well as the ones you miss.

All 6 units of AP Microeconomics

Unit names, topics and exam weights follow the published College Board course framework for AP Microeconomics. AP® is a trademark registered by the College Board, which does not endorse this site.