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PRINCIPLES OF MICROECONOMICS
COURSE DESCRIPTION
Analysis of decision making processes and economic equilibrium for the consumer and the individual firm at an introductory level.
PREREQUISITES MAT 111. Knowledge of graphing techniques, basic high school algebra, and an introductory understanding of derivatives is assumed.
COURSE LEARNING OBJECTIVES
The primary objective of this class is to learn the principles of microeconomic theory. In learning about and applying economic concepts, ideas, and tools, you will also develop a new way of thinking critically. The subject matter is a core component of the Cameron Business School curriculum and serves as a foundation for further study in all Business School departments. As we learn the material, I hope you will realize that economics is not about mundane issues. Rather, economics is fundamental to just about everything in life. If you apply yourself and work hard, you will leave here with knowledge and intuition that you will use every day (really).
STUDENT LEARNING OUTCOMES (SLO’S): The course contains an introduction to economic analysis in microeconomics. The main theme is the analysis of markets and the system of markets that make up the economy. We will examine the role of prices in the allocation of resources. Students should be able to understand and use the fundamental tools of economic theory to analyze and explain market phenomena. Within this broad agenda, specific learning outcomes are highlighted below:
SLO1: The student will be able to describe and explain the following terms concepts, methods, and principles: a) opportunity cost b) the principle of comparative advantage and gains from trade c) the principle of diminishing marginal benefit and the law of demand d) the principle of increasing costs and the law of supply e) market equilibrium f) the price elasticity of demand g) the price elasticity of supply h) the perfectly competitive model i) the profit-maximizing condition j) economic surplus k) monopoly l) market failure m) consumer behavior n) oligopoly.
SLO2: Students will learn how to identify and measure alternative categories of benefits and costs and demonstrate how such values affect economic decisions. Students will learn how to use consumer and producer price and quantity data to critically analyze the effects of changes in exogenous factors on market outcomes. Students will also learn to use market data to calculate elasticity measures in order to describe consumer and producer responses to changes in price. The predicted results of economic models - specifically the competitive and imperfectly competitive market models - will be tested against real world data.
SLO3: Students will demonstrate the ability to critically analyze economic arguments using microeconomic modeling. Students will analyze the impact of exogenous economic changes and price policies in the context of these models. Students will compare model predictions about the efficiency and equity of resource allocation under different market structures against real world data.
SLO4: Students will articulate how international trade can lead to more efficient and desirable quantity and price outcomes for society. Students will be able to convey both the intent and the result of price control policies such as price ceilings and price floors. Students will articulate the alternative merits and inherent tradeoff between efficient and equitable market outcomes. Students will also be able to articulate social efficiency outcomes related to various levels of competition and how public policy can assist or impede such competition.
COURSE POLICIES GRADING: Your grade in this course will be based on performance on two exams, three short quizzes, attendance, and a comprehensive final. The plus/minus system will be implemented on final grades where appropriate. The weights assigned to each component of your grade are as follows:
- 2 mid-semester exams = 44% of final grade (22% each) - Attendance = 10% of final grade
- 3 quizzes = 21% of final grade (7% each) - Final exam = 25% of final grade
EXAMS: The two mid-semester exams will likely be mostly multiple choice with a few short answer questions (true/false or fill-in-the-blank). Each exam will test your knowledge of material covered since the previous exam, so the exams are not explicitly comprehensive. However, nearly all of the material in this class builds on previously attained knowledge. You will find that you will be using information from the first part of the semester throughout the course. The final exam is comprehensive in coverage.
QUIZZES: Quizzes will be given at the beginning of the class on the scheduled date, and should take approximately 20 minutes. The format of the quizzes will be a mix of multiple choice questions, short answer, and graphing.
“CHALLENGE QUIZ”: One of your quiz grades may be replaced during the semester by taking a “challenge quiz” prior to the next exam. This process entails submitting a formal written request, and scheduling a time to take a much more difficult quiz on the same topics. Do not sign up to take a challenge quiz unless you are prepared to explain the material in detail in your own words. By submitting the request and scheduling the challenge, you automatically forfeit the original quiz grade and accept the outcome of the challenge quiz. Quizzes that were missed because of an unexcused absence cannot be challenged.
ATTENDANCE: Attendance will be taken randomly throughout the semester. Attendance is 10% of your grade. So, if I take attendance 10 times, and you are there for 9 of those classes, you will receive a 90% for that component of your grade. If you do not miss any classes, you will have an additional 2 points added to your final grade for the course. If you miss 3 or more classes you will have 2 points deducted from your final grade. Absences will only be excused for valid and documented University emergencies.
FALL 2012 T/H CLASS SCHEDULE ~ Unit topic dates may change. Quiz and exam dates will not.
- Tuesday 8/28 Unit Thursday 8/23 Introduction & Syllabus
- Thursday 8/30 Unit
- Tuesday 9/4 Unit
- Thursday 9/6 Unit
- Tuesday 9/11 Unit 2 & Quiz
- Thursday 9/13 Unit
- Tuesday 9/18 Unit
- Thursday 9/20 Unit
- Tuesday 9/25 Unit
- Thursday 9/27 Unit
- Tuesday 10/2 Exam
- Thursday 10/4 Unit
- Thursday 10/11 Unit Tuesday 10/9 No Class ~ Fall Break
- Tuesday 10/16 Unit
- Thursday 10/18 Unit
- Tuesday 10/23 Unit 6 & Quiz
- Thursday 10/25 Unit
- Tuesday 10/30 Unit
- Thursday 11/1 Unit
- Tuesday 11/6 Unit
- Thursday 11/8 Exam
- Tuesday 11/13 Unit
- Thursday 11/15 Unit
- Tuesday 11/20 Unit
- Tuesday 11/27 Unit Thursday 11/22 No Class ~ Thanksgiving
- Thursday 11/29 Unit 10 & Quiz
- Tuesday 12/4 Unit
Course Outline This course is composed of 10 units. We will cover these units in the order presented below. You can find these topics in any principles of microeconomics textbook.
Unit 1: What is economics? Scarcity Opportunity cost Positive vs. normative analysis Marginal analysis Comparing marginal costs and benefits vs. comparing total costs and benefits Micro vs. Macro Economics Efficiency
Unit 2: Allocating scarce resources Budget line model
- How to draw it.
- Slope reflects opportunity cost.
- Shifting (change income, change in one or both prices) Production possibilities frontier model
- Why this shape? What does the shape mean about opportunity cost?
- Shifting the PPF (changes in technology, availability of resources, quality of resources)
- Trade, comparative advantage and the PPF The law of increasing opportunity costs The principle of comparative advantage
Unit 3: The functioning of markets and price determination What is a “Market”? Demand (the law of, curve, and schedule) and Determinants of demand (= demand shifters) Quantity demanded and changes in quantity demanded Supply (the law of, curve, and schedule) and the determinants of supply (= supply shifters) Quantity supplied and changes in quantity supplied Equilibrium Where does the equilibrium price (P*) come from? Shortages and Surpluses How changes in one market can affect another market? Using individual demand curves to construct the market demand curve. Normal vs. inferior goods Price floors Price ceilings
Unit 4: Understanding changes in prices and quantities: Elasticity The price elasticity of demand elastic vs. inelastic D determinants of elasticity changes in elasticity along D curve measuring elasticity between 2 points on a D curve (midpoint formula) changes in revenue from price changes The income elasticity of demand The cross-price elasticity of demand The elasticity of supply
Unit 5: Consumer Theory Preferences and the budget line revisited utility (marginal vs. total ) law of diminishing marginal U the utility maximizing rule for consumption of 2 or more goods (the “equimarginal principle” ) “consumer equilibrium” benefit (marginal vs. total ) net benefit and consumer surplus
