ECON 350-01—Microeconomic Theory
University of Redlands Spring 2024
Instructor: Nicholas Shunda (nicholas_shunda@redlands.edu). My pronouns are he/him/his.
Office: Duke Hall, Room 203B.
Phone: (909) 748-8569.
Office hours: Tuesdays/Thursdays 1:00-2:00 pm and by appointment. Sign up on Navigate for
meetings: https://redlands.campus.eab.com/pal/axj9vpZayX.
Class meetings: Tuesdays/Thursdays 10:50 am-12:05 pm in Duke Hall, Room 201.
Course description:
Microeconomics is the study of individual decisions and behavior under conditions of scarcity.
The course comprises four distinct sections: an introduction; microeconomic consumer theory;
microeconomic producer theory; and general equilibrium. We begin with a review of the economic
logic of benefits, costs, and marginal analysis and then review the demand and supply model of
market equilibrium. We then examine consumer theory in considerable depth. Microeconomic
consumer theory posits that a consumer chooses among alternative combinations of goods to
maximize her satisfaction subject to her limited resources and the market environment she faces.
We will analyze the neoclassical economic model of rational consumer choice and derive its
predictions about consumer behavior in equilibrium as well as the economic tradeoffs the model
illuminates. We then turn to microeconomic producer theory, which posits that a firm chooses
among alternative production plans to maximize its profits, the excess of revenues over costs. We
will study the various technological and economic constraints on firms, such as the industrial
organization of firms’ product markets, and trace out the implications of these constraints for
firms’ output and pricing behavior as well as for market performance. Perfect competition,
monopoly, monopolistic competition, and oligopoly are the industry structures we will study with
some depth. The course concludes with an analysis of a simple exchange economy model
highlighting the efficiency properties of competitive equilibrium.
Course objectives:
The goals of this course in microeconomic theory are threefold:
1. Increase students’ knowledge of microeconomic theory by introducing and studying
concepts and models that were not necessarily studied in ECON 101—Principles of
Economics.
2. Deepen students’ knowledge of microeconomic theory by revisiting classic
microeconomic models with a focus on using relatively more sophisticated analytical and
mathematical methods to analyze consumer and producer economic decisions.
3. Improve students’ own economic decision making as responsible citizens and productive
members of the economy.
Textbook (required):
Frank, R. H. (2021). Microeconomics and Behavior (10th ed.). New York, NY: McGraw-Hill
Education.
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Course grading scheme:
I determine each student’s course grade as a weighted average of the following elements:
•
•
•
•
•
Problem sets 25%.
Midterm exam 1 25% (Thursday, February 22, in class).
Midterm exam 2 25% (Thursday, March 28, in class).
Final exam 25% (Tuesday, April 23, 12:00-2:30 pm).
Active participation in class meetings (up to an extra 5% for excellent participation).
I grade each exam on a 0-100% scale (each exam has 120 points on it).
I grade each problem set as follows:
•
•
•
√+ (“Check-plus) Excellent: 100%.
o √/√+ Good/Excellent: 92.5%.
√ (“Check”) Good: 85%.
o √-/√ Poor/Good: 75%.
√- (“Check-minus”) Poor: 65%.
At the end of the semester, I drop each student’s lowest problem set grade from the problem set
grade average.
I determine letter grades (GPA) for each student’s course grade as follows:
95-100%: A (4.0)
90-94%: A- (3.7)
87-89%: B+ (3.3)
84-86%: B (3.0)
80-83%: B- (2.7)
77-79%: C+ (2.3)
74-76%: C (2.0)
70-73%: C- (1.7)
65-69%: D+ (1.3)
60-64%: D (1.0)
55-59%: D- (0.7)
0-55%: F (0.0)
Problem sets:
Problem sets are a regular part of the course. The purpose of problem sets is to help you to practice
outside of class meetings with the concepts and models that you encounter in the selected readings
and in-class discussions and activities. Some problems will be similar to material discussed in class
and that you encounter in assigned readings; other problems will ask you to extend microeconomic
concepts and models into somewhat novel situations. I will assign approximately 6-8 problem sets
over the course of the semester and they will be combinations of problems from the end of the
textbook’s chapters and problems that I create. Naturally, working in earnest on problem sets will
help you to learn and will prepare you for exams.
Guidance for students working collaboratively on problem sets: Each student must submit their
own written problem set work for grading while identifying the other student(s) with whom they
worked on the problem set.
Academic honesty policy:
I uphold and expect my students to understand and abide by the University’s academic honesty
policy, the details of which appear under the heading Academic Honesty on pages 30-35 of the
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University of Redlands Catalog 2023-2024. Of particular relevance to our course are Academic
Honesty sections I-III on standards, obligations and responsibilities, and violations. I will not
tolerate violations of academic honesty on any academic work for the course (e.g., problem sets,
exams, papers); the penalty for any kind of academic honesty violation is a course grade of 0.0 (or
NC if taking the course with the C/NC grading option). The University of Redlands Catalog 20232024 is available online here: https://www.redlands.edu/study/registrars-office/universitycatalogs/.
Collaborative work on problem sets is permitted, but each student must submit their own written
problem set work for grading while identifying the other student(s) with whom they worked on
the problem set.
Late problem sets and make-up exams policy:
You must submit problem sets by their due dates and times for consideration for credit. I do not
accept late submissions of problem sets under any circumstance. This is why I drop each student’s
lowest problem set grade from the problem set grade average at the end of the semester.
I will give make-up exams for students that miss a regularly scheduled exam provided that they
have a documented/verifiable excuse and communicate this to me in advance of the exam.
Health and safety policy:
Please do not attend any class meetings or individual meetings with me if you are feeling ill in any
way. I expect my students to understand and abide by the University’s UR Ready: COVID
Response
guidelines,
details
of
which
are
available
online
here:
https://www.redlands.edu/urready/. Of particular relevance to our class are expectations pertaining
to procedures to follow if exposed to someone who has tested positive for COVID-19, if feeling
ill with COVID-19 symptoms, and if you have tested positive for COVID-19. I will provide
alternative assignments or other appropriate accommodations to support students who experience
quarantines or isolations.
Devices in the classroom policy:
Please do not use smartphones, tablets, laptops, or other electronic devices during our class
meetings. Any such devices should be switched off and put away during class meetings. This is
for your benefit because you will learn best when you are fully present in our class meetings and
your attention is not divided. Please contact me to discuss if you have a documented need or have
other reasons for using an electronic device for note-taking purposes. If I allow you to use an
electronic device in class meetings for note-taking purposes, I reserve the right to revoke the
privilege if I see you abuse it.
Title IX and equity:
In order to provide a safe and equitable learning environment for all students, faculty, and staff,
discrimination, harassment, retaliation, sexual misconduct, and sexual harassment (including
sexual assault, dating or domestic violence, and stalking) are not tolerated at University of
Redlands. The University’s Policy Prohibiting Discrimination, Harassment, Sexual Misconduct,
and Retaliation (available online here: https://sites.redlands.edu/titleixandequity/policy/) prohibits
unlawful discrimination or harassment on the basis of age, color, race, ethnicity, national origin,
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ancestry, sex, marital status, pregnancy, status as a complaining party of domestic violence, sexual
orientation, gender, gender identity or expression, physical or mental disability, genetic
information, religion/creed, citizenship status (except to comply with legal requirements for
employment), military/veteran status, or any other characteristic protected by law. If you or
someone you know has experienced or experiences any of these behaviors, know that you are not
alone. You can contact the Office of Equity & Title IX (location: Administration Building, Suite
111; email: titleix@redlands.edu; phone: 909-748-8289) for reporting options, supportive
measures, and resources to support you.
All University of Redlands faculty and staff are “responsible employees,” which means that if you
tell me about a situation involving any of the above, I must report the matter to the Office of Equity
& Title IX. Although I have to make that report, you are in control of how you would like to
proceed, including whether or not you wish to pursue a formal complaint. Our goal is to make sure
you are aware of the range of reporting options available to you and have access to the support and
resources you need.
You can directly report an incident either by contacting the Interim Director of Equity & Title IX
Coordinator, Christopher Jones (location: Administration Building, Suite 111; email:
titleix@redlands.edu; phone: 909-748-8289) or by filing a report online here:
https://cm.maxient.com/reportingform.php?UnivofRedlands&layout_id=5.
You can also file an incident report with local law enforcement (website:
https://www.cityofredlands.org/police; phone: 909-798-7681, ext. 1). If you are ever in immediate
danger, please call 911 or email/text 911@redlandspolice.org if you cannot make a phone call.
If you wish to speak to someone confidentially (meaning not connecting with the Office of Equity
& Title IX), you can contact the University Counseling Center (location: Student Development
Center, Armacost Library, Lower Level; website: https://www.redlands.edu/student-life/healthand-psychological-services/counseling-center/; phone: 909-748-8108; 24/7 crisis line: 909-7488960) or TimelyCare (website: https://app.timelycare.com/auth/login). Off-campus resources and
points
of
contract
include
Partners
Against
Violence
(website:
https://www.partnersagainstviolence.org/sexual-assault-survivor-services; 24/7 sexual assault
crisis line: 909-885-8884), Option House (website: https://www.optionhouseinc.com/home; 24/7
dating/domestic violence crisis line: 909-381-3471), and Love is Respect (website:
https://www.loveisrespect.org; phone: 866-331-9474).
For more information about Title IX and equity, related University policies, and the process of
filing a report, please visit https://sites.redlands.edu/titleixandequity/.
Academic accommodations:
If you qualify under the Americans with Disabilities Act and Section 504 of the Rehabilitation Act
for accommodations for completing the work for this course, please contact the University’s Office
of Academic Success and Accessibility (location: Student Development Center, Armacost Library,
Lower Level; website: https://www.redlands.edu/study/schools-and-centers/college-of-arts-andsciences/asds/accessibility/; email: asa@redlands.edu; phone: 909-748-8069) to determine the
appropriate academic accommodations.
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Resources for additional study:
My hope is that I am your first and best source for learning in the course, for answers to any
questions you have, and for discussion of any aspect of the course. Please make use of our time in
class as well as my weekly office hours to learn and to seek answers to any questions you might
have.
Aside from our time together in class, my scheduled office hours, and individually appointed
meetings with me, you may desire additional help with the economics and/or the mathematics
involved in our course. The University’s Office of Academic Success and Accessibility offers free
subject tutoring upon request (location: Student Development Center, Armacost Library, Lower
Level;
website:
https://www.redlands.edu/study/schools-and-centers/college-of-arts-andsciences/asds/academic-success/; email: asa@redlands.edu; phone: 909-748-8069).
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Course topics and readings outline:*
Dates
Textbook readings
Major topics
Subtopics
I. AN INTRODUCTION TO MICROECONOMIC THEORY
January 11, 16, 18, Chapter 1
Introduction to
Economic logic: Benefits and
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microeconomic theory
costs
Marginal analysis
Chapter 2
Demand and supply
Market equilibrium
Comparative statics
Price and non-price rationing
January 25, 30;
February 1, 6
February 8, 13
February 15, 20
!! Midterm exam
1 in class on
February 22 !!
March 5, 7
*
II. MICROECONOMIC CONSUMER THEORY
Chapter 3 and its
Consumer choice theory Budget constraints
Appendix (pages 77Consumer preferences: utility,
86)
marginal utility, indifference
curves, marginal rate of
substitution (MRS)
Rational choice: constrained
utility maximization
Chapter 4
Demand
Individual and market
demand
Income effects versus
substitution effects
Elasticities of demand: ownprice, cross-price, income
III. MICROECONOMIC PRODUCER THEORY
Chapter 8 and its
Production
Production functions: short
Appendix (pages
run versus long run
257-264)
Marginal product versus
average product
Isoquants
Marginal rate of technical
substitution (MRTS)
Returns to scale
Chapter 9 and its
Costs
Cost minimization: isoquant
Appendix (pages
and isocost
293-297)
Cost functions: short run
versus long run
Economies of scale
Fixed costs, variable costs,
marginal costs, average costs
Tentative and might change depending upon students’ progress and interests.
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Course topics and readings outline:*
Dates
Textbook readings
Major topics
Subtopics
March 12, 14
Chapter 10
Industry structure I:
Perfect competition
Conditions for perfect
competition
Competitive equilibrium:
short run versus long run
Efficiency and welfare
analysis
March 19, 21
Chapter 11 (pages
335-352 and 359370 only)
Industry structure II:
Monopoly
Pure monopoly versus natural
monopoly
Conditions for pure monopoly
Market power and P > MC
Why is monopoly a problem?
Efficiency and welfare
analysis
March 26
Chapter 11 (pages
352-359 only)
Price discrimination
Typology: First-degree
(perfect), second-degree,
third-degree (market
segmentation)
Efficiency and welfare
analysis
April 2
Chapter 13 (pages
411-415 only)
Industry structure III:
Imperfect competition—
Monopolistic
competition
Conditions for monopolistic
competition
Product differentiation
Monopolistically competitive
equilibrium: short run versus
long run
Efficiency and welfare
analysis
April 4
Chapter 12 (pages
373-382 only)
Game theory
What is a game?
Players, strategies, payoffs
Best response
Nash equilibrium
Prisoners’ Dilemma
!! Midterm exam
2 in class on
March 28 !!
*
Tentative and might change depending upon students’ progress and interests.
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Course topics and readings outline:*
Dates
Textbook readings
April 9, 11, 16
Chapter 13 (pages
401-411 only)
If time allows
Chapter 17
Major topics
Subtopics
Industry structure IV:
Imperfect competition—
Oligopoly
Conditions for oligopoly
Best response function
Cournot competition
Bertrand competition
Stackelberg competition
First-mover advantage
IV. GENERAL EQUILIBRIUM
General equilibrium
!! Final exam on
April 23, 12:002:30 pm !!
*
Tentative and might change depending upon students’ progress and interests.
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Exchange economy: pure
exchange versus exchange
with production
Edgeworth box
Pareto optimality
Contract curve
Production possibilities
frontier (PPF)
Marginal rate of
transformation (MRT)
Efficiency in consumption,
production, and product mix