ECONOMICS 1101 (formerly ECON 2201) PRINCIPLES OF MICROECONOMICS

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1 Department of Policy Studies ECONOMICS 1101 (formerly ECON 2201) PRINCIPLES OF MICROECONOMICS Instructor: VARIES ACCORDING TO SCHEDULE & SEMESTER Office: Phone: (office) Office Hours: Or by appointment if the above hours are inconvenient. Code Time Day Room Lectures: Labs: Labs must be attended. Times will be announced during the first week of classes. Textbooks: Ragan, Christopher T.S & Lipsey, Richard G., Microeconomics (Required) (11th Edition), Addison-Wesley Publishers Limited, Dickson Paul T. & Grant, E. Kenneth, Study Guide, Microeconomics 11 th Canadian Edition. Addison-Wesley Publishers Limited, Course Learning Outcomes: This is a first level course that assumes no previous formal training in economics. Upon completion, students should be able to use analytical skills, including algebraic and graphical analysis to evaluate economic problems and proposed solutions using the theories discussed in class. In addition, students will have a basic competency in accessing, processing, and inputting data and electronic mail relevant to course requirements. Students will be prepared to apply these skills to advanced courses in economics, business, and other social sciences. 1

2 University Learning Outcomes: An education at Mount Royal University ensures that upon graduation with a diploma or degree you will gain competencies in the following six areas: communications, computer literacy, thinking skills, ethical reasoning, information retrieval and evaluation, and group effectiveness. It is intended and expected that each course a student takes at the university will develop at least one of these competencies. It is not intended that all competencies should be included in each course. Building upon this principle, each program - by combining a carefully integrated sequence of appropriate courses -will ensure that upon completion the student will have acquired the desired level of competency in all the specified areas. The following list of outcomes is provided in order to orient and assist the student toward his/her process of academic advancement. For introductory microeconomic theory: thinking skills, communication skills, information retrieval and evaluation skills, and computer literacy. While ethical reasoning and group effectiveness may be present they are not central themes. The introductory courses in microeconomic theory have developed specific learning objectives that are measurable in terms of demonstrated ability to analytically process mathematical and graphical analysis and to present, explain and criticize formal economic models. These specific learning objectives are contained and posted in the TLM software that students will use in the computer lab portion of the course. Objectives: This course will introduce the student to the neo-classical micro-economic model of the economy. The student should be able to evaluate micro-economic problems and analyze the possible solutions using the following tools: Supply-Demand Theory, Cost Analysis, Industrial Structure Theory and Distribution Theory. Method: Material will be presented in a standard lecture-discussion form, supplemented with the computer labs. It is strongly recommended that students read the relevant course material before the lecture. Labs: Students will be given a series of multiple choice and true and false self tests in the lab. The self tests are based on a mastery of learning principle and although students will receive no credit toward their final grade for these self tests, they will not be permitted to do the assignments until these self tests are completed at a satisfactory level. The laboratories will be conducted in Room EA2065 and there will be supervision for part of the week by the Instructional Assistant. Because the lab is conducted on a drop-in basis it is important to acquaint yourself with the following rules and procedures concerning the lab. Students wishing evening or weekend access to the computer lab may purchase an 'access card' from the parking office located near the West Gate of the University. 2

3 Students will be held personally responsible for any messages or assignments placed on the system under their account. Do not let other people know your 'password' and be sure to change your password frequently. Students who do not comply with these simple rules will be removed from the computer managed instruction portion of the course and will be awarded an 'F' grade for the course as a whole. They will also be subject to the provisions of such disciplinary measures as apply under academic and non-academic conduct regulations at the University. Evaluation: Assignments: Students will be given three assignments to be completed in the computer lab. Exams: There will be 2 mid-term tests, 3 quizzes and one final exam. Time: The dates of the assignments and the tests will be announced later during the course; the quizzes dates will not; the final exam will be scheduled by the Registrar's office and held during exam week. Format: Both midterm tests and the final exam will consist of two sections: a multiple choice section and a problem/essay topic(s)/short answer questions section. Content: Midterm tests will cover only that portion of the material that has not been tested before. The content of each test is tentatively indicated on the course outline. The ultimate content (confirmation or changes) will be announced in class later on. The final exam is comprehensive and covers the whole material according to the course outline. Mark Determination: Each piece of work will be assigned a percentage grade (the corresponding letter grade conversion is listed below). The final grade will be found by calculating the weighted average for the assignments and exams. The weighting scheme is: 3 Assignments 15% (5% each) 3 quizzes 15% (5% each) 1st Midterm Test 20% 2nd Midterm Test 20% Final Exam 30% 100% NOTE: I do reserve the right to move your final mark up from what it otherwise would be (in its original, crude magnitude) in recognition of your special effort, diligence or contribution to the discussion; or down - in case of a dramatic lack of the above (including poor attendance, late-coming, misbehaviour etc). In both cases my margin of discretion will be within 3 percentage points. 3

4 However, in case of disruptive behaviour or notorious late-coming (in both cases according to my standards), students may be removed from class or from the course. Percentage - letter grade correlation: = A = B = C = A = B = D = A = C = D = B = C 0-49 = F Attendance: There are no marks for attendance, but it is mandatory (also see the Note above). Any student who misses more than 3 hours of class time (including labs), without a valid and certified reason may be withdrawn by the instructor, or see her\his final grade reduced to as low as F. Students who miss 2 or more weeks of classes irrespective of the reason will be advised to withdraw from the course. Students who miss classes are responsible for catching up on the material covered and any other information offered by the instructor during those classes. Students who are late are responsible for making sure that they are marked as late rather than absent. NOTES: 1. The date of the final exam is set by the Registrar's Office and held during exam period. You must be available to write the final exam on any day and at any time (this may be during the day, at night or on a weekend). If this causes the student difficulty with arranging time off from place of employment or travel plans, the student should make arrangements early in the semester to ensure that attendance at the exam will be possible. If the student cannot arrange attendance then withdrawal is advised. 2. Students need not receive a passing grade on any particular component in order to pass the course, yet all the components must be complete (see next point) unless an individual exemption has been granted to the student. Students should be aware that no "make-up" tests or assignments will be offered. Any student who misses the test due to illness must produce, immediately upon return to school, a doctor s certificate stating the nature of the problem and specifying the time that the student has been considered unfit to attend classes. Only then the instructor may, solely at his discretion, move the weighting assigned to that specific test to another test or exam. 3. Late completion of assignments (unless a prolonged illness is documented) will be docked at 20% per day. 4. Students should make themselves familiar with the university rules for writing examinations (which will be enforced). Especially rules 6, 8, and Students are advised to read and familiarize themselves with pages of the University Calendar. Please note that the last day to withdraw with a grade of W is *****. Content: The following is the list of topics and the sequence in which these topics are expected to be discussed. 4

5 The content is binding i.e. students will be responsible for all material listed on the course outline and will be tested on it whether or not it is lectured on unless the instructor specifically excludes part of it. The same rule applies to the CORE content of this course (see your computer map in the lab). 5

6 TOPIC CONCEPTS READING 1. Introduction 1) About the subject Ch. 2 2) Introduction to the Lab 3) Math Review 4) Economics Toolbox 2. Economic Issues The Problem of Scarcity Ch. 1 and Concepts Scarcity and Choice Economics Defined Production Possibility Curve Opportunity Cost The Fundamental Economic Questions Globalization Economic systems defined Capitalism Socialism Mixed Characteristics of all modern systems Governmental Economic Policies 3. An Overview of Demand defined Ch. 3 The Market Supply defined Economy Market equilibrium Rationing function of prices Comparative Statics (the four laws ) 4. Elasticity Price Elasticity of Demand Ch. 4 Formulae App. to Ch. 4 Degrees and Interpretation Determinants of Elasticity Income & Cross Elasticity Elasticity of Supply Formulae Determinants and degrees Economic Time Periods Demand & Price Regulation, Price fixing Ch. 5 Supply price ceiling, price floor In Action Cases: Tax incidence Agriculture ASSIGNMENT I TEST I

7 TOPIC CONCEPTS READING 6. Consumer Theory Utility Theory Ch.6 of Demand Law of Diminishing Marginal Utility Assumptions of Consumer choice Utility maximization rule Marginal Utility and Demand 7. The Firm and The meaning of cost Ch. 7 The Cost of Economic Costs App. to Ch. 7 Production: Normal profit vs. Economic Profit The Short-Run Economic time period revisited Production Costs: the short-run The law of diminishing returns 8. Pure (Perfect) Pure Competition defined Ch. 9 Competition Price and output determination pp Industry & Individual firm Revenue calculation Optimization/Profit Maximization/Equilibrium The short Run: Two approaches TR - TC MR - MC Three cases: profit maximization loss minimization close-down case 9. The Cost of Production Costs: The long run Ch. 8 Production: Long-Run Cost Minimization The Long-Run Economies and Diseconomies of Scale (increasing and decreasing returns to scale) Constant Returns to Scale The Very Long Run (Pure Competition cont d) Optimization/Profit Ch. 9. maximization/equilibrium pp the Long; Run: individual firm industry Increasing/decreasing/constant cost industry productive efficiency Ch. 12 allocative efficiency pp ASSIGNMENT II TEST II 7

8 TOPIC CONCEPTS READING 10. Pure Monopoly Pure Monopoly model (a single Ch. 10 Price model) Barriers to entry Price & output determination monopoly demand monopoly pricing Misconception re Monopoly Monopoly & Efficiency Ch. 12, pp Regulated Monopoly 11. Imperfect competition: Model - defined Ch. 11 A Monopolistic Price and output determination Competition Excess capacity Theory Non-price competition 12. Oligopoly Basic Characteristics Ch. 11 Origins Price & output determination : Strategic Behaviour Collusion Contestable markets 13. Market Failures Market Power Ch. 16 and Government Externalities Intervention Public Goods Asymmetric Information Moral Hazard Pollution Control Ch. 17 Government Regulation ASSIGNMENT III FINAL EXAM (2 hrs.) 8