UNIVERSITY OF ZAMBIA COURSE: ECN 1115: INTRODUCTION TO MICROECONOMICS INSTRUCTOR : Dale Mudenda (PhD) OFFICE : HSS - 127 (Department of Economics) Course Meets : Wednesday & Thursday 11- 12 hours, Friday, 9 – 10 hours Venue : Lecture Theatre 1 (LT1) -HSS Course Tutors : TBA Never hesitate to see tutors if you need help Course Description This course deals with the behaviour of individual economic units. These units comprising consumers, firms and any other individual unit that plays a role in the functioning of our economy. This course will form a solid foundation for students in understanding the basics of the economics approach to the study human behaviour. The course applies microeconomic concepts and theories in a range of contexts and to appreciate their value and limitations in explaining real world phenomena. RATIONALE: In introducing students to the study of economics, particularly microeconomics, this course will form a solid foundation for students in understanding the basics of the economics approach to the study human behaviour. The course applies microeconomic concepts and theories in a range of contexts and to appreciate their value and limitations in explaining real world phenomena. COURSE OBJECTIVES By the end of this course, students are expected to: • demonstrate an understanding of the nature and methodology of microeconomics. • show knowledge of the concepts of supply and demand in product and input markets. • demonstrate the foundation necessary for the study of intermediate microeconomics. Key Reference Text Books: Begg, D., Fischer, S. & Dornbusch, R., 2011. Economics. 10th ed. London: MaGraw-Hill. (In short BVFD ) Hardwick, P., Khan, B., and Langmead, J., 2006. Introduction to Modern Economics. London: Longman. ( In short HKL) COURSE CONTENT 1. The Study and Methodology of Microeconomics • Definition of Economics, distinction between micro- and macroeconomics, positive and normative economics. Basic economic problem. Actors in a market economy: households, firms, government, external sector. • Models (static models, dynamic models and comparative models), graphs and math. BVFD -Chapter 1 & 2 ; HKL - chapter 1 2. Demand, Supply and the markets • Demand and the law of demand-Curves & demand function • Determinants of demand (demand shifters) • Supply and the law of supply: - schedules & supply function • Determinants of supply (supply shifters) • Market equilibrium . BVFD Chapter 3 & 6, HKL Chapters 7, 3. Consumer Choice Theory • Budget and preferences (indifference curves), concept of utility (cardinal, ordinal and marginal utility), • Deriving the demand curve using indifference curves. • Market demand curve, Elasticity of demand. Consumer surplus. BVFD Chapter 5, HKL Chapters 3 & 4 4. Theory of the Firm • Objectives of the firm. • Production in the short-run; technology, production function, diminishing returns, marginal product, average product, total product, marginal cost, average cost, total cost. Graphical illustration. • Production in the long-run; returns to scale, Short- and long-run. • Supply curve of a firm, market supply curve. Comparative statics. BVFD Chapter 6 & 7, HKL Chapters 2 & 5 5. Perfect Competition • Market structures, classification of markets based on different criteria. • Definition of perfect competition, underlying assumptions. • Definition of equilibrium. Importance of the concept. • Market equilibrium and efficiency. Graphical illustration. • Consumer and producer surplus. Long-run vs. short-run. BVFD Chapter 8; HKL Chapters 9 6. Monopoly • Definition of Monopoly. • Graphical illustration of monopoly case. • Welfare loss – comparison to perfect competition. • How to regulate a monopoly. HKL Chapters 10; BVFD Chapter 8 7. Market efficiency and welfare economics • Equity and efficiency • Perfect competition and Pareto efficiency • Market failure and market failure HKL Chapters 8; BVFD Chapter 13 Method of Teaching Four contact hours consisting of three hours of lectures and one hour tutorial Course Assessment Continuous Assessment 50 % One assignment 20% Two tests 30% Final Examination 50 % OTHER RECOMMENDED READING Karlan, D. & Morduch, J., 2014. Microeconomics. 1st ed. London: MaGraw-Hill Education.
