Office: Landis 12. Office Hrs.: T,Th 2-3:30 email: bellinge +by appt.

GOALS OF THE COURSE:
 

Introductory microeconomics is the first required course for a major or minor in economics, or a major in international business and management. It is a recommended course for any interdisciplinary major which may include additional economics courses, including environmental studies or science, international studies, or policy studies. This course will introduce you to the subject matter of microeconomics, how economists think about various issues, and the historical basis of economic thought and our modern economy. The primary goal of the course is to provide the theoretical tools you will need to understand the microeconomic aspects of any relevant economic or social issue.

Learning economics is quite different from learning most other social sciences. Economics is in some ways a typical social science, in that it is concerned with human behavior, social issues, and public policy. It is atypical, however, in its reliance on mathematical models as a fundamental part of the theory and its applications. The typical economics issue is analyzed through the use of a theoretical model, which provides predictions of the effects of particular actions. For example, the recent increase in the minimum wage has effects on employment, the income of low-wage workers, the level of poverty, and the level of production in the U.S. economy. Simple predictions of the economic effects of this law can be made by using model of the labor market which involves supply and demand.

This emphasis also affects examinations and homework. While essays are sometimes important components of homework and exams, the more typical question will be a type of story problem. You are given a situation and some information. You must then choose the right model to use in formulating your analysis, and must then use graphs or algebra to formulate an answer. The level of mathematics is not high, involving relatively simple 2 dimensional graphs and algebraic formulas. If you are rusty, don't panic, since you will have plenty of practice and plenty of help. However, it won't be enough to read the assignments and study for the tests. In order to be able to apply the theories you will be learning, you must do AND UNDERSTAND the homework assignments and work assigned for class. If you have questions, PLEASE don't procrastinate. Note your questions and ask me or the T.A.'s as soon as possible. While I have scheduled office hours, feel free to call anytime for an appointment, or ask questions in class. Since some of our work will be assigned in teams, your teammates might be another good source of advice. I also recommend study groups aside from the teams if you feel more comfortable choosing your own friends to study with.

The goals of the course extend beyond simply learning microeconomics. In a broader sense, the goal of a college education is to prepare you for the day when you will become fully independent, productive human beings. For most of you this day is still a few years away, but the skills you need to succeed in the world of work take time to develop and refine. These skills include the "three R's", but also include the ability to think critically and creatively about difficult issues, and to work productively in groups. This course will provide some chance to develop in all of these areas.

TEXTS:

Michael Parkin, Microeconomics, 4^th Ed. This is an unusually well-written text which provides a strong balance between basic theoretical concepts and real world applications.

Mark Rush, Study Guide for Microeconomics by Michael Parkin, 4^th Ed, The study guide provides a resource for the practice and application of the principles learned through the text and classroom presentations. This is a crucial resource for reinforcing the quantitative reasoning and application of concepts so fundamental in economics. The multiple choice review for each chapter will be a valuable tool for exam preparation.

Readings packet: a selection of readings concerning history and current issues.
 

EVALUATION CRITERIA:

This course will be evaluated primarily on the basis of examinations and regular homework assignments. There will be three hourly examinations given on February , March , and April. A cumulative final exam will be held on Saturday, December 19 at 2 P.M. Early flights or rides are NOT valid excuses, so don't plan on leaving early! The hourly exams will be worth a maximum of 100 points while the final will be worth 125 to 140 points. Exams may be curved to a median grade of C+ to B- if the average scores are lower than that level. All exams will involve a mixed format, combining multiple choice questions for a broad overview with story problems and/or essays to test your ability to apply the models and concepts.

Homework is a very important part of the course. You can expect a few homework problems for nearly every class. Most homework assignments will be individually graded. Others will be assigned to teams of 4 to 5 individuals. Homework will be worth somewhere between 100 and 125 total points, or at least as much as one hourly exam. You are expected to do ALL homework, and to seek help from B.B., teammates, other classmates, or teaching assistants if you have questions.
 

COURSE OUTLINE AND READING ASSIGNMENTS: (subject to modification)

I. INTRODUCTION AND BASIC CONCEPTS

9/2 Introduction to the course, Some facts about the U.S. Economy

9/4 How economics works: theory, models, and mathematics:
Read: Parkin, Principles of Microeconomics (hereafter, Parkin), pp. 18-38.

9/7 What is economics about?: scarcity and other concepts. Read: Parkin, pp. 12-16, 41- 50.

9/9 Malthus and the Dynamics of Scarcity
Read: Buchholz, Chapter 3.

II. THE COMPETITIVE MARKET

9/11 The emergence of markets
Read: Heilbroner, The Making of Economic Society, pp. 42-60 (readings packet).

9/14 Adam Smith's "Invisible Hand"
Read: Parkin, pp. 2-3, Buchholz, Chapter 2.

9/16 The market I: Demand and Supply
Read: Parkin, pp. 61-77.

9/18 The market II: Equilibrium and shifts in the curves
Read: Parkin, pp. 78-88.

9/21 The Price Elasticity of Demand.
Read: Parkin, pp. 91-99.

9/23 Other elasticities, and some cases.
Read: Parkin, pp. 100-108.

9/25 Markets and public policy: The Minimum Wage
Read: Parkin, pp. 132-134; "Minimum Wage vs. Supply and Demand," Wall St. Journal, 4/24/96; "New Minimum Wage Makes Few Waves," Wall St. Journal, 11/20/96; "While Congress Jousts Over Minimum Wage, Some People Ignore It," Wall St. Journal, 5/20/96.

9/28 Specialization, Exchange, and Trade
Read: Buchholz, pp. 62-67; Parkin, pp. 51-53; handout.

9/30 More on Trade, Review

10/2 EXAM I

10/5 Trade Restrictions: the Controversy
Read: Lipsey and Courant, Microeconomics, pp. 723-728; Lee, "Happily Never NAFTA,'' Real World Micro, 5^th Ed, p. 121-124; Blinder, Hard Heads, Soft Hearts, pp. 109-125; Cooper, "Experts' View of Nafta's Economic Impact: It's a Wash," Wall St. Journal, 6/17/97.

III. THE RATIONAL CONSUMER

10/7 The First View of the Consumer: "Utility" and utility maximization.
Read: Buchholz, pp. 88-92; Parkin, pp. 150-166.

10/9 The Second View of the Consumer, and a group project.
Read: Parkin, pp. 166-170, handout.
 

10/12 The Third View of the Consumer : Indifference curves and budget lines
Read: Parkin, pp. 173-182.

10/14 Indifference curve analysis II: maximizing utility and applications.
Read: Handout.

Fall Pause

IV. THE FIRM AND INDUSTRIAL PRODUCTION

10/19 The Industrial Revolution: Causes and Effects
Read: Heilbroner, The Making of Economic Society, pp. 69-91.

10/21 Marx and the Critique of Capitalism
Read: Buchholz, Chapter 6.

10/23 EXAM II

10/26 Business Decisions in the Real World
Read: "Sam Walton in His Own Words," Fortune, June 29,1992, pp. 98-106; Call It Dumbsizing, Why Some Companies Regret Cost Cutting," Wall St. Journal, 5/14/96; "Many Firms See Gains of Cost-Cutting Over, Push to Lift Revenues," Wall St. Journal, 7/5/96.

10/28 Firms and Profits
Read: Parkin, pp. 191-196, 200-210

10/30 Profit Maximization
Read: Parkin, pp. 240-244, Handout.

11/2 More Detail on Production Decisions: Short Run Productivity and Costs
Read: Parkin, pp. 214-223.

11/4 A Production Experiment

11/6 Short Run Profit maximization: The Shut Down Point and Visualizing Profit:
Read: Parkin, pp. 245-249 (top).

11/9 Long Run Costs and Economies of Scale
Read: Parkin, pp. 204-207, 224-230.

11/11 The Long Run Operation of Markets
Read: Parkin, pp. 249-255.

11/13 The Basic Model of Monopoly
Read: Parkin, pp. 262-269.

11/16 Monopoly II: Cases and Policy Issues
Read: Parkin, pp. 420-423; Randall Stross, "Heaven's Gates" U.S. News and World Report, v. 121, No. 21 (November 25, 1996); Eric Schmidt, "The Struggle for Bill Gates's Soul," U.S. News and World Report, v. 121, No. 21 (November 25, 1996), pp. 69, 71; Laurence Zukerman, "How the Antitrust Wars Wax and Wane", New York Times, 4/11/98

11/18 Catch-up and Review

11/20 more review

11/23 Exam III.

VI. THE BENEFITS AND COSTS OF GOVERNMENT

11/25 Video and discussion of a recent policy issue.

11/30 Efficiency Concepts and the Competitive Market
Read: Parkin, pp.112-121, 256-259, 334-337(economic rent and opportunity cost)

12/2 Market Imperfections: A Case for Government Involvement in Markets
Read: Parkin, pp. 389-390, 275-279

12/4 The Inefficiency of Taxes: A Case Against Government Involvement in Markets.
Read: Parkin, pp. 398-403.

12/7 Externalities, Pollution, and Environmental Policy
Read: Parkin, pp. 384-385, 429-438.

12/9 environmental policy debate
Read: Alan Blinder, Hard Heads and Soft Hearts, p. 138-145, 147-154; R. Ginsburg, "Playing With Fire", Real World Micro, p. 29-31.

12/11 Catch-Up and Review

FINAL EXAM, SATURDAY, DECEMBER 19, at 9:00 A.M.