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Azerbaijan University
School of Business
Econ 2106 Principles of Microeconomics
Fall, 2010
Instructor:
Office phone:
Phone:
E-mail:
Class hour:
Office hour:
Rovshan Guliev
+99412 431 50 79 (106)
+994 50 636 08 19
[email protected]
Monday 15:00-16:00
by appointment
Course Materials:
1. David C. Colander MICROECONOMICS Richard D. Irwin Inc 1993
2. Paul A. Samuelson, William D. Nordhaus ECONOMICS 15th edition, (1997)
McGRAW-HILL, INC.
3. Campell R.McConnell , Stanley L.Brue ECONOMICS: Principles, Problems and
Policies , 12th edition (1993)
4. Fredric S.Mishkin The Economics of Money, Banking and Financial Markets ,
HarperCollinsPublisher(1992)
5. Lectures materials prepared by instructor. These will be delivered to students before
each lesson.
Course Objective: The goal of ECON 2106 is to provide an introduction to
microeconomics, to the economic way of thinking and to the economist's view of the
world. The course attempts to develop a student's ability to think analytically about the
economic forces at work in society and give detailed knowledge of microeconomics.
Students learn both a specific set of analytical tools and how to apply them to current
policy issues.
Prerequisites: Math 1111 College Algebra
Method of Instruction: ECON 2106 is taught through a combination of lecture,
discussion, homework and examinations. Class interaction allows the students to
discover the strengths and weaknesses of alternative policy recommendations.
Learning Objectives for ECON 2106:
1. The student will learn the nature and methods of economics and will define “the
circular flow model” and two different level of analysis of economic behavior-micro
and macro
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2. The student should be able to define the concept of scarcity.
3. The student should be able to recognize, interpret, and utilize a supply curve and a
demand curve, and should be able to identify the underlying determinants of each.
The student should be able to differentiate between a change in demand/supply and
a change in the quantity demanded/supplied.
4. The student should be able to define the general concept of elasticity for different
variables in the demand or supply function (own, cross, income), and should be able
to describe the effect of a given elasticity on economic outcomes (e.g., revenues, tax
burden, policy choices, etc.).
5. The student should be able to define opportunity costs, demonstrate how they affect
economic decisions, and identify these costs in a given economic decision.
6.
The student should be able to explain and apply the concepts of marginal benefits
and marginal costs to determine optimal economic decisions for consumers and
firms, as well as the benefit-cost principle.
7. The student should be able to accurately explain the way in which economists use
the following adjectives and the relationships among them: marginal, average, total,
fixed, variable, and sunk.
8.
The student should also be able to determine in a given economic decision which
costs and benefits are relevant (e.g., marginal) and which are not (e.g., sunk).
9. The student should be able to identify the differences between a perfectly
competitive market, a monopolistic market, and an imperfectly competitive market,
and the implications of each for economic outcomes.
10. The student should be able to define externalities and public goods, their relation to
free markets, and economic solutions to these problems.
Grades
Grades will be based on a midterm exam, a final exam, quizzes and participation
performance in the following proportions:
Participation Demerits
Midterm Exam
20%
Late to class
1%
Final Exam
30%
Lecture disruption (eg. cell phone) 1%
Activity
10%
Exam disruption (eg. cell phone)
1, 5%
Quizzes
30%
Absence
1.5%
Participation
10%
Total
100%
During the semester the students will take 5-7 quiz each consisting of 10
multiple-choices questions which usually cover the contents of respective two lectures.
Activity of students is estimated by lector or instructor for their active
participation in discussions during the semester.
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Participation demerits are the reductions of the student’s score for class
disturbance caused by student, aimed to ensure the relevant class process and calculated
as shown above.
The final grading scale will be as follows: A, A-, B+, B, B-, C+, C, C-, D, F.
Grade Points
A+
100-97%
A
96.9-94%
A-
93.9-90%
B+
89.9-87%
B
86.9-84%
B-
83.9-80%
C+
79.9-77%
C
76.9-74%
C-
73.9-70%
D
69.9-60%
F
59.9% >
Tentative Course Outline
Lecture 1
Course Introduction
 Syllabus.
 Introduction to basic economics:
- microeconomics and macroeconomics
-the nature and methods of economics
-the economizing problem
-the circular flow model
-the “ISMS”: market economy (pure capitalism), the command economy, mixed
systems, the traditional economy
Lecture 2
Individual Markets: Demand and Supply
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 Markets defined
 Demand
-law of demand, the demand curve, individual and market demands,
determinants of demand, changes in demand, changes in quantity
demanded.
 Supply.
-law of supply, the supply curve, the determinants of supply, changes in
quantity supplied
 Supply and Demand: Market Equilibrium
-surpluses, shortages, equilibrium, rationing function of price, changes in
supply and demand
Lecture 3
Demand and Supply Elasticity
 Price Elasticity of Demand, determinant of price elasticity of demand,
income and cross elasticity of demand
 Price Elasticity of Supply, applications
Lecture 4
Consumer Behavior and Utility Maximization
 Theory of Consumer Behavior, consumer choices and restraints, utility
maximizing rule,
 Marginal utility and the demand curve, law of diminishing marginal utility, two
explanation of the law of demand-income and substitution effects
 The time dimension, the value of time
 The paradox of value, the water-diamond paradox.
 The indifference curve, budget line, equilibrium point of contact (touching)
Lecture 5
Production and Cost
 Production theory and marginal product, production function, law of
diminishing return, economies and diseconomies of scale
 Production cost in short and long run, fixed variable and total costs.
 Organizing a Business, large-scale, medium and small businesses, sole
proprietorship, partnership, corporation, hybrid form of business organizations
Lecture 6
Market Structure: four markets model and pure competition
 Pure competition and Occurrence, behavior of competitive firm in short and
long run.
 Pure competition and efficiency
 Competitive field (industries)
Lecture 7
Market Structure: imperfect competition and pure monopoly
 Introduction-definition of imperfect competition and its types, pure monopoly
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

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
Barriers to entry and monopoly demand
Output and price determination
Economic effects of monopoly, price discrimination
Regulated Monopoly
Maximization monopolist profit
Lecture 7
Market Structure: Oligopoly and Monopolistic Competition
 Monopolistic competition: Concepts and Occurrence
 Output and price determination, non-price competition
 Monopolistic competition, wastes of it and economic analysis
 Oligopoly: Concepts and Occurrence
 Oligopoly Behavior: A Game Theory Overview
 Four oligopoly model
 Oligopoly and Economic Efficiency
Lecture 8
Factor Markets: Income and Resource pricing
 Production and resource demand
 Resource pricing
 Marginal productivity theory of resource
 Determinant and elasticity of resource demand
 Optimal combination of resource
 Marginal productivity theory of income distribution
Lecture 9
Factor Markets: wage determination
 Meaning of wages, general level of wages
 Wages in particular labor markets
 Wage differentials
 Labor supply
Lecture 10
Factor markets: rent, interest and profit
 Economic rent
 Interest
 Economic profit
Lecture 11
Risk, Uncertainty and the Game Theory
 Risk economics and Uncertainty
-Arbitrage and geographic structure of price
- Speculation and price alignment in time
-Distribution of risk by means of hedging
 The game theory
-Basic concepts
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-Alternative strategy
Lecture 12
The Market Systems and Its Operations, Governments –Market intercourse
 Partial and general equilibrium of market, market interrelationships,
 Regulating of business: theory and practice
 Government and market failure: public goods, the environment and
information problem.
 Antitrust regulations
Syllabus Agreement
I, the undersigned, certify that I have read and fully understand the terms of the Course
Syllabus
and that I unconditionally agree to abide by the terms of the Syllabus for the Course.
Course Number: ECON2106
Date: _____________________________________
Signature: _________________________________
Please sign, date and give this form to your instructor before the first lecture begins.
You will not be
allowed to take the first exam if you have not dated, signed and submitted this form to
the
instructor.
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