Download ECON 2010-020 Principles of Microeconomics

PRINCIPLES OF MICROECONOMICS (ECON 2010-020)
Department of Economics, University of Colorado
Fall, 2005
M,W,F: 11:00-11:50 am,
Room: RAMY C250
Professor: Charles de Bartolome
Office hours: M 9:15-10:15 am, Tu 10-11am,
Thurs 1:30 - 2:30 pm
Office: Econ 203.
e-mail: [email protected]
Recitation instructor:
Recitation place:
Recitation time:
Office hours:
Office:
Textbook:
Mankiw, N. Gregory, (2004), Principles of Microeconomics (3rd Edition).
Thomson Southwestern Publishers.
“Clickers”
Each student must buy a radio-frequency “clicker” which is purchased with your
textbook at the University of Colorado bookstore. The class will use the clickers to
promote faculty-student interaction.
Course description: Microeconomics is about what goods get produced and at what prices they
are sold. 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 decisions. In addition, the course
considers such questions as: What is competition? Why is competition socially desirable? Is
competition likely? How do firms behave in the absence of competition?
Course Level: 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.
Course assignments and WebCT: all course assignments and some lecture notes are posted on
the course WebCT page located at: http://webct.colorado.edu .
In the past, some students have had difficulty in downloading some of the pdf files posted on
WebCT . ITS advises that this is due to the large file sizes. ITS recommends that you open the
Adobe Acrobat Reader. Then click as: Edit > Preferences> General > Options and uncheck
“Allow Fast Web View”.
Please note that six pages of each Adobe Acrobat file can be printed on a single sheet by clicking
as: Print >Properties > layout > Pages per sheet.
Grading: There are two midterms, a final exam, two experiments and one data collection
exercise. The grade of the student (before any adjustment for non-attendance) will be determined
as: 30% First Midterm, 30% Second Midterm, 30% Final, and 10% Experiments.
The data collection exercise is Pass/Fail. If an attempt at the data collection exercise is not
handed in by the date due, your course score will be lowered 1% . If the exercise is not passed by
the day of the exam, you will be graded Fail. If you subsequently pass the exercise within 6
months after the final, your grade will be changed to the grade earned in the midterms, the final
and the experiment. If you do not pass the exercise within 6 months after the final, your grade
will remain permanently as Fail.
Attendance at class: Yogi Berra once remarked: "90% of life is just turning up". The best way to
learn the material is to attend class. Reading the lecture notes posted on the web is not a good
substitute for attendance. Attendance at class is therefore required.
Non-attendance at class will be reflected in your grade. Your final score - calculated as explained
above under “Grading” - is out of 100 points. For each absence from class after your third
absence, your score will be reduced by .5 point. For example, your score from the exams and
experiments is 76 (out of 100) and in total you missed 6 classes. Your final score which I will
use to calculate your grade is 76-3(.5) = 74.5.
Administrative Drop: Because attendance is important and is expected, I will drop from the class
any student who neither attends the first three classes of the term nor gets special permission
from me for his/her absence.
Recitations: Recitations start w/c 29 August. Attendance at recitation is required.
Before the recitation, you must attempt to work through the weekly problem set which is posted
on WebCT. The recitation will then review the problem set. At the recitation, you are required to
hand in your answers to the problem-set. If you consistently 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:
Tuesday, 27 Sept
in CHEM 140
SECOND MIDTERM: Tuesday, 1 November
in CHEM 140
The final exam will be held as:
FINAL:
Monday, 12 December
in RAMY C250
7:00 - 9:00 p.m.
7:00 - 9:00 p.m.
1:30 - 4:00 p.m.
You must bring a blue-book to each exam.
Failure to be present at an exam: If you fail to be present at an exam (unless you are ill and have
a medical note from your doctor, or unless before the exam I have granted you permission to
miss the exam), you will earn a score of 0 in the exam.
Students with Special Needs: If you qualify for accommodations because of a disability, please
submit to me a letter from Disability Services (DS) in a timely manner so that your needs
may be addressed. DS determines accommodations based on documented disabilities (303-4928671, Willard 322 or www.colorado.edu/sacs/disabilityservices).
Sexual Harassment Policy: The University of Colorado Policy on Sexual Harassment applies to
all students, staff and faculty. Sexual harassment is unwelcome sexual attention. It can involve
intimidation, threats, coercion, or promises or create an environment that is hostile or offensive.
Harassment may occur between members of the same or opposite gender and between any
combination of members in the campus community: students, faculty, staff, and administrators.
Harassment can occur anywhere on campus, including the classroom, the workplace, or a
residence hall. Any student, staff or faculty member who believes s/he has been sexually
harassed should contact the Office of Sexual Harassment (OSH) at 303-492-2127 or the Office
of Judicial Affairs at 303-492-5550. Information about the OSH and the campus resources
available to assist individuals who believe they have been sexually harassed can be obtained at:
http://www.colorado.edu/sexualharassment/
Religious Observances: Campus policy regarding religious observances requires that faculty
make every effort to reasonably and fairly deal with all students who, because of religious
obligations, have conflicts with scheduled exams, assignments or required attendance. In this
class, please let me know in a timely manner if one of the exam dates falls on a religious holiday
you intend to observe and I will arrange for you to take a make-up. See policy details at
http://www.colorado.edu/policies/fac_relig.html
Classroom Behavior: Students and faculty each have responsibility for maintaining an
appropriate learning environment. Students who fail to adhere to behavioral standards may be
subject to discipline. Faculty have the professional responsibility to treat students with
understanding, dignity and respect, to guide classroom discussion and to set reasonable limits on
the manner in which students express opinions. See policies at
http://www.colorado.edu/policies/classbehavior.html and at
http://www.colorado.edu/studentaffairs/judicialaffairs/code.html#student_code
Academic Integrity: All students of the University of Colorado at Boulder are responsible for
knowing and adhering to the academic integrity policy of this institution. Violations of this
policy may include: cheating, plagiarism, aid of academic dishonesty, fabrication, lying, bribery,
and threatening behavior. All incidents of academic misconduct shall be reported to the Honor
Code Council ([email protected]; 303-725-2273). Students who are found to be in violation
of the academic integrity policy will be subject to both academic sanctions from the faculty
member and non-academic sanctions (including but not limited to university probation,
suspension, or expulsion). In particular: papers submitted by any student, written in part or in
whole by someone other than that student, shall be considered to constitute fraud under the
University Honor Code, and result in the assignment of an “F” for the entire course. Additional
information on the Honor Code can be found at
http://www.colorado.edu/policies/honor.html and at
http://www.colorado.edu/academics/honorcode/
Course outline: shown overleaf is a list of topics to be covered and likely dates.
Date
Topic
Chapter
22, 24 Aug
INTRODUCTION
Eleven Big Ideas
Scarcity.
Trade-off.
Opportunity cost.
Economics as a social science.
1
26 Aug
THINKING LIKE AN ECONOMIST
Positive and normative.
Circular flow model.
Production possibility model.
2
29, 31 Aug
GAINS FROM TRADE
Comparative advantage.
Specialization.
Mutual gains from trade.
3
2 Sept
DETERMINATION OF THE MARKET PRICE
Competitive markets.
Individual and market demand curves.
5 Sept
No class (Labor Day)
7, 9 Sept
DETERMINATION OF THE MARKET PRICE (cont)
Individual and market supply curves.
Equilibrium: Law of Supply and Demand.
4
(pp. 71-77)
12 Sept
CHANGES IN MARKET CONDITIONS
Shifts in the demand curve: substitutes and complements.
Shifts in the supply curve.
4
(pp. 77-84)
14, 16 Sept
INTERFERING WITH THE MARKET MECHANISM
Coordinating role of prices.
Inelastic = steep, Elastic = flat.
Price-ceiling and price-floors.
4
(pp. 63-71)
6 (pp. 113-123)
19, 21, 23, 26
Sept
HOUSEHOLD DECISION-MAKING AND SOCIETAL GAINS
7
Benefit = willingness to pay.
(pp. 137-142)
Consumer surplus
and pp. 453-455
Scarcity: budget line.
Decision-making: marginal changes.
Marginal benefit.
Purchase decision rule: “marginal benefit = price” rule
Consumer demand curve = marginal benefit curve.
27 Sept
FIRST MIDTERM (7:00 - 9:00pm in CHEM 140 )
29 Sept
No class
30 Sept
FIRM DECISION-MAKING AND SOCIETAL GAINS
Marginal changes
Marginal cost
Production decision rule: “marginal cost = price” rule
Operating profit (producer surplus), marginal operating profit.
7
(pp. 143-147)
3, 5, 7 Oct
EVALUATING THE MARKET OUTCOME
Market efficiency: First Fundamental Welfare Theory.
Limitations: equity, market power, externalities.
7
(pp. 147-155)
10, 12 Oct
APPLICATION OF MARKET EFFICIENCY
International trade.
14 Oct
No class (Fall Break)
17,19,21,24 Oct
FIRMS: COSTS OF PRODUCTION
Distinguishing accounting and economic costs.
Production function, diminishing marginal product.
Total cost, increasing marginal cost.
Fixed and Variable Costs.
Average and Marginal Costs.
FIRMS: PROFIT MAXIMIZATION
Profit maximization
Marginal revenue.
Entry
9 (pp.175-182, 187-195)
13 (pp. 267-280)
26, 28, 31 Oct
FIRM DECISION-MAKING: COMPETITIVE FIRM
14 (pp. 289-300)
Competitive firm’s demand curve is horizontal.
Short-run and long-run.
Presence rule of existing firm:
“produce if price >= min average variable cost" rule.
Presence rule of new firm:
"enter if price >= min average total cost" rule
Level rule: "produce till marginal cost = price"
Firm supply curve in short-run and long-run.
1 Nov
SECOND MIDTERM (7:00 - 9:00 pm in CHEM 140 )
2 Nov
No class
5 Nov
FIRM DECISION-MAKING: COMPETITIVE FIRM (cont)
7, 9, 11 Nov
COMPETITIVE MARKETS
Short-run market supply curve is upward sloping.
Long-run market supply curve is horizontal.
In long-run: price = min average cost.
Market dynamics in the short-run and in the long-run.
14 (pp. 301-304)
14, 16, 18 Nov
MONOPOLY
Monopoly demand curve is downward sloping.
Monopoly: marginal revenue < price.
Monopoly output choice:
“marginal revenue = marginal cost” rule.
Natural process of innovation, profits and entry.
Inefficiency: deadweight loss.
Public policy discussion.
15 (pp. 313-333)
21, 23 Nov
MARKET FAILURE: EXTERNALITIES
Divergence of group and individual incentives.
24 Nov
No classes (Thanksgiving Break)
28 Nov
MARKET FAILURE: EXTERNALITIES (cont.)
Public policy discussion.
30 Nov, 2 Dec
EXPERIMENT 2 (in class)
.
10
(pp. 203-212)
10
(pp. 212-220)
5,7 Dec
MARKET FAILURE: EXTERNALITIES (cont)
MARKET FAILURE: PUBLIC GOODS
12 Dec
FINAL EXAM (1:30 - 4:00 pm in RAMY C250)
11