Download ECON 1200 Principles of Economics

Principles of Economics
ECON 1200
Course Manual
2007 Printing
Copyright © 1999
All rights reserved. No part of the material protected by this copyright may be reproduced,
stored in a retrieval system, or transmitted in any form or by any means, electronic or
mechanical, including photocopying, recording, or otherwise without the prior written
permission from the copyright owner.
Revised 1999, 2001, 2002, 2004.
The University of Manitoba, Distance and Online Education
Acknowledgments
Content specialists:
Dominka Wranik-Lohrenz
Department of Economics
Faculty of Arts
University of Manitoba
Instructional designer:
Leona Dvorak, Ph.D.
Distance and Online Education
University of Manitoba
Desktop publishers:
Lorna Allard
Distance and Online Education
University of Manitoba
Table of Contents
Introduction to the Course ....................................................................1
Course description.........................................................................1
Course goals..................................................................................1
Course materials............................................................................1
Going online..................................................................................2
Topic overview .............................................................................4
Evaluation and grading .................................................................6
Working through the course..........................................................8
Final examination........................................................................10
Module 1
How Markets Operate......... Error! Bookmark not defined.
Unit 1 What is Economics? .......... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 2 The Market ........................ Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 3 Elasticities ......................... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 4 Consumer Behaviour ......... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Module 2
A Closer Look at Supply..... Error! Bookmark not defined.
Unit 5 Organization and Costs of a FirmError! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 6
Market Structures—Pure Competition and
Pure Monopoly .................. Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 7
Market Structures—Monopolistic Competition
and Oligopoly .................... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 8
Research and development (optional)Error! Bookmark not
defined.
Module 3
Beyond Markets................... Error! Bookmark not defined.
Unit 9 Winners and Losers in The MarketError! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 10 Governments and The MarketError! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 11 Public Choice and TaxationError! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Module 4
The Real Side of the EconomyError! Bookmark not defined.
Unit 12 Measuring Features of the Economy Error! Bookmark not
defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 13 Modeling Private and Public ExpendituresError! Bookmark not
defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 14 Modeling the Economy ..... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 15 Fiscal Policy ...................... Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Module 5 Monetary Policy and other Macroeconomic Issues Error!
Bookmark not defined.
Unit 16 Monetary Policy ................ Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 17 A look at Inflation and Some ControversiesError! Bookmark not
defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 18 Economic Growth.............. Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Module 6
International Economics ..... Error! Bookmark not defined.
Unit 19 International Trade ............ Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 20 Exchange Rates ................. Error! Bookmark not defined.
Useful Practice Questions ........... Error! Bookmark not defined.
Unit 21 World Economies .............. Error! Bookmark not defined.
Introduction to the Course
Have you ever studied economics? No? Then this is the course for you. It is
designed to introduce you to the field of economics and to show you how to
apply the material you learn to real world situations. This course will
familiarize you with the language of economics and will prepare you for
selecting higher level courses in the future.
Course description
The University of Manitoba Undergraduate Calendar describes this course as
follows:
A study of the principles of economics and some of their applications. Students
may not hold credit for ECON 1200 (or 018.120) and any of: ECON 1201 (or
018.120), ECON 1210 (or 018.121), ECON 1211 (or 018.121), ECON 1220 (or
018.122), or ECON 1221 (or 018.122).
Course goals
Upon completion of this course you will be able to:
• explain basic concepts and tools that economists use to address current
Canadian and foreign economic and policy issues;
•
categorize basic economic tools and concepts with respect to a specific area
in the field of economics. For example, the theory of the firm is part of
microeconomics. This will facilitate your choice of higher level, more
specialized courses in economics;
•
practically apply these tools and concepts to constructed economic
problems; and
•
analyze a variety of economic situations that are discussed in the media.
This will require that you select from the available set of concepts and tools
those that are most useful for a particular situation.
Course materials
You will be working with the textbook and the study guide. You may also find
some newspaper clippings or other forms of media reports in your assignment
package.
Required
The following required materials are available for purchase from the University
of Manitoba Book Store. Please order your materials immediately, if you have
not already done so. See your Distance and Online Education Student
Handbook for instructions on how to order your materials.
Principles of Economics
ECON 1200
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Textbooks
McConnell, C. R., Brue, S. L. and Barbiero, T. (2005). Microeconomics, 10th
Canadian ed. McGraw-Hill Ryerson.
McConnell, C. R., Brue, S. L. and Barbiero, T. (2005). Macroeconomics,
10th Canadian ed. McGraw-Hill Ryerson.
Videos
Introduction to Economics videotape series. Winnipeg, MB: The University of
Manitoba. The videos are purchased through the Book Store.
Study guides
Walstad, W. B., Bingham, R. C., and Anderson, T. (2005). Study guide for use
with Microeconomics, 10th Canadian ed.
Walstad, W. B., Bingham, R. C., and Anderson, T. (2005). Study guide for use
with Macroeconomics, 10th Canadian ed.
The Distance and Online Education Student Handbook
The Distance and Online Education Student Handbook is located online in each
course site and on the Distance and Online Education website. You can
bookmark the site for easy access at your convenience. If you need to order a
printed copy, please consult your Distance and Online Education Guide staff
directory for the general inquiries contact information.
Accessing both the Handbook and the DE Guide throughout the year provides
you with detailed information regarding the management/administrative aspects
of this distance education course. The Handbook tells you how to access the
following:
•
•
•
•
•
•
•
Your instructor;
Writing your final exam at a location other than the University of Manitoba
campus;
Distance and Online Education Student Services;
Using technology (online access, communication tools);
The University of Manitoba Libraries;
Information on ordering your course materials through the University of
Manitoba Book Store; and
Information on accessing your grades and submitting assignments online.
Going online
Interacting with other students
Take advantage of communication tools in the course website. The tools include
e-mail, discussion, and chat. Post your questions or comments in the discussion
area. Activities such as these provide other students with an opportunity to
interact with you. Consider creating online study groups.
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Interacting with your instructor
Questions? Concerns? Discussion? Your instructor is prepared to assist you. Do
not hesitate to address any concerns regarding the course and assignments
directly with your instructor. Check your instructor’s contact information to
determine how best to communicate—not all instructors communicate online.
Using the libraries
Additional readings enrich your learning experience and your understanding of
your course topics. Textbooks and course materials often contain suggested
reading lists, and you can search any library, using online library search tools,
to find these and other related materials.
Selected bibliography
On occasion you may find it useful to read through sections in other
introductory economics textbooks. For the most part you will find that the
material presented is the same in all these books. However, different authors use
different words and examples to explain the same ideas.
You should consult additional books when:
•
You are having difficulty understanding a particular concept, even though
you have read about it in your textbook several times.
•
You discover that a concept is particularly interesting and you would like to
gain additional insight.
Colander, D. C. & Sephton, P.S. (1996). Microeconomics. Toronto: Times
Mirror Professional Publishing Ltd.
Colander, D. C. & Sephton, P.S. (1996). Macroeconomics. Toronto: Times
Mirror Professional Publishing Ltd.
Parkin, M. & Bade, R. (1997). Microeconomics: Canada in the global
environment. Don Mills, ON: Addison-Wesley.
Parkin, M. & Bade, R. (1997). Macroeconomics: Canada in the global
environment. Don Mills, ON: Addison-Wesley.
Vogt, R., Cameron, B. J. & Dolan, E. G. (1993). Economics: Understanding the
Canadian economy. Toronto: Dryden.
These textbooks are available from the Distance Education Library Service,
Elizabeth Dafoe Library at the University of Manitoba. You can obtain them by
using the directions provided in your Distance and Online Education
Handbook.
Principles of Economics
ECON 1200
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Topic overview
Microeconomics
Module 1 – How Markets Operate
Unit
Title
Content
Chapters
1
What is economics
- the science of economics
- basic economic problem
1, 2
2
The market
- consumers
- producers
- adjustment mechanism
3
Elasticities
-
price elasticity of demand
price elasticity of supply
income elasticity of demand
cross price elasticity
5
4
Consumer behaviour
- investigation of consumer
behaviour
- in depth analysis of demand
6
3
Module 2 – A closer look at supply
Unit
Title
Content
Chapters
5
The typical firm
- organization of a firm
- costs of a firm
6
Market structures 1
- firm behaviour under pure
competition
- firm behaviour under pure
monopoly
8,9
7
Market structures 2
- firm behaviour under
monopolistic competition
- firm behaviour under
oligopoly
10
Research and
Development
- R&D in a typical firm
11
8 opt
7
Module 3 – Beyond markets
Unit
4
Title
Content
Chapters
9
Winners and Losers
in The Market
-
15, 16
10
Governments and
The Market
-
17
11
Public Choice and
Taxation
-
18
Macroeconomics
Module 4 – The Real Side of the Economy
Unit
Title
Content
Chapters
5,6
12
Describing an
economy
- measuring production levels
- measuring unemployment
- measuring inflation
13
Modeling private and
public expenditures
- aggregate expenditure
model
- when does spending
change
7
14
Modeling the
economy
- aggregate demand
- aggregate supply
- adjustment mechanisms
8
15
Fiscal Policy
- effects of government
spending and taxation on
the economy
9,10
Module 5- Monetary Policy and other Macro Issues
Unit
Title
Content
Chapters
11, 13
16
Monetary Policy
- What is money
- How the Bank of Canada
manages our money
- How this affects the
economy
17
A look at inflation in
the AS-AD model
- Economic shocks in the
short run and in the long run
- The Phillips curve
14
18
Economic Growth
- Sources of economic
growth
- Desirability of economic
growth
15
Module 6 – International Economics
Unit
Title
Content
Chapters
19
International Trade
- Why countries trade
- Can there be too much
trade?
20
Exchange Rates
- Determination of exchange
rates
- Should government protect
our dollar from losing value?
Principles of Economics
4.4,16
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ECON 1200
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Module 6 – International Economics
Unit
21
Title
World Economics
Content
- A brief look outside the
Western Capitalist World
Chapters
Course
Manual and
Video only
Evaluation and grading
Students should acquaint themselves with the University’s policy on plagiarism,
cheating, and examination impersonation as detailed in the General Academic
Regulations and Policy section of the University of Manitoba Undergraduate
Calendar. Note: These policies are also located in your Distance and Online
Education Student Handbook or refer to Student Affairs at
http://www.umanitoba.ca/student.
Assignments
Principles of Economics is divided into two major parts: microeconomics in the
first term and macroeconomics in the second term. During each term you will
complete three assignments.
Microeconomics is divided into three modules. The first module includes units 1 to
4, the second module includes units 5 to 8, and the third module includes units 9 to
11. At the end of each module you will complete an assignment.
Macroeconomics is divided into three modules. The fourth module includes
units 12 to 15, the fifth module includes units 16 to 18, and the sixth module
includes units 19 and 20.
Each assignment will consist of three types of problems. Some will ask you to
explain concepts in order to demonstrate your understanding of the concepts;
some will ask you to apply specific concepts to constructed problems in order to
show that you can use the concepts in a meaningful manner; and some will ask
you to analyze real world situations, with the help of concepts covered up to
that point, in order to show that you can identify which concepts are useful in
which situation.
When you are preparing answers to your assignment questions you may proceed
in one of the following two manners:
•
Read the material for one lesson and then complete questions pertaining to
that lesson only. Read the material for the following lesson and then
complete the questions pertaining to that lesson.
- or •
Read the material for all the lessons in the assignment and then complete the
entire assignment at once.
Which option you choose is entirely up to you. You may work through this
course in the way that best suits your learning style.
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Presentation of your assignment
Presentation accounts for 10% of the grade on your assignment. To obtain all 10%:
• Type your assignment.
• Draw your graphs neatly by hand on graphing paper or prepare them on a computer.
• Print calculations neatly by hand or use a computer.
• Leave some space for your instructor’s comments.
Grading percentages
Item
Value
6 assignments
60% of final mark
(each worth 10%)
Final exam
40% of final mark
Total 100%
Course letter grades
Grade
Value
A+
A
B+
B
C+
C
D
F
90% - 100%
80% - 89%
76% - 79%
70% - 75%
62% -69%
56% - 61%
50% - 55%
0% - 49%
Please note: All final grades are subject to departmental review.
Assignment due dates
Assignment
Module
1
2
3
4
5
6
1
2
3
4
5
6
Sept - April
January - July
October 15
November 15
December 15
January 15
February 15
March 15
January 21
February 21
March 21
April 21
May 21
June 21
If you need to write the final exam at a location other than the University of
Manitoba main campus, you must complete an application. Please consult
your Distance and Online Education Student Handbook for directions.
Note: If the assignment due date falls on a Saturday, Sunday, or statutory
holiday, it will be due on the next working day. If the assignment due
date falls during the Mid-term Break in February, it will be due on the
Monday following the Mid-term Break. If you are unable to submit an
assignment on time, contact your instructor well in advance of the due
Principles of Economics
ECON 1200
7
date, for we cannot guarantee that the instructor will accept late
assignments.
Review the guidelines on assignment due dates in the Student Handbook.
Working through the course
Because this is an independent study course you are required to work on your
own. This includes not only reading the material and completing assignments
without classroom instruction but also requires you to organize your time well.
This is often a challenge, especially if you have not taken a course by distance
education before. It is not easy to estimate how much time it will take you to
read a section of the course or to complete questions. This section of the manual
contains helpful suggestions for scheduling your work effectively.
1. Understanding your textbook
A textbook is not meant to be read from beginning to end in one sitting in the way
that a novel would be read. You may want to try the following approach instead:
• Read through the course outline.
• Read the “contents” section of the textbook to see how each chapter
correlates to the course logic chart and the course outline.
• Familiarize yourself with the style of the textbook. You may find the “To
the student” section in your textbook useful for that purpose.
2. Planning your work
Plan when you are going to read which chapter and when you will begin
completing each assignment so that you can submit all assignments on time.
Even if you are not able to stick to your schedule exactly, it will help you to
organize your work. You should do this in the first week of the course and
update your schedule as you go along.
Example:
To be read:
Assignment 1
Chapters 1-5 (omit chapter 4)
Approximately 140 pages
To be viewed: Video #1
8
Time:
Beginning of term to October 15
Schedule:
Sept 8 - Sept 14
Organize my course work
Sept 15 - Oct 1
Read the material (see “Reading the
material”)
Oct 2 - Oct 10
Complete a first draft of the
assignment. (See “Completing your
assignment”)
Oct 10 - Oct 13
Type the assignment and doublecheck the answers
Oct 14
Fax the assignment (allow more time
if you are mailing)
3. Mastering the material
•
Flip through the assigned chapters and read the section headings to get an
idea of how much reading lies ahead of you. At this point you may also
prepare a more detailed schedule for the particular unit(s).
•
Watch the introductory section of the video that corresponds to the module.
It will take no more than 5 minutes.
•
Read the chapters rapidly to get an idea of which sections are more difficult
than others.
•
Read the chapters more slowly to make sure that you do not miss any
details. You may want to take study notes. You can compare the points you
highlighted in your notes with those highlighted in the summary at the end
of each chapter.
•
Read the unit(s) in your course manual.
•
Watch the remainder of the video for the module. It provides you with a
summary of the module.
•
Practice your knowledge by working through problems at the end of the
chapter and in your study guide until you feel confident that you have
mastered the material.
4. Completing your assignment
•
Be sure that you understand what the question is asking before you start to
write. If you do not read the question carefully you may end up answering
something that is not asked and not answering what is asked. If necessary,
restate the question in your own words. A good rule of thumb: You really
understand something when you are able to explain it to a friend who does
not.
•
You will discover that many questions will ask you to analyze certain
situations. Be sure that you do not attempt to answer them with a
preconceived notion of what your conclusion should be. Instead, make sure
that your conclusion follows from your analysis.
•
Identify the problem(s) in the question. What is the situation and what
would you like to change about it?
•
Identify the relevant economic tools and concepts that you will be using in
your analysis. Outline for yourself the reasoning process.
•
There may be more than one possible analytical route. Identify alternate
routes and explain why you are choosing one route over another.
•
Clearly state the conclusions that can logically be drawn from your analysis.
Often the consistency and logic of your answer is just as important as the
conclusion that you reach.
Principles of Economics
ECON 1200
9
•
If there is more than one possible conclusion, state them all. Often there is
no right or wrong answer.
•
Be sure to refrain from assertions of truth or expressions of personal
opinions and preferences to support your answer, unless specifically asked
to do so. For instance, when asked what you would do to decrease the rate
of unemployment in an economy, it is not satisfactory to answer: “I would
not do anything because I believe that people should not work. Obviously,
work only causes stress and problems in the family.”
Final examination
The final examination will test you on your knowledge of the entire course. It
will be divided into two sections, one covering microeconomics and the other
covering macroeconomics. In each section, you will be asked to choose three
questions out of five. The format of the questions will resemble the assignment
questions. The best preparation for the final exam is to work through all
assignments carefully and work through them again once they are returned to
you with comments from the instructor.
General guidelines for assignment and exam preparation
A word of caution about the assignments and the final examination
Some students find that they do very well on the assignments, but they do not
do nearly as well on the final examination. While your grades on the
assignments will give you some idea of how well you are mastering the
material, they may not indicate how well you will do on the examination,
because the examination is written under very different circumstances. Because
the assignments are open book, they do not require the amount of memorization
that a closed-book examination requires nor are they limited to a specific time
period. Some students have told us that, based on the high marks they received
on the assignments, they were overconfident and underestimated the time and
effort needed to prepare for the final examination.
Please keep all this in mind as you prepare for the examination. If your course
has a sample exam or practice questions, use them to practice for the
examination by setting a time limit and not having any books available. Pay
careful attention to the description of the type of questions that will be on your
final examination. Preparing for multiple choice questions involves a different
type of studying than preparing for essay questions. Don't underestimate the
stress involved in writing a time-limited examination.
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