Economics 370 Microeconomic Theory II
Winter 2007
Instructor: Dr. Steffen Ziss, P3024, ph: 884-0710 ext. 2776, email: sziss@wlu.ca
Office hours: Tuesdays and Thursdays, 2:30 − 4 pm.
Classes:
Section A: Tuesdays and Thursdays, 11:30 am − 12:50 pm in P3007.
Section B: Tuesdays and Thursdays, 1:00 pm − 2:20 pm in P3007.
Course description: Topics include:
• Labour supply – How does the labour supply choice depend on wages,
endowments, taxes, overtime pay and income and substitution effects?
• Intertemporal choice – How does the savings decision depend on interest
rates, current and future income, tax rates and investment opportunities?
• General equilibrium – Pareto efficiency and competitive equilibrium.
• Externalities – How can taxes, property rights and liability rules be used to
solve the externality problem? Can these solutions make everyone better off?
• Public goods – Can voting achieve efficient public good provision?
• Uncertainty – Insurance and investment choice using expected utility theory.
• Adverse selection – How can the adverse selection problem be overcome by
using certification, signalling or screening?
• Moral hazard – Principal agent problem and expected utility theory.
Assessment: Your mark will be determined as follows:
(a) Mid-term exam (30%) on Saturday March 10, 12 – 2 pm. (Room TBA)
(b) 3 Individual assignments (15%) due in Weeks 3, 7, 11
(c) 1 Group assignment (5%) (due date varies)
(d) Final exam (50%) held during the regular exam period
Note: There is no deferred mid-term. If you have documented evidence that illness or
misadventure prevented you from writing the mid-term then the weight assigned to
the mid-term will be transferred to the final exam.
Textbook: Varian, Hal R. (2006) Intermediate Microeconomics: A Modern Approach
(7th edition), New York: Norton.
Plagiarism: Wilfrid Laurier University uses software that can check for plagiarism.
Students may be required to submit their written work in electronic form and have it
checked for plagiarism.
Accessible Learning : Students with disabilities or special needs are advised to
contact Laurier’s Accessible Learning Centre for information regarding its services
and resources. Students are encouraged to review the Calendar for information
regarding all services available on campus.
EC370
Course outline Winter 2007
1
Course website: http://www.wlu.ca/webct
Contains lecture notes, assignment answers and potential mid-term and final exam
questions. WebCT login guidelines are as follows.
1. Go to http://www.wlu.ca/webct and click on 'Log into WebCT'
2. Enter your login and password (Login: Enter your 9-digit WLU ID number.
Password : Your birth date, in the format MMDDYY). UW Students will use their 8digit UW ID number with the number 0 added to the end.
3. When you first login you must change your password before you will be allowed to
continue.
4. Click on “Login” and your WebCT home page should appear, along with a list of
courses you are registered in. Click on EC 370 Microeconomic Theory II. Make sure
that you log out after using the WebCT site.
5. Set-up a security question (your MyWebCT Login Hint) to enable you to reset your
password. Once set, you can reset your own WebCT password.
6. If you forget your password, and you have not set up a security question to allow
you to reset it yourself, you may visit the ITS Helpdesk in person to have it reset.
Please provide photo ID (e.g., OneCard, Driver's License) upon your request.
7. If you log into WebCT and EC370 is not listed, check LORIS to confirm the
registration status of the course. It will not appear until it is listed in LORIS. This
could be an issue if you registered late. UW students that don't have EC370 in the list
of courses should contact webct@wlu.ca for support.
Group assignment
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Students will be assigned to groups. Each group will be assigned a workshop
problem which they will submit and then present in class.
To find out which group you are in and what workshop problem you are doing go
to the course web-site, click on “My Grades” and look for the number under the
“Workshop problem” heading.
The assignment is due at the beginning of the workshop.
Marks will be based on the correctness of the answers as well as on the quality of
the presentation.
EC370
Course outline Winter 2007
page 2 of 4
Topics, Textbook Readings and Event calendar
Week 1 (3-5 January)
Lecture 1
Buying and selling
ch. 9.1 − 9.5
Week 2 (8-12 January)
Lecture 2
Labour supply and intertemporal choice
ch. 9.8 – 9.9 and ch. 10.1 – 10.5
Workshop 1
Labour supply and intertemporal choice (ch.9, 10)
Workshop problems 1 and 2
Week 3 (15-19 January)
Lecture 3
Exchange economy: Pareto efficiency
ch. 30.1 – 30.8
Lecture 4
Exchange economy: Competitive equilibrium
ch. 30.9 – 30.13
Assignment 1: Due Fri. Jan. 19 at 4 pm to boxes outside P3117A.
Coverage: chapters 9 and 10. Late penalty: 5% per workday.
Week 4 (22-26 January)
Workshop 2
Exchange economy (ch.30)
Workshop problem 3 and 4
Lecture 5
One-good production economy
ch. 31.1 – 31. 8
Week 5 (29 January-2 February)
Lecture 6
Two-good production economy: Pareto efficiency
ch. 31.9 – 31. 11
Two-good production economy: Competitive equilibrium
ch. 31.12 – 31.14
Lecture 7
Week 6 (5-9 February)
Workshop 3
Lecture 8
Production economy (ch.31)
Workshop problems 5 and 6
Consumption externalities and tragedy of the commons
ch. 33.1 and 33.2
Week 7 (12-16 February)
Lecture 9
Lecture 10
Production externalities
ch. 33.3 and 33.4
Pollution vouchers and Tragedy of the commons
ch. 33.3 and 33.6
Assignment 2: Due Fri. Feb. 16 at 4 pm to boxes outside P3117A.
Coverage: chapters 30 and 31. Late penalty: 5% per workday
EC370
Course outline Winter 2007
page 3 of 4
Reading week
Week 8 (26 February-2 March)
Workshop 4
Externalities (ch.33)
Workshop problems 7 and 8
Lecture 11
Public goods
ch. 35.1 – 35.7
Week 9 (5-9 March)
Lecture 12
Voting and the Clarke Tax
ch. 35.8 – 35.10
Workshop 5
Public goods (ch.35)
Workshop problems 9 and 10
Mid-term exam: Saturday March 10, 12 – 2 pm. (Room TBA)
Coverage: chapters 9, 10, 30, 31, 33 and 35. Format: 4 problems
Week 10 (12-16 March)
Lecture 13
Uncertainty
ch. 12
Workshop 6
Uncertainty (ch.12)
Workshop problems 11 and 12
Week 11 (19-23 March)
Lecture 14
Adverse selection
ch. 36.1 – 36.3
Lecture 15
Screening
ch. 25.3
Assignment 3: Due Fri. Mar. 23 at 4 pm to boxes outside P3117A
Coverage: chapters 33, 35, 12, 25.3, 36.1 – 36.3. Late penalty: 5% per workday
Week 12 (26-30 March)
Lecture 16
Signaling
ch. 36.6
Lecture 17
Two-part tariff signaling
None
Week 13 (2-3 April)
Lecture 18
Moral hazard and incentives
ch. 36.4, 36.5, 36.7 and 36.8
Final exam format: 3 hours, 5 problems.
EC370
Course outline Winter 2007
page 4 of 4