Baylor University
Economics 2306_Fall 2011
Principles of Microeconomics
Lecturer: John M. M. Ssozi (PhD)
Office: CASHION 337
Office Hours: TR 0915-1030AM
Office Phone: (254) 710 6793
E-mail: John_Ssozi@baylor.edu
Class Time: TR 1100AM-1215PM
Classrooms: CASHION 307
Required Text Book: Mankiw, N. Gregory, Principles of Microeconomics, 6th Edition,
Thomson South-Western, 2011
Course Objectives: Principle of Microeconomics enables students to get an insight into
the theories and applications of demand and supply, production, industrial organization,
international trade, and Christian Ethics in economic decisions. The over-riding goal of
the course is to make students better decision- makers in their careers. The principles and
techniques are also applicable to personal financial and economic decisions. This course
is to make students critical thinkers in real life situations: business, public policy, service
to the community and ethics.
The course, accordingly, is concerned with both theory and practice: the theory serves to
sharpen analytical skills, and the practice will involve application of the principles and
techniques to real-world business problems.
Course Assessment: Grades will be determined by YOUR PERFORMANCE on three in-class
examinations, three quizzes, graded homework assignments, and a cumulative final examination.
Grades will be assigned as follows: 600-540 = A; 539-528 = B+; 527-480 = B; 479-468 = C+;
467-420 = C; 419-360 = D; below 360 = F
The points will be distributed as follows:
Exam 1
100 points
Exam 2
100 points
Exam 3
100 points
Quiz 1
25 points
Quiz 2
25 points
Quiz 3
25 points
Homework
75 points (problem sets)
Final Exam
150 points
Total possible
600points
Learning Outcomes:
At the end, students who complete this course will be able to:
 Understand the different goals of the firms and the constraints firms face.
 Measure the responsiveness of consumers' demand to changes in the price of a
good or service, the price of other goods and services, and income.
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Understand the different costs of production and how they affect short and long
run decisions.
Understand economies of scale, diseconomies of scale, economies of scope, and
cost complementarities, and how each affects the cost of production.
Understand the four basic market models of perfect competition, monopoly,
monopolistic competition, and oligopoly, and how price and quantity are
determined in each model.
Apply the economic way of thinking to individual decisions and business
decisions, community service and ethics.
Class Web
Please regularly visit “Blackboard” via Baylor University home page for course
materials, announcements, homework and your continuous assessment/ scores. I will be
sending reminders via e-mail.
Course Outline
PART I: INTRODUCTION
Chapter One: Ten Principles of Economics. (Week 1)
This chapter gives an overall image of what economics is all about. It introduces the
concepts of scarcity, opportunity cost, marginal analysis, market and trade, role of
government in a market economy, why countries differ, and finally inflation and
unemployment.
Chapter Two: Thinking like an Economist. (Weeks 1 and 2)
The chapter introduces the methodology of economics: the role of assumptions and
models. An example is given of the production possibility frontier as a model to illustrate
the concepts of scarcity, choice, opportunity cost and efficiency. Finally the chapter
examines some pitfalls of economic reasoning and explains why economists might
disagree with one another.
Chapter Three: Interdependence and Gains from Trade. (Weeks 2 and 3)
The chapter makes application of the concepts of scarcity and opportunity cost in the
context of the gains from international trade. Key concepts: Scarcity, Opportunity Cost,
Absolute advantage, Comparative advantage, Specialization, Trade (international).
 Homework 1
PART II: HOW MARKETS WORK
Chapter Four: The Market forces of supply and demand.
(Weeks 3 and 4)
This chapter introduces the basics of demand and supply analysis. Emphasis is placed on
changes in price and output due to changes in factors like income, technology, tastes and
preferences, population structure etc.
 Homework 2
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Chapter Five: Elasticity (Weeks 4 and 5)
This chapter examines consumer sensitivity to demand changes. The concept of such an
association is depicted by the elasticity of demand. The chapter also reveals how demand
elasticity is associated with a firm’s revenue. An extension is also made to the supplier’s
responsiveness to changes in price.
 Homework 3
Chapter Six: Supply, Demand and Government Policy (Week 5)
This chapter introduces government intervention into the price system through price
controls. Specifically it examines the effects of price ceilings and a price floors. It also
examines how taxes affect market operations.
PART III: MARKETS AND WELFARE
Chapter Seven: Consumers, Producers and Efficiency of Markets (Week 6)
The chapter concerns itself with the allocation of resources that maximizes the sum of
consumer and producer surplus, that is, efficiency.
 Homework 4
Chapter Eight: Application: The costs of taxation. (Week 7)
Aware that modern society can not be maintained without some sort of taxation, this
chapter goes ahead to weigh the costs of taxation. Specifically it discusses the
deadweight loss due to taxation.
 Homework 5
Chapter Nine: Application: International trade (Week 7)
This chapter is an application of the principles of demand and supply. It examines the
effects of free trade: imports and exports. It introduces tariffs in international trade and
examines their effects. Finally it examines the various arguments for restricting
international trade.
 Homework 6
PART IV: ECONOMICS OF THE PUBLIC SECTOR
Chapter Ten: Externalities (Week 8)
In this chapter we shall study the different types of externalities, both positive and
negative. Specifically we shall study how negative externalities can be solved either
privately or by government intervention.
 Homework 7
Chapter Eleven: Public Goods and Common Resources (Week 8)
We shall examine the defining characteristics of public goods: non-rival and nonexcludable, and how this differs from common resources which are rival in consumption
but not excludable.
 Homework 8
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Chapter Twelve: The Design of the Tax System (Week 9)
We shall examine the different types of taxes levied by both the federal government and
local governments. The chapter will also help us to analyze the efficiency and equity of a
tax system, and the trade-off between efficiency and equity in public policy.
PART V: FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY
Chapter Thirteen: Costs of production (Weeks 10 and 11)
The goal of the firm is to maximize profits. However in order to earn any profits the firm
incurs some costs. This chapter examines the different types of costs: explicit and
implicit.
 Homework 9
Chapter Fourteen: Firms in competitive markets (Weeks 11 and 12)
This chapter combines the demand, cost of production, and marginal analysis concepts
from previous chapters to explain how competitive markets determine prices, output, and
profits. We will use this information to explain what happens to firms under competitive
markets in the short-run and in the long-run.
 Homework 10
Chapter Fifteen: Monopoly (Weeks 12 and 13)
This chapter explains why firm do not or can not enter a particular market and compete
with a monopolist. Then it examines the production and pricing behavior of monopolists;
and the advantages and disadvantages of monopolies. We shall examine in detail the
phenomenon of price discrimination. Finally it examines public policy toward
monopolies, namely, regulation, increasing antitrust laws, public ownership and “do
nothing”.
 Homework 11
Chapter Sixteen: Monopolistic Competition (Week 13)
Oligopoly is the most common market structure. We shall examine how oligopolists
often try to maximize profits by forming cartels and acting like a monopolist. However
self-interest can prevent them from cooperation. That is why cartels are not stable.
Policymakers use the antitrust laws to prevent oligopolies from engaging in behavior that
reduces competition.
 Homework 12
Chapter Seventeen: Oligopoly (Week 14)
Monopolistic Competition is a middle ground between perfect competition and
monopoly. The source of monopoly power is product differentiation.
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Homework 13
Chapter Eighteen: Markets for factors of production (Week 14)
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The economy’s income is distributed in the markets for the factors of production. The
demand for the factors depends on their marginal productivity.
 Homework 14
Chapter Twenty One: The theory of consumer choice (Week 15)
The goal of a consumer is utility maximization with a budget constraint. We shall
examine how changes in the price and/or income affect the utility maximization of a
consumer.
 Homework 15
 Final review session: Thursday, December 1st, 2011
Final Exam will be cumulative.
Final Exam day and Time: Tuesday, December 13, 2011, 11:30am – 01:30 pm
***The overall pace of the course will ultimately dictate which chapters are covered during
each lecture.
Exam/Quiz/Homework Policy:
 Under normal circumstances there will be no make-up exams or quizzes. However
you may be given a make-up exam/quiz only if you miss it due to illness or another
valid and verifiable excuse. If necessary the department administration may be
involved in verifying the validity of your excuse.
 An absence from the final exam is governed by the rules of the College of Business
Administration.
 Late submission of homework assignments will cost you 2% of the homework
score for each hour passed the due time within four hours. After four hours past
the due time NO homework will be accepted.
Attendance:
According to the policy of the Hankamer School of Business, to earn academic credit in a
particular course, a student must be officially enrolled in that course by the end of the
second full week of the semester and must attend at least 75percent of all class sessions for
that course. Students who do not fulfill these requirements will receive a grade “F” in the
course. Faculty members are responsible for:
 Providing notification for students either through posted attendance records
(such as on Blackboard) or direct correspondence before the threshold for grade
action is reached.
Special needs:
Please inform me during the first week of class if you have any conditions that may limit or
effect your ability to participate in this course so that we can make necessary arrangements.
Expectations:
You are expected to: (1) carefully study the assigned reading material prior to the class; (2)
attend all classes, take class notes as needed; (3) submit all homework assignments on time
and be prepared to discuss them in class; (4) carefully review all relevant course material
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prior to each quiz and examination; (5) seek assistance when needed. The examinations will
assume that all these expectations have been fulfilled.
Blackboard:
Important course content will be available on Blackboard website for this course.
E-mail:
I will frequently communicate with you by e-mail, so you should check your Baylor
student e-mail often.
Academic Honesty:
Integrity is the trademark of Baylor University. Hence conduct yourself accordingly.
The first penalty for dishonesty on an exam/quiz/homework is getting a zero. Second,
depending on the specific infraction and the advice of Chair of the Economics
Department, the case may be referred to the Office of the Dean for further action and
penalties.
Emergency plan:
Every Baylor University campus building has emergency shelter and evacuation plans.
Please familiarize yourself with the plans of each building in which you take classes or
attend meetings. Make sure to note the routes to the lowest level of the buildings for
shelter during inclement weather, as well as exits from the buildings in the event of fire
or other emergency.
Policy regarding cell phones, lap tops, and other electronic devices:

The use of lap top computers is not allowed in my class. Exception: If you have a
documented physical or learning disability and the use of a computer in the classroom
(to be used only for taking notes on the day’s lecture) is recommended as a
reasonable accommodation to your situation, please set up an appointment to meet
with me so we can discuss this.

The use of cell phones is not allowed in my class. You may not use your cell phone
as a clock or as a calculator or for any other reason during class or during quizzes or
exams. You will need to turn your cell phone off or to silent before the beginning of
class and leave your cell phone in your purse, backpack, or pocket until the end of the
class period. If you forget to turn off your cell phone and it rings or vibrates during
class, turn it off immediately without checking to see who is calling. At no time
during my class should your cell phone be visible, audible, or in use.

The use of iPods is not allowed in my class. If you have an iPod, it must be turned
off and put away during class and during quizzes and exams, and the ear buds must
be removed from your ears.
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FINAL EXAMINATION: Tuesday, December 13th 2011 at 11:30am – 01:30pm.
The final examination will be cumulative/comprehensive.
IMPORTANT DATES
August
22
Classes Begin (Monday)
December
5
Last Day of Classes (Monday)
Holidays
September
October
November
5
14-16
23 -27
Labor Day – University Holiday
Fall Break (Friday through Sunday)
Thanksgiving Holidays (Wednesday through Sunday)
Quizzes
September
October
November
8
13
8
Quiz 1
Quiz 2
Quiz 3
Examinations
September 22
October
27
November
22
December
13
Exam 1
Exam 2
Exam 3
Final Examination at 11:30am – 01:30pm
*****Final Exam Venue: TO BE ANNOUNCED
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