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AP® Microeconomics · Unit 2 · Topic 2.6

Market Equilibrium and Consumer and Producer Surplus: Topic Checklist (Microeconomics 2.6)

Specific “I can…” statements for market equilibrium and consumer and producer surplus, each linked to the guide section and practice question that shows whether you can really do it.

Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.

Understanding

  • I can define market equilibrium as the price at which quantity demanded equals quantity supplied, and explain what “the market clears” means. (Guide: “Market equilibrium”; Practice Q6)
  • I can explain why the price moves back towards equilibrium when it is too high or too low. (Guide: “Why the market settles there”; Practice Q6)
  • I can explain how the equilibrium price rations goods and gives sellers an incentive to move resources. (Guide: “The price as a signal”; Practice Q6)
  • I can define consumer surplus and producer surplus and link them to willingness to pay and minimum acceptable price. (Guide: “Consumer surplus”, “Producer surplus”)

Calculation and graphing

  • I can find the equilibrium price and quantity from a table. (Guide: Worked example 1; Practice Q1)
  • I can find the equilibrium quantity and surplus in a market of individual buyers and sellers. (Guide: Worked example 2; Practice Q4)
  • I can calculate consumer, producer and total surplus as triangle areas on a straight-line graph, measuring heights from the price. (Guide: Worked example 1; Practice Q2, Q5)
  • I can draw a labelled supply and demand graph with equilibrium marked and consumer and producer surplus shaded and labelled. (Guide: Figure 1; Practice Q5)
  • I can tell total spending (price × quantity) apart from consumer surplus. (Guide: Worked example 1(c); Practice Q2)

Reasoning

  • I can use marginal benefit and marginal cost to explain why total surplus is largest at the competitive equilibrium. (Guide: “Why equilibrium maximises total surplus”; Practice Q3, Q7)
  • I can show that trading more or less than the equilibrium quantity lowers total surplus. (Guide: Worked example 2(c); Practice Q4, Q7)
  • I can state when a market equilibrium would not be efficient. (Practice Q7)

All ticked? Move on to Topic 2.7, Market Disequilibrium and Changes in Equilibrium, or return to the course roadmap.

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