American University
Department of Economics
ECON-200-001-Spring 2009
Mon & Thurs 12:45-2:00 pm
Ward 1
Walter G. Park, Roper Hall 213
EMail: WGP@American.Edu
Office Hours: M 2-5:30 & Th 10 am-12:30 pm
Introduction to Microeconomics (Econ-200-001)
(1) General Education Requirements:
ECON 200G Microeconomics (Section 6) is one of the second-level courses in Curricular Area 4 (Social
Institutions and Behavior), Cluster 1 (Institutions) in American University's General Education Program.
It is the second of a two-course sequence. For students who have taken ECON 100G Macroeconomics,
this course satisfies the General Education requirement for Social Institutions and Behavior.
(2) Course Objectives:
This course presents an economic approach to thinking about how and why social, economic, and political
systems work the way they work. While macroeconomics focuses on the workings of the economy as a
whole, microeconomics focuses on the working details within an economy (e.g. consumer behavior, firm
behavior, and government behavior). More specifically, the core issue in microeconomics is resource
allocation; i.e., how should society’s limited or scarce resources be allocated among alternative uses to
satisfy human wants. In a market economy, market forces determine how resources are allocated; e.g.
goods are consumed by those most willing to pay for them and produced by those who can produce them
at least cost. But sometimes markets fail to allocate resources efficiently or equitably. This is where
public policy comes into play. How should policy authorities allocate resources? Do they in fact allocate
resources optimally, or does public intervention produce worse outcomes?
The two main objectives in this course are: (i) to develop a conceptual framework for thinking about
economic problems; (ii) to apply this framework to real-world events and policy issues. Examples of
economic applications include antitrust, drugs, crime and punishment, environment, education, health
care, organ shortages, marriage and family, child adoptions, poverty, income distribution, stocks and
bonds, biotechnology and agriculture, insurance markets, innovation, transportation, immigration,
international trade and economic development, and more.
This course should not only help students prepare for further study in economics but also complement
their other courses in political science, business, law, sociology, aerobics, and others. Microeconomics is
for everyone: from econ majors to B flat minors.
(3) Pre-requisites:
Must be trendy, humorous, energetic, and a citizen of at least one of the countries on Earth. Plus a high
school diploma or equivalent. It is also recommended that you take Introductory Macroeconomics (Econ100 or equivalent).
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(4) Required Texts and Materials:
i. Wheelan, Charles (2002), Naked Economics: Undressing the Dismal Science. W.W. Norton and Co.
ISBN 0-3933-2486-9.
ii. Levitt, S. and Dubner, S. (2005), Freakonomics, William Morrow & Co, ISBN 0-0607-3132-X.
iii. Krugman, P. and Wells, R. (2009), Microeconomics 2nd ed. Worth Publishers, integrated with
APLIA (an Online Workbook) ISBN 978-1429-22917-3
Two ways to obtain item iii.
Option #1. Purchase the textbook (new or used) at the Campus Bookstore. If you purchase a
new book, an access card to APLIA is included. If you purchase a (less expensive) used book,
you will need to purchase access to APLIA (from www.aplia.com) separately.
OR
Option #2. Purchase a subscription to APLIA directly (www.aplia.com) for $70. This includes
an electronic copy of the textbook. For an additional $50 plus shipping, APLIA will send you a
hardcopy of the textbook. (For cost-conscious students, choice #2 with the e-book option may
be the most attractive.)
iv. Supplemental Readings (electronic copies to be posted on Blackboard).
– If you purchase a new copy of the Krugman and Wells textbook, you will find that it is bundled with a
couple of items:
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Study Guide ISBN-13: 978-1-429-21756-9
Access to APLIA
Only APLIA is required; the Study Guide is optional and was provided to you at no extra charge by the
publisher for purchasing a new book. However, if you chose option #2 above or if you purchased a copy
of the Krugman and Wells textbook off-campus, you can access the textbook’s companion web site, in
lieu of the Study Guide and try their quizzes and other practice exercises. Register at:
http://bcs.worthpublishers.com/krugmanwellsmicro2/ (see left-hand side of the screen).
– Note that to access the course’s APLIA site, you will need the Course Key: TTSE-UDEV-4R98.
Instructions for accessing APLIA are posted on Blackboard (see under Course Information)
– Each of the course materials above plays an important role in the course. The Krugman & Wells
textbook illustrates the basic economic principles or foundations. APLIA provides exercises based on the
economic principles. The Wheelan (2002) and Levitt & Dubner (2005) books are non-technical and
provide everyday applications of economic ideas.
– For more light readings in economics, see the Appendix to this syllabus.
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(5) Course Evaluation:
Since the dawn of civilization, grades have been determined by class and social status. This semester,
however, grades will be determined from the following:
i.
ii.
iii.
iv.
2 Midterms (15% per midterm)
Final Exam
Problem Sets (online at www.Aplia.com)
Reaction Papers
Total:
30%
35%
20%
15%
100%
vi.
vii.
Optional: Service Learning for one extra credit (please see details below)
Bonus Points (please see details below):
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Attendance in Class (range: 0 to 3%)
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Attendance in Review Sessions (range: 0 to 5%)
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Relation to Kennedy, Biden, or Jackson (range: 3 - 5%) Program Suspended
– The 1st midterm will be held in class on Feb. 16th and the 2nd midterm on Mar. 26th. The final exam
is cumulative and will be held in class on Apr. 30th (11:20-1:50 pm). Books and dictionaries are not
permitted in exams (even if English is not your first language, e.g. U.S. Americans). Calculators are also
not permitted and are not even needed, though a bottle of Pepto-Bismol might be.
– Problem sets will be assigned approximately weekly. See Blackboard -> Assignments for a list of due
dates for these assignments. You will access and work on the problem sets directly at the APLIA web site
(go to www.aplia.com). The problem sets are designed to help you better understand the course material.
The problem sets must be completed and submitted for grading before the due date/time.
– The reaction paper assignments will have you critique the Levitt & Dubner and Wheelan readings.
Four reactions papers will be assigned during the semester. Each must be no more than 2 single-spaced
(typed) pages in length and be stapled. In each paper, you will survey the economic principles and
discuss the extent to which they shed light on real world situations. These assignments will also be
posted on Blackboard, along with some guidelines. The reaction papers must be submitted in hardcopy in
class only (to be collected at the end of class). The due dates for Reaction Papers #1, 2, 3, and 4 are Feb. 5,
Mar. 5, Apr. 2, and Apr. 20 respectively.
– Regular review sessions will be held throughout the semester. In a typical week, there will be several
review sessions to accommodate the schedules of almost everyone. Attendance at these sessions is
optional. However, you can earn bonus points by attending at least one review session per week. You are
welcome to attend more than one review session per week, but credit is given for attending that week only
(however many sessions you attended that week). Total bonus points equal k times 5%, where k = the
fraction of weekly review sessions you attended. For example, if we have 10 weeks of review sessions
and you were in attendance at 5 of those weeks, k = ½ and you will have 2.5% added to your final grade.
– Attendance will be taken randomly. Out of this random count, students who attended 100% of the
classes will get 3% added to their final grade. Students who attended at least 95% and 90% will receive
2% and 1% respectively added to their final grade. Those who attended below 90% will not receive a
bonus for attendance.
– Policy on missed assignments/exams: (1) No late assignments will be accepted and no make-up
exams will be given (except in the case of medical emergencies, such as an organ transplant or cosmetic
surgery). Furthermore, the due dates of assignments and dates of examinations are fixed and cannot be
changed due to any of the following reasons: bad hair day, personal travel plans (e.g. camping or ski trips),
obligations in other courses (such as term papers, exams, etc.), extracurricular activities, part-time or full-
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time job conflicts, and so forth. It is the students’ responsibility to plan their travel, leisure activities,
extracurricular affairs, job schedule, and their class schedules accordingly. There are high costs to
rescheduling exams or arranging make-up exams. Such arrangements can only be made for students with
extenuating circumstances or connections to the Governor of Illinois. (2) In the event that you have a
medical or family emergency, and you miss a midterm or a problem set, please provide full
documentation. Your missed assignment and/or midterm will be waived and your final grade will be prorated accordingly. Please fill out the waiver form on Blackboard -> Course Information by the due date
indicated. If you miss the final exam, however, a make-up exam will be arranged for you afterwards.
– Grade Scheme: A (93-100%), A- (85-92%), B+ (77-84%), B (73-76%), B-(70-72%), C+ (67-69%), C
(63-66%), C- (60-62%), D (50-59%), and F (0-49%).
– Standards of academic conduct are set forth in the University's Academic Integrity Code
(http://www.american.edu/academics/integrity/code.htm). By registering, you have acknowledged your
awareness of the Academic Integrity Code, and you are obliged to become familiar with your rights and
responsibilities as defined by the Code.
- Those interested in learning more about the economics major should consult:
http://www.american.edu/cas/econ/undergraduate/undergraduate.htm
Service Learning Option (an opportunity to earn 1 EXTRA CREDIT)
This course encourages the application of the knowledge and skills you will learn in class to real-life
issues and concerns. This teaching and learning strategy is commonly called “community-based
learning and research” or “service-learning.” In addition to deepening student learning, this hands-on
approach provides much-needed and appreciated support to nonprofit and community-based
organizations that are serving local communities and develops a partnership between the campus and
the city. It offers students an opportunity to explore the connections between the theoretical realm of
the classroom and the practical needs of the community.
AU’s Community Service Center (CSC), located in Mary Graydon 273, can help you explore how and
where to incorporate a service-learning project into this course. Office staff can help you identify
which DC-area organizations would be a good match for the topic or issue you are pursuing. They
have binders with information on hundreds of area nonprofits and handouts listing organizations
working on a range of issues (e.g. Housing and Homelessness Organizations, Race and Ethnicity,
Community Development, Environmental Issues, Food and Nutrition, Health, International and
Multicultural Issues, and others).
The Community Service-Learning Project (CSLP) extra credit option allows students to add an
additional credit to a class when you connect community work with an established three or four-credit
course by means of a project, product, or service. The CSLP entails 40 hours of service during the
course of the semester at one nonprofit site. At the end of the semester, the student participant will
submit a journal or portfolio of work (about 3 pages), reflecting upon the experience.
For more information about AU’s service-learning option, contact Marcy Fink Campos by email
(mfcampos@america.edu) or phone (Extension 7378). You can also stop by the Community Service
Center to talk with the Service-Learning Coordinator, see their resources, or go to their website at
http://www.american.edu/ocl/volunteer/sl/sl.html.
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(6) Course Outline:
The following is a tentative outline for the semester. The readings supplement the lectures, not vice versa.
See section 7 for tips on how to read the textbook.
Part I:
MARKET MECHANISMS & COMPETITIVE MARKETS
Dates:
Jan. 12
Topic
Economic Approach (Overview)
Background Readings
Wheelan (henceforth WH): Ch. 1
Levitt & Dubner (henceforth LD): Intro, Ch. 1
Krugman & Wells (henceforth KW): Ch. 1, 2A
Study Guide (henceforth SG): Ch. 1
Jan. 15, 22
Market Economy,
Cost-Benefit Analysis
KW: Chs. 1 and 9; SG: Ch. 9
WH: Ch. 2
Jan. 26
Comparative Advantage
KW: Chs. 2; SG: Ch. 2
Jan. 29, Feb. 2 Demand & Supply
KW: Chs. 3 and 5; SG: Ch. 3 and 5
Feb. 5, 9, 12
Consumer Theory (Elasticities,
Consumer Surplus, Marginal Utility)
KW: Chs. 4, 6, and 10
SG: Chs. 4, 6, and 10
Feb. 16
Midterm #1
Feb. 19, 23
Firm Theory (Finance: Stocks &
Bonds, Production, and Profits)
KW: Ch.12; SG: Ch. 12
WH: Ch. 7
Feb 26
Competitive Markets
KW: Ch. 13; SG: Ch. 13
Mar. 2, 5
Applications: Crime & Punishment,
Agriculture
LD: Chs. 3, 4
Supplemental Readings (see Blackboard)
Part II:
MARKET FAILURES & IMPERFECTLY COMPETITIVE MARKETS
Dates:
Mar. 16
Topic
Asymmetric Information
Background Readings
WH: Ch. 5; LD: Ch. 2;
KW: Ch. 21; SG: Ch. 21
Mar. 19 , 23
Monopoly, Antitrust
Monopolistic Competition
KW: Chs. 14 and 16
SG: Chs. 14 and 16
Mar. 26
Midterm #2
Mar. 30
Oligopoly and Game Theory
KW: Ch. 15; SG: Ch. 15
Supplemental Readings (see Blackboard)
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Part III:
PUBLIC POLICY ISSUES
Dates:
Apr. 2
Topic
Public Goods,
Public Choice
Background Readings
KW: Ch. 18; SG: Ch. 18
WH: Chs. 4, 8
Apr. 6, 9
Environment,
Health and Education
WH: Ch. 3; LD: Chs. 1, 5;
KW: Chs. 17 and 19; SG: Chs. 17 and 19
Supplemental Readings (see Blackboard)
Apr. 16
Poverty and Inequality:
Domestic and Global
KW: Ch. 19; SG: Ch. 19
WH: Ch. 6
Supplemental Readings (see Blackboard)
Apr. 20
International Trade Policy
WH: Ch. 11; KW: Ch. 8; SG: Ch. 8
Apr. 23
Epilogue
Apr. 30
Final Exam
Note: No Econ-200-001 classes during the following periods:
Martin Luther King Day, Jan. 19
Spring break, Mar 7-15
Easter Monday, Apr. 13
Extra Study Day, Apr. 27
(7) Important Additional Notes About the Course:
"The most beautiful thing we can experience is the mysterious.
It is the source of all true art and science."
-- Albert Einstein, What I Believe (1930)
"There's no use trying," she said: "One can't believe
impossible things."
I daresay you haven't had much practice," said the Queen.
"When I was your age, I always did it for half-an-hour a day.
Why, sometimes I've believed as many as six impossible things
before breakfast."
-- Lewis Carroll, Alice in Wonderland (1865)
– Note that the lectures will be eclectic and thus not cover everything contained in the readings. It is not
possible to cover everything in the readings in this course. Instead, the goal is to help you acquire the
necessary foundations, the skills of reasoning, and familiarity with key issues, so that you can continue to
learn about the economy in future courses or through work and other experiences.
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– As stated earlier, the readings supplement the lectures, not the reverse. Thus, focus on what we cover in
class, and use that as a guide for your readings.
– Study Tips: The Naked Economics and Freakonomics books are easy to read. They’re not textbooks
but leisure reading. (For more leisure readings in economics, see the Appendix to this syllabus.) Thus it
might be useful to read these books in their entirety early in the semester, get an overview of the subject,
and then re-read individual chapters that pertain to the reaction paper assignments later on. As for the
textbook, here are some tips for reading the chapters in your textbook: but first, remember that you are
only required to read those sections of the textbook that cover topics discussed in class. Second, skim the
chapter and recognize what we covered in class. Cross reference the chapter with your lecture notes.
Third, read the chapter carefully, focusing on what we covered in class, and underline/highlight key
points. Fourth, analyze the graphs patiently: check the labels, the relationship(s) being described, and the
economic principle being illustrated by the graph (e.g. is it trying to show that minimum wages raise
unemployment? Or that the decrease in employment is not too bad?). Fifth, review the material. See if
you can explain the concepts, define terms, or illustrate/replicate the graphs on your own (i.e. in your own
words). More active reading like this is preferable to re-reading, re-reading, and re-reading the chapter.
Sixth, do some practice exercises: either review your APLIA assignments or do the exercises in the Study
Guide (or in the textbook’s companion web site). The answers to these exercises are in the Guide (or on
the web site). Attend review sessions where you can go over these exercises with your teaching assistant
and/or ask other questions.
– Check the course’s Blackboard site regularly for announcements, information about exams, and
postings (e.g. assignments, extra readings, discussion board, office hours and review sessions, etc.).
– Lastly, here are some DO's and DON'T's:
1) DO keep up-to-date with current events. Read the Wall Street Journal or Economist, for
example. DO NOT rely on the National Enquirer for up-to-date economics news.
2) DO take concise notes during class (since lecture notes will be posted on Blackboard after
class). DO NOT update your status on Facebook during class.
3) DO spread your study time evenly over the semester. DO NOT cram before tests. Experience
shows this to be ineffective.
4) DO supplement your readings by going through the Study Guide. DO NOT develop your
economic reasoning skills with the Weekend Guide of the City Paper.
5) DO set your alarm so as not to miss classes or exams. DO NOT rely on a roommate who
parties a lot to wake you up.
6) DO be enthusiastic and optimistic regarding your ability to learn and take challenges. DO
NOT get complacent if you do well in the course early on. It is important to maintain your pace.
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Appendix: Popular Books in Micro-Economics
These books are for your reference only. I will from time to time refer to these books. But they are not
required for this course. They are highly recommended and perhaps you can read some of them during a
vacation.
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Ariely, Dan (2008), Predictably Irrational, Harper Collins.
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Ayres, Ian (2007), Super Crunchers: Why Thinking-by-Numbers is the New Way to be Smart,
Bantam Books.
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Cowen, Tyler (2007), Discover Your Inner Economist, Penguin Books.
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Coyle, Diane (2007), Soulful Science: What Economists Really Do and Why it Matters,
Princeton Univ. Press
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Fisman, Ray and Miguel, Edward (2008), Economic Gangsters, Princeton University Press.
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Frank, Robert (2007), The Economic Naturalist, Basic Books.
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Friedman, David (1996), Hidden Order: The Economics of Everyday Life, Harper Collins.
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Gans, Joshua (2009), Parentonomics: An Economist Dad’s Parenting Experiences, MIT
Press.
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Harford, Tim (2006), Undercover Economist, Oxford University Press.
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Harford, Tim (2008), Logic of Life: The Rational Economics of an Irrational World, Random
House
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Landsburg, Steven (1997), Fair Play: What Your Child Can Teach You About Economics,
Free Press.
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Landsburg, Steven (2007), More Sex is Safer Sex: The Unconventional Wisdom of Economics,
Free Press.
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McKenzie, Richard (2008), Why Popcorn Costs So Much at the Movies and Other Pricing
Puzzles, Springer.
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McMillan, John (2002), Reinventing the Bazaar: A Natural History of Markets, W.W.
Norton.
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Omerod, Paul (2000), Butterfly Economics, Basic Books.
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Shermer, Michael (2008), The Mind of the Market, Henry Holt & Co.