Download Course outline 114 Mikro Eng 2016

DEPARTMENTOFECONOMICS
ECONOMICS114
MODULEOUTLINE
2017
CGWSchumann-building
FifthFloor
Tel:+27218082247
Fax:+27218084637
http://www.ekon.sun.ac.za
Lecturers:
DrSophiaduPlessis
MsHeleenHofmeyr
MrEMoses MsBPegado
DrDShepherd(convener)
MrMvanSchoor
Internalmoderator:MrAvanderMerwe
Overview,aimsandoutcomesofthemodule:
The Greek word economics means “the management of the household”. This description
may sound strange, but there are actually many similarities between a household and an
economy.Decisionshavetobemadeathouseholdlevel,e.g.whoiscookingdinner,whoisdoing
theshopping,wherethenextholidaywillbe,etc.Thesedecisionsaresubjecttoscarcity;e.g.the
ability to cook, financial means and available time. In the same way, decisions also have to be
made within societies who are subject to scarcity. A government, for example, has to decide
whethermoreschoolsormorehospitalsshouldbebuiltwiththeavailablefunds.Economicsisthe
studyofscarcity.
Inthefirstsectionofthemoduleattentionisgiventoadefinitionofeconomics.Thefocusis
onthebigquestionsbeingaskedineconomics,andtheeconomicproblemisidentified.Students
areexposedtodifferenteconomicprinciplesandtheeconomicwayofthinking.
The next section of the module focuses on how markets determine prices through the
mechanism of demand and supply. We also look at the consumer’s preferences and how it
determinesdemand,aswellashowsensitivemarketagents’quantitydemandedandsuppliedare
to price changes (elasticities). We investigate the welfare of market agents with the aid of the
conceptssuchasconsumersurplusandproducersurplus.Theinfluenceofgovernmentpolicieson
marketsanditsimpactonthewelfareofmarketagentsarealsoinvestigated.
Hereafter we explore the behaviour of firms given different market structures. This is an
importantaspectofhowthesupplysideinamarketisdetermined.
Thefollowingsectionofthemodulegivesattentiontotheproblemofmarketfailure.Here
we specifically look at the impact of one party’s activities on other market agents; an external
benefit or cost to the latter party for which the former party does not receive compensation or
doesnotacceptresponsibilityforthecosts(externalities).Agoodexampleofthisispollution.We
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alsolookatthedifferencebetweenprivateandpublicgoods.Lastly,weanalyselabourmarkets,
whichisimportantfromboththeperspectiveofthefirmandoftheindividual.
After completion of the module, students will have a working knowledge of basic
microeconomictheory:amongstothershowdemandandsupplyinfluenceprices,theproduction
decisions and various costs that every firm faces, and especially the behaviour of firms in the
differenttypesofmarketstructures.Studentswillbeabletoexplainwhatexternalitiesare,whyit
causesmarketfailureandtheroleofgovernmentpolicytoaddresstheproblem.Studentswillalso
be able to distinguish between private and public goods. Finally, students will have a basic
knowledgeofthelabourmarket.
GeneralInformation:
Students are referred to the “Yellow booklet”, which contains information on lectures, tests,
tutorialclasses,etc.Itmustbestudiedthoroughly:ifastudentfailstocomplywiththemodule
requirements contained in it (including the requirements w.r.t. tutorial class attendance), the
studentwillnotgainaccesstotheexamination,andthereforecannotpassthemodule.
Please note that you must ensure that you download a copy of the “Yellow booklet” from
SUNLearn.Pleaseaskyourlecturerifanythingisuncleartoyou.
LANGUAGEOFINSTRUCTION:
Forthismodulewhereitisreasonablypracticableandpedagogicallysoundtohavemorethanone
classgroup,thefollowingapplies:
•
ThereareseparatelecturesinAfrikaansandEnglish.
•
Learningopportunities,suchasgroupwork,assignments,tutorialsandpracticalsinvolving
students from both language groups are utilised to promote integration within
programmes.
•
Students are supported in Afrikaans and English during a combination of appropriate,
facilitated learning opportunities (e.g. consultations during office hours or scheduled
tutorialsandpracticals).
PRESCRIBEDTEXTBOOK:
Parkin,M.2015.Microeconomics.12thedition.GlobalEdition.PearsonHigherEducation.
ORParkin,M.2014.Microeconomics.11thedition.GlobalEdition.PearsonHigherEducation.
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INTRODUCTIONTOECONOMICS
ECONOMICS:THESCIENCEOFSCARCITY
(Pleasenotethattheoutlinebelowmerelycontainsthemainpointswithineachsectionofthemoduleanddoes
notnecessarilyindicatealltopics.Deviationsandadditionsmaybeannouncedduringlectures.)
1. IntroductiontoEconomics
(Chapter1;Appendix)
• WhatisEconomics?
• DistinguishbetweenMicroeconomicsandMacroeconomics
• BigquestionsinEconomics
• Economicwayofthinking
• Economicsassocialscience
2. Theeconomicproblem (Chapter2)
• Productionpossibilitiesandopportunitycost
• Usingresourcesefficiently
• Economicgrowth
• Economiccoordination
MICROECONOMICS
DEMANDANDSUPPLY:HOWDOMARKETSWORK?
3. Demandandsupply
(Chapter3)
• Marketsandprices
• Demand
• Supply
• Marketequilibrium
• Changesindemandandsupply
4. Elasticity
(Chapter4)
• Priceelasticityofdemand
• Incomeelasticityofdemand,crosspriceelasticityofdemand
• Priceelasticityofsupply
5. Efficiencyandequity
(Chapter5)
• Resourceallocationmethods
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•
•
•
•
Demandandmarginalbenefit
Supplyandmarginalcost
Isthecompetitivemarketefficient?
Isthecompetitivemarketfair?
6. Governmentactionsinmarkets
(Chapter6)
• Priceceilings
• Pricefloors
• Taxes
7. Consumerchoicetheory
(Chapter8and9)
• Utilityanddemand
• Consumptionpossibilities
• Preferencesandindifferencecurves
• Predictingconsumerbehaviour
THECOSTOFPRODUCTIONANDMARKETSTRUCTURES
8. Productionandcosts
(Chapters10and11)
• Organisingproduction
• Shortrunversuslongrun
• Short-runcosts
• Long-runcosts
9. Perfectcompetition
(Chapter12)
• Whatisperfectcompetition?
• Afirm’sdecision-makinginperfectcompetition
• Output,pricesandprofitinperfectcompetition
• Changesintastesandimprovedtechnology
• Competitionandefficiency
10. Monopoly
(Chapter13)
• Marketpower
• Monopoly’soutputandpricedecisions
• Comparemonopolyandperfectcompetition
• Pricediscrimination
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11. Monopolisticcompetition
(Chapter14)
• Whatismonopolisticcompetition?
• Priceandoutputinmonopolisticcompetition
• Productdevelopmentandmarketing
12. Oligopolyandactionagainstmisuseofmarketpower
(Chapters10,13,14and15,Additionalnotes)
MARKETFAILURES
13. PublicchoicesandPublicGoods
(Chapter16)
• Classificationofgoodsandresources
• Providingpublicgoods
14. EconomicsoftheEnvironmentandMixedPublicGoods(Education)
(Chapter17)
• Negativeexternalities
• Positiveexternalities
FACTORMARKETS
15. Thelabourmarketasanexample
(Chapter18)
• Thedemandforafactorofproduction
• Labourmarkets
• Marketpowerinlabourmarkets
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