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University of Vermont Department of Economics Course Outline EC 12 Time: TWTH 9:00-12:45 A.M. Room: 300 Lafayette Summer 2015 Professor Catalina Vizcarra 332 Old Mill Phone Number: 6-0694 Office Hours: by appointment [email protected] Principles of Microeconomics The course is an introduction to the fundamental principles of the market economy. It examines the decision-making processes of individuals and firms and how they interact in regulated and unregulated markets. The course provides the basic tools required for 100-level courses in economics. Course Textbook Frank and Bernanke, “Principles of Microeconomics,” 5th edition. Course Evaluation Your grade will be based on four in class exams (25% each) Exam Dates: Thursdays How to Contact Me: The best way to reach me is by email during business hours. Please note that I will be communicating all important course announcements in class. Additionally, on the course’s Blackboard site you will find occasional announcements, practice tests, answer keys, and other course materials. Classroom Rules Class attendance is mandatory. Students are responsible for all the material discussed during lecture. You may use your computer in class. However, all uses for your computer during class other than class related work are strictly prohibited. If I learn that you are using your computer for any other purposes you will be asked to power it down or leave the classroom. Additional Policies: Please review the following codes of conduct: Code of Student Rights and Responsibilities http://www.uvm.edu/~uvmppq/ppq/student/studentcode.pdf Code of Academic Integrity http://www.uv.edu/~uvmppq/ppq/student/acadintegrity.pdf Note: It is the University policy to allow students to honor their religious holidays. Students should submit in writing by the end of the second full week of classes their documented religious holiday schedule for the semester so as to arrange for any necessary make up work in advance. Tentative Course Outline 1. Introduction. Thinking like an economist: The cost-benefit principle, opportunity cost, decision pitfalls. Economics as a social science. Chapter 1 (Also, review the appendix to Chapter 1: Graphs in Economics). 2. Comparative Advantage. Comparative and absolute advantages, the production possibilities curve, the gains from trade. Chapter 2. 3. Demand and Supply fundamentals. Demand, supply and market equilibrium, predicting changes in prices and quantities, efficiency. Chapter 3. 2 4. Elasticity. Price elasticity of demand, elasticity and total expenditure, income elasticity and cross-price elasticity of demand, price elasticity of supply. Chapter 4. 5. Demand. The law of demand, the rational spending rule, individual and market demand curves, consumer surplus. Chapter 5. 6. Perfectly Competitive Supply. The importance of opportunity cost, profit-maximizing firms in perfectly competitive markets, some important costs concepts, determinants of supply, producer surplus. Chapter 6. 7. Efficiency Exchange and the Invisible Hand. The invisible hand theory, economic rent v. economic profit, social optimum, efficiency, the costs of preventing price adjustments. Chapter 7. 8. Monopoly, Oligopoly and Monopolistic Competition. Imperfect competition, sources of market power, profit maximization for the monopolist, price discrimination. Chapter 8. 9. Games and Strategic Behavior. Using game theory to analyze strategic decisions, Nash equilibrium, the prisoner’s dilemma, games in which timing matters, commitment problems. Chapter 9. 10. Externalities and Property Rights. External costs and benefits, The Coase Theorem, Remedies for externalities, property rights and the tragedy of the commons. Chapter 10. 11. The Economics of Information. How the middleman adds value, the optimal amount of information, asymmetric information, the credibility problem in trading. Chapter 11. 12. Public Goods and Tax Policy (if time permits). Chapter 14. 3