MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY SOCIALIST REPUBLIC OF VIETNAM Independence – Liberty – Happiness BACHELOR PROGRAM MAJOR : ALL MAJORS CONCENTRATION : All Concentration Instructor : Dr. Hồ Quốc Thông/ thonghq@ueh.edu.vn SYLLABUS Course title: MICROECONOMICS Course code: ECO501001 (Vietnamese), ECO501004 (English) Number of credits: 3 Level: Freshmen Teaching time allocation: 45 hours of lecture. In addition, students are expected to spend 90 hours on reading materials and doing homework. Prerequisites: None (calculus and algebra are preferred) Learning objectives This course introduces basic principles of microeconomics and the application of theories and models to explain economic activities. The applications of microeconomic theories and models will be properly emphasized during the course. Students successfully completing this course are expected to be able to: 1. Understand economic problems facing the society. 2. Explain the interaction between supply and demand and the way in which equilibrium market prices are achieved. 3. Explain the elasticity of supply and demand and the effects on a market of the different levels of elasticity. 4. Analyze the efficiency of markets. 5. Understand how the prices are determined in different market structures. 6. Explain various pricing strategies that can be used by firms. 7. Explain the core economic concepts involved in choices made by businesses with respect to short-run and long-run investment and production choices. 8. Explain competitive markets and how they operate. 9. Explain profitability in markets with imperfect competition. 10. Explain the concept of utility and how rational utility maximizing agencies make consumption choices. Course description Microeconomics studies the behaviors of different economic agents in making decisions towards the efficient allocation of scarce resources. It focuses on the motivations and process of decision making of those agents, and the effects of these decisions on other agents as well as on the entire economy. It also identifies market failures that are the basis of government interventions for efficiency in the conditions of general competitive equilibrium. This course consists of four parts. The first part introduces simple supply-demand model and the operations of competitive market, and the analyses of the effects of government interventions on competitive market. The second part introduces the theory of consumer choice, the derivation of individual demand from utility maximization behavior, and the construction of industry demand from individual demand. The third part analyzes the behaviors of producers, including the production function, cost minimization, and profit maximization. The firm output supply and industry supply are then constructed based on the analyses of producer behaviors. The fourth part presents models of monopoly, oligopoly, and monopolistic competition, for a comprehensive analysis of market structures. Student learning activities - Reading lecture notes, textbooks, and reference materials, and doing homework assigned by the instructor before class Attend lectures regularly Participate in discussions and doing exams Course materials - - Textbook: 1. Mankiw, N. G. (2017). Principles of Microeconomics, 8th ed. Cengage 2. Greenlaw, A. S. & Shapiro, D. (2018). Principles of economics, 3rd ed. (https://openstax.org/details/books/principles-economics-2e?Book%20details) Reference: Pyndick, R. S. and D. L. Rubinfield. (2012). Microeconomics, 8th ed. Pearson Some free economics courses: Coursera; Edx; Khanacademy Evaluation - Assignments, quizzes & participation Mid-term exam (multiple choice Qs) Final exam (multiple choice Qs) Course grading scale: 0 to 10 : : : 30 % 20 % 50 % Learning activities Week 1 2 3 4 5 6 7 8 9 10 11 Topics - Introduction to microeconomics - Thinking like an economist - Demand, supply and equilibrium - Elasticity and its application - Government policies - Market efficiency - The cost of taxation - Gain from trade - An application to international trade - Midterm 1 - Solutions to midterm 1 - The cost of production - Competitive market - Monopoly - Monopolistic competition - Oligopoly - Midterm 2 - Theory of consumer choice - Solutions to midterm 2 - Theory of consumer choice (Cont’d) - Review Reading Mankiw 1, Greenlaw & Shapiro 1 Mankiw 2, Greenlaw & Shapiro 2 Mankiw 4, Greenlaw & Shapiro 3 Mankiw 5, Greenlaw & Shapiro 5 Mankiw 6, Pindyck & Rubinfeld 2 Mankiw 7, Pindyck & Rubinfeld 9 Mankiw 8, Pindyck & Rubinfeld 9 Mankiw 3, Pindyck & Rubinfeld 9 Mankiw 9, Pindyck & Rubinfeld 9 Mankiw 13, Greenlaw & Shapiro 7 Mankiw 14, Greenlaw & Shapiro 8 Mankiw 15, Greenlaw & Shapiro 9 Mankiw 16, Greenlaw & Shapiro 10 Mankiw 17, Greenlaw & Shapiro 10 Mankiw 21, Greenlaw & Shapiro 6 Mankiw 21, Greenlaw & Shapiro 6 Details - - - - - - - - Introduction to microeconomics: o Questions that economics addresses o Principles of how people make decisions o Principles of how people interact o Principles of how the economy as a whole works Thinking like an economist o Roles of economists o Models and how economists use them o Elements of the Circular-Flow Diagram and concepts the diagram illustrates o Production Possibilities Frontier and relation to opportunity cost o Difference between microeconomics & macroeconomics, positive & normative Demand, supply and equilibrium o Factors affect buyers’ demand for goods o Factors affect sellers’ supply of goods o Determining the price of a good and the quantity sold o Effects from changes in that factors to demand or supply, market price and quantity of a good o How markets allocate resources Elasticity and its application o Elasticity: definition and methods of calculations o Price elasticity of demand and its relation to the demand curve, revenue & expenditure o Price elasticity of supply and its relation to the supply curve o Income and cross-price elasticities of demand Government policies o Price ceilings and price floors o How price ceilings and price floors affect market outcomes o How taxes affect market outcomes o How the effects depend on whether the tax is imposed on buyers or sellers o Tax incidence and its determinations Market efficiency o Consumer surplus and its relation to the demand curve o Producer surplus and its relation to the supply curve o Desirable allocation of resources The cost of taxation o Effects from tax to consumer surplus, producer surplus, and total surplus o deadweight loss of a tax o Determinants of the size of deadweight loss o Tax revenue and size of the tax Gain from trade o How trade can make everyone better off o Absolute advantage and comparative advantage. The similarity and difference - - - - - - - An application to international trade o Determinants on how much of a good a country will import or export o Benefit and loss from trade o Benefit and loss from trade restriction o Common arguments for restricting trade. The cost of production o Production function, marginal product and their relation o various types of costs, and their inter-relation to each other and to output o Costs in the short run and the long run o Economies of scale Competitive market o Characteristics of a perfectly competitive market o Marginal revenue and its relation to total and average revenue o Determining the quantity that maximizes profits for a competitive firm o Shut down in the short run and exit the market in the long run o Market supply curve in the short run and in the long run Monopoly o Reasons that monopolies arise o Monopolies choosing their P and Q with their market power o Society’s well-being affected b monopolies o Government intervention toward monopolies o Price discrimination Monopolistic competition o Characteristics of monopolistically competitive market o How monopolistically competitive firms choose price and quantity o Society’s welfare affected by monopolistic competition o Social costs and benefits of advertising Oligopoly o Possible outcomes under oligopoly o Game theory and explanation why it is difficult for oligopoly firms to cooperate o Antitrust laws used to foster competition Theory of consumer choice o Budget constraint represent the choices a consumer can afford o Indifference curves represent the consumer’s preferences o How a consumer divides her resources between two goods o Using theory of consumer choice to explain some of their decisions
