EconB200 Syllabus and Outline

COURSE SYLLABUS and COURSE OUTLINE
ECON B200
Principles of Microeconomics
Summer 2000

Time: M-F 10:00-11:30 Location of Class: MI 205

Course Information

Catalogue Description: Introduction to economic analysis, allocation of resources, distribution of income, specialization, exchange, demand, production, costs, supply, market structures, pricing, and international trade.

Course Prerequisites: Math 115 or Math 122

Required Readings:
The Economics of Public Issues (11th ed.) by Miller, Benjamin & North (MBN)
Class Handouts

Optional Readings:
Microeconomics by Robert B. Ekelund and Robert D. Tollison (ET)

Course Learning Objectives:

Students completing this course will:

be able to explain and use the terminology used in basic microeconomic analysis;
be able to explain the role of markets, organizations and government;
be able to make pattern predictions in order to make better decisions;
be able to explain the basis for international trade

Course Policies

Introduction
This is a basic course in microeconoimcs. We still study markets, firms, government, and human action in general. Economics is the study of purposeful human action in the broadest sense. It is a social science and should be studied alongside many other disciplines – including history, philosophy, marketing, management, etc. Economics is about choice and coordination and therefore encompasses the decisions all of us make every day of our lives. I look forward to a productive semester.

Course Assignments
There will be three exams (the lowest grade will be dropped) and a final exam. I will also periodically give homework assignments and will expect you to keep up with the assigned readings. The class will include discussions about the readings – therefore, if you have not read the assigned reading, you will not be able to participate in the discussions and will not gain as much from the lectures.

NOTE: I do not follow a text book chapter by chapter. The notes in this class will be very important. If you do not like this style of teaching, drop this course and take it from another instructor.

Grading Policy: Your grade will be determined as follows:

50% -- three exams (two exams at 25%, lowest grade dropped)
You must take all of the exams. If you miss an exam without my prior
permission I will deduct 50 points from your total number of points.
15% -- homework assignments (approximate depending on assignments given)
05% -- class participation (mostly attitude and attendance)
30% -- final exam (will cover the material after the 3rd exam)

There will be NO make-up exams except under VERY unusual circumstances. Since the lowest grade from your three exams will be dropped, if you miss an exam with prior permission, that grade will be dropped. You must take all of the exams – not studying for one exam will put you behind in the class. The material builds upon past material presented. The exams will include definitions, short answer questions, essays and problems (including graphs). NOTE: once an exam has been handed out in class, you are not allowed to leave the classroom for any reason!! DO NOT ASK ME TO MOVE YOUR FINAL TO ANOTHER TIME OR DATE BECAUSE OF PLANE RESERVATIONS. MAKE YOUR PLANE RESERVATIONS AROUND YOUR EXAM SCHEDULE!!

Attendance Policy: I will not take attendance. However, a good set of notes is necessary in my class to get a good grade. Furthermore, I will consider irregular attendance a sign that you are disinterested and/or lazy and will take that into consideration when determining final grades. Therefore, if you do not attend class regularly, your grade will suffer. And please take note: coming into class late is, in my opinion, very rude and disruptive to class. A couple of minutes late once or twice per semester is understandable – but coming into class late more often than that will not be acceptable – your class participation grade will suffer if you do so. Get to class on time!!! Leaving (and returning) in the middle of the class will also be considered rude and disruptive. (If you must leave early for some reason let me know at the beginning of class).

Academic Integrity Statement: If I believe an exam has been compromised, I reserve the right to retest the whole class or any individual in the class. Violations of the University’s academic code include, but are not limited to: possession of, or use of, unauthorized materials during exams and providing information to another student. Violations may result in academic penalties, including receiving an “F” in this course.

TENTATIVE COURSE OUTLINE AND SCHEDULE

Date Topic

5/30 Introduction to the class

The Nature and Methods of Economics

Reading Assignment: “The Broken Window Fallacy” by
Henry Hazlitt (Handout)

Learning Objectives:

To define economics
To explain the fundamental economic problems
To explain the methodologies of economics
To explain and apply the “Broken Window Fallacy”

The Economic Way of Thinking: TANSTAAFL or
Life is just one trade-off after another!

                      Reading Assignment: Pages 1-3 in MBN
                      Ch. 1 & 2 in MBN
                      Comparative Advantage (Handout)
                      Optional: Ch. 1 & 2 in ET
                      Film: “Greed” with John Stossell
                      Homework Assignment: Comparative Advantage Problem

Learning Objectives:

To explain and apply the concepts of opportunity cost and choice
To explain that exchange is mutually beneficial
To explain marginal analysis
To explain the production possibilities frontier
To explain the reasons for economic growth: THE RULES OF THE GAME or the INSTITUTIONAL FRAMEWORK
To explain the law of increasing marginal opportunity cost
To explain comparative advantage, specialization, and gains from trade
To list the alternative means of coordinating human action

6/6 First Exam

Consumer Choice and Demand

Learning Objectives:

To explain the concept of want satisfaction
To explain the concept of diminishing marginal utility
To explain the law of demand and the demand schedule
To explain the factors affecting demand

Supply

Learning Objectives:

To explain the law of supply and the supply schedule
To explain the factors affecting supply

The Interaction of Supply and Demand

                  Reading Assignment: Ch. 5,6,7,9,20 in MBN
                  Demand Elasticities (Handout)
                  Optional: Ch. 4, 5, and 6 in ET
                  Homework Assignment: Supply and Demand Problems

Learning Objectives:

To explain market coordination or why markets are so beautiful
To explain the concept of a market surplus
To explain the concept of a market shortage
To explain the functions of market prices and profits
To explain the affects of price controls (ceilings and floors)
To explain the concept of price elasticity of demand
To explain the concept of cross price elasticity of demand
To explain the relationship between revenue and price elasticity of demand
To explain the concept of income elasticity of demand
To explain the concept of price elasticity of supply
To explain the concepts of consumer and producer surplus
To explain the affects of an excise tax

6/15 Second Exam

Competition

                  Reading Assignment: Ch. 12, 13 & 14 in MBN
                  Optional: Ch. 9, 10, and 11 in ET
                  Homework Assignment: TBA

Learning Objectives:

To explain the process of rivalry and the potential dimensions of competition
To explain the different types of barriers to entry
To explain the affects of government regulation and antitrust laws
To explain the concept of a “cartel” and why they collapse
To explain the concept of “natural” monopolies and to critique the concept

Organizations and the Firm

Reading Assignment: Ch. 15 in MBN
Optional: Ch. 7 in ET

Learning Objectives:

To explain the nature of firms and why they exist
To explain the concept of transaction costs
To explain the concept of internalization (vertical integration)
To explain the role of the entrepreneur
To explain the concepts of asymmetric, incomplete, and incorrect information
To explain the concept of the agency problem
To explain the concepts of opportunism, bounded rationality, and asset specificity

Marginal Productivity and Costs

Reading Assignment: Optional: Ch. 8 in ET
Homework Assignment: Cost and revenue concepts

Learning Objectives:

To explain the difference between accounting cost and economic cost
To explain the difference between accounting profit and economic profit
To explain the difference between VC and FC
To explain the economic concepts of the short run and the long run
To explain the meanings of TC, ATC, AFC, AVC, and MC
To explain the meanings of TR, AR, MR, MP, and MRP
To explain marginal productivity (the profit maximizing or loss minimizing level of Q)
To explain the law of diminishing marginal returns
To explain economies of scale and scope
To explain the concept of sunk costs
To explain the short run shutdown decision

6/22 Third Exam

Public Choice Theory

Reading Assignment: Ch. 22, 23, 25 in MBN
Optional: Ch. 20 in ET

Learning Objectives:

To explain the concept of “Public Choice” economics
To explain the problems of democratic government: the median voter model, logrolling, rational ignorance, and special interest groups
To explain the problems associated with rent seeking
To explain why governments grow: fiscal illusion, the bureaucrat’s utility function, and the government voter model

Externalities and the Environment

Reading Assignment: Ch. 26, 27, 28 in MBN
Homework Assignment: TBA

Learning Objectives:

To explain the concept of externalities (positive and negative)
To explain the concept of internalization: persuasion, assigning property rights, voluntary agreements, and taxes/subsidies
To explain the free rider problem

International Trade

Reading Assignment: Ch. 30, 31 in MBN
Optional: Ch. 21, in ET

Learning Objectives:

To explain the basis for international trade
To explain the impact of barriers to international trade: tariffs and quotas

6/30 Final Exam

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