Microeconomics
PURPOSE OF THE COURSE
This course is designed to provide an understanding of basic microeconomic concepts and principles and to develop the ability to apply these concepts and principles to real world problems.
For each class session there are assigned readings in the textbook and/or the course syllabus. These readings should be completed before class. In addition, one or more problems are assigned for most class sessions. These should be prepared in advance individually for class discussion. Finally, there are eight cases. All class members should read the case and work out a recommendation, but each of the eight study groups has been assigned one case presentation to the class.
REQUIRED TEXT
K.E. Case and R, C, Fair (C & F), Principles of Microeconomics, 5th edition, 1999. Other required readings and cases are in the course syllabus.
SCHEDULE OF SESSIONS
Session 1: Introduction and Overview
- C & F, Chapters 1 and 2 ("What Is Economics?" and "Scarcity and Choice")
Note: Do not read the Appendix to Chapter 1 for this session.
Session 2: Graph Review and Consumer Choice
- C & F, pp. 19 - 23 and 127 - 139. ("How to Read and Understand Graphs" and "Household Behavior and Consumer Choice")
Problem: Daily Political Budget
Session 3: Market Demand
- C & F, pp. 67 - 80, pp. 108 - 120, and pp. 142 and 144 ("Demand," "Elasticity," and "Consumer's Surplus")
- Notes on Estimation of Price Elasticity
Problem: The Demand for Oranges
Problem: The Benefits From a New Highway
Case: The Price of Pears (Group 1)
Session 4: Market Supply
- C & F, pp. 159 - 166 and Chapter 8 ("The Behavior of Profit - Maximizing Firms" and "Short - Run Costs…")
Problem: Profit - Maximization
Problem: Output Determination in a Multi-Plant Firm
Case: Airline takes a Marginal Route. (Group 2)
Session 5: Producer Choice
- C & F, pp. 166 - 181. ("The Production Process")
Notes on Production and Optimization
Session 6: Pricing in Competitive Markets and Efficiency of the Market
- C & F, Chapter 9 ("Costs and Output Decision…") and pp. 436 - 44 ("Tax Incidence")
- "Effect of an Excise Tax"
- "Marvelous Markets," The Economist
- "Free Market Comes to the Farm," Wall Street Journal
Problem: Drug Enforcement and the Heroin Market
Case: Eggs, Copper and Coffee. (Group 3)
Case: The Voucher Education Plan. (Group 4)
Session 7: Pricing in Non-Competitive Markets - Monopoly
- C & F, Chapter 13 ("Monopoly")
- Notes on Price Discrimination
- "Welfare and Efficiency," The Economist:
Problem: The Pricing of Railroad Services
Case: U.S. vs. Aluminum Co. of America. (Group 5)
Session 8: Pricing in Non-Competitive Markets - Collusion
- C & F, pp. 347 - 364
- "The Economics of Antitrust: The trustbusters' new tools," The Economist:
- "OPEC Agrees on Higher Output Ceiling," Wall Street Journal
- "Diamond Cartels Aren't Forever," Wall Street Journal, 7/17/2000
Case: Merger Mania. (Group 6) (Also see "Questions on Merger Mania" in syllabus)
Session 9: The Determination of Wages and Other Factor Incomes
- C & F, Chapters 10 and 17 ("Input Demand" and Income Distribution and Poverty")
Case: The Economics of Minimum Wages Laws (Group 7)
Session 10: Market Failure - Externalities
- C & F, pp. 310 - 318, 373 - 386, 517 - 529 (The Market Mechanism," and "Environmental Protection")
- "How to Break Up Traffic Jams," Wall Street Journal
- "Selling Dirty Air is Big Business," San Francisco Chronicle
Session 11: Market Failure - Public Goods and The Public Sector
- C & F, pp. 387 - 393 ("Public Goods, etc.")
Case: Congress Cuts the Budget. (Group 8)
