Download ECON 2010-100 Principles of Microeconomics

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PRINCIPLES OF MICROECONOMICS (ECON 2010) - JOO
Department of Economics, University of Colorado
Spring, 1998
M,W,F: 10-10:50 am,
Professor: Charles de Bartolome
Office hours:
Office: Econ 202.
e-mail: [email protected]
Room: Math 100
Recitation instructor:
Recitation time:
Recitation place:
Office hours:
Office:
Textbook:
Stiglitz, J.E., (1997), Principles of Microeconomics (2nd Edition).
New York: Norton.
Study Guide: Martin, L. W., (1997), Study Guide for Principles of Microeconomics
(2nd Edition). New York: Norton.
Course description: Microeconomics is about what goods get produced and sold at what prices.
The individual must decide what goods to buy, how much to save and how hard to work. The
firm must decide how much to produce and with what technology. The course explores how "the
magic of the market" coordinates these decisons. In addition, the course considers such questions
as: Why is competition socially desirable? Is competition likely? How do firms behave in the
absence of competition?
The course is an introductory course. No previous knowledge of economics is assumed.
The student is, however, assumed to be able to solve simultaneous equations both graphically and
algebraically.
Grading: There are two midterms, a final exam, two experiments and two data collection
exercises. The grade of the student will be determined as: 30% First Midterm, 30% Second
Midterm, 30% Final and 10% Experiments. The data collection exercises are Pass/Fail: your
grade is Incomplete Fail until you pass these exercises.
Attendance at class: attendance at class is required. If you consistently miss class or recitation,
you will be warned. If you continue not to attend after the warning, you fail the course.
Attendance at recitation: attendance at recitation is required. At the recitation, you are required
to hand in your answers to the weekly problem-set. If you consistenly do not do this or if your
answers show no evidence of effort, you will be warned. If you ignore the warning, you fail the
course.
Difference with other sections: I expect this section to go slower, cover fewer topics and put
more emphasis on analysis than other sections.
Exams: The two midterms will be given in the evening as:
FIRST MIDTERM:
Monday, 15 February,
7:00 - 9:00 p.m.
All recitation sections in MATH 100.
SECOND MIDTERM: Wednesday, 17 March,
7:00 - 9:00 p.m.
Recitation sections Rl 11-118 in MCDB A2B70
Recitation sections Rl 19-126 in DUAN G1B20
The final exam will be held as:
FINAL:
Friday, 7 May
8:30 - 10:30 a.m.
You must bring a blue-book to each exam.
Notification of class grade: university rules prevent me from posting your grade. If you wish to
be notified by me of your final grade, you must give me a stamped addressed card at the final
exam
Course outline: shown overleaf is a list of topics to be covered and likely dates.
Chapter
Date
Topic
11, 13 Jan
WHAT IS ECONOMICS?
The role of markets.
The use of models.
Positive v normative economics.
15, 20 Jan
THE BASIC MODEL
Rational Agents.
Price-taking.
Benefit.
Opportunity cost.
22,25,27,29 Jan
1 Feb
LAW OF SUPPLY AND DEMAND
The coordinating role of prices
- individual demand curve.
- market demand curve.
- individual supply curve.
- market supply curve.
- equilibrium.
Marginal analysis
- demand rule: marginal benefit= price.
- supply rule: marginal cost= price.
- the paradox of value.
Shifts in the demand curve: substitutes and complements.
Shifts in the supply curve.
4
3 Feb
APPLICATIONS OF SUPPLY AND DEMAND
Inelastic = steep, elastic = flat.
Price-ceiling and price-floors.
5
2
incl. Appendix
omit pp. 99-103
5, 8 Feb
INTERTEMPORAL MARKETS
Interest rate as a price.
Present discounted value.
6
incl. Appendix
omit pp. 131-138
10, 12 Feb
GOODS DEMAND CHOICE
The objective
- utility and indifference curves
as a measure of well-being.
- marginal utility.
- diminishing marginal utility.
- marginal benefit.
The constraint: budget constraint.
Choice.
8
(omit p. 186)
incl. Appendix
(but omit pp. 1967-198)
,.-"I>
.
• .....
15 Feb FIRST MIDTERM
17 Feb GOODS DEMAND CURVE
Derivation of the demand curve:
"price = private marginal benefit" rule.
Every decision is a marginal decision.
pp. 194-197
19 Feb MEASURING WELFARE GAINS
Consumer surplus.
pp. 185-186
22, 24 Feb
LABOR SUPPLY CHOICE
Trade-off: leisure v. consumption
Labor supplied is leisure sold
- wage as a price.
- labor supply curve.
- do you work harder if your wage increases ?
- market labor supply.
26 Feb SAVINGS CHOICE
Trade-off: consumption now v. consumption later
Saving is income not spent
- interest rate as a price.
- do you save more as the interest rate increases ?
1,3,5,8,10 Mar
PRODUCTION AND COST
Production function, marginal product.
Cost structure: marginal and average cost.
12 Mar
PROFIT MAXIMIZATION
Marginal revenue.
Profit maximization:
"marginal revenue = marginal cost" rule.
15 Mar
COMPETITIVE FIRMS
Output decision: "price=marginal cost rule"
17 Mar
SECOND MIDTERM
9
(pp. 199-211, 222-223)
9
(pp. 212-218, 223-225)
11
omit pp. 266-272
omit Appendix
pp. 282-287
,..n
., •
19, 29, 31 Mar
2, 5, 7 April
COMPETITIVE FIRMS (CONT.)
Accounting v. economic profits.
Short-run production decision:
"price > average variable cost" rule.
Firm short-nm supply curve
- short-run market supply curve.
Long-run production decision:
" price > average cost" rule.
Firm long-run supply curve
- long-nm market supply curve.
- "long-nm price = minimum average cost" rule.
- the role of profits and entrepreneurship.
12
omit pp. 299-304
omit Appendix
9,12,14,16 Apr
COMPETITIVE GENERAL EQUILIBRJUM
13
Circular flow of funds
- partial equilibrium v. general equilibrium.
Pareto-efficiency
- utility possibility frontier.
- exchange efficiency: "equal marginal benefit" rule.
- production efficiency: "equal marginal cost" rule.
- product-mix efficiency: "marginal benefit = marginal cost" rule.
First Fundamental Welfare Theorem
- price internalizes social opportunity cost to individual.
19, 21, 23 Apr
MONOPOLY
"Marginal revenue = marginal cost" rule.
Inefficient outcome.
26, 28, 30 Apr
3 May
12
INPUT MARKETS
(pp. 299-308)
Labor demanded by firm:
- "value of marginal product of labor= wage" rule.
Market labor demand.
Capital demanded by firm:
- "value of marginal product of capital = capital price" rule.
Market capital demand.
Input market equilibrium.
Income Distribution.
Second Fundamental Welfare Theorem
- keep the market, change the endowments.
7May
FINAL EXAM
14
omit pp. 346 - 358
omit Appendices A and B