PRINCIPLES OF MICROECONOMICS –Spring 2012
Jenny Bourne
Office hours (usually): Willis 321 -- M 12-2; TTh 3-5; by appointment
Phone: x4007
Course description
The course is intended to familiarize you with the basic economic models of consumers, firms,
and markets. We will discuss the determinants of the behavior of households and firms, the choices they
face and the decisions they make, the effects of public policy on behavior, and several standard and notso-standard real-world applications. We will use conceptual, algebraic, and graphical techniques
throughout the course. Calculus is a useful tool but not required for this course.
Evaluation
You will be evaluated on the basis of three exams, in-class exercises, class participation, 5 out of
7 response papers, and problem sets. I describe the last four in the following paragraphs.
We will work on several exercises as part of the course. I will place these in the on-line course
folder. Scan these before class so you are familiar with the topic area; you don’t need to write down
answers outside class because we will work on them (sometimes in small groups) in class, but I do want
you to look at the exercises beforehand and bring them to class on the designated day. Your
participation in discussing the exercises and your general willingness to attempt to answer questions and
raise issues count toward your grade. Note that the attempt is what matters most: don't be afraid to speak
up in class. Often the only way to learn a subject is to make mistakes and figure out how to correct them.
The response papers will give you practice in reading, writing, and analysis. Please write NO
MORE THAN ONE PAGE for each response paper. The articles you should respond to (note that you
may have a choice of articles) and the due dates for the papers appear on the course outline. I expect
clear writing and good analysis. DON’T summarize the article: instead, I want you to tie it to concepts
you’ve learned in this class, and I want to hear your well-supported reaction. You don’t have to respond
to the entire article (although most articles are quite short). If you’d like, you can pick out a point that
piques your interest and discuss it. DON’T ASSUME THAT THE ARTICLES CONTAIN GOOD
ECONOMIC REASONING OR GOOD WRITING – part of your task is to decipher what good economic
reasoning is and how writing style can enhance or detract from content. I have attached a list of writing
tips at the end of the syllabus. We will use your papers as a foundation for class discussion. I will
include your top 5 grades on response papers in your overall grade.
Besides the exercises, you will be responsible for problem sets completed outside class and
turned in to me (hard copies) in class on the day indicated. I will place the problem sets in the course
folder. They are intended primarily to give you practice in working through concepts, generate
constructive feedback for you, and help prepare you for exams; they do not themselves count directly
toward your grade. Instead, if you turn in all problem sets on time (no excuses accepted), showing a
good-faith effort to answer all questions, you will have the following grading option:
.3(exam 1) + .3 (exam 2) + .4(final)
grade = .1(exerc&partic) + .2 (response papers) +.7 max .3(exam 1) + .7(final)
.3(exam 2) + .7(final)
2
If you fail to meet the requirement for the option, your grade will be calculated as follows:
grade = .1(exercises and participation) + .2 (response papers) +.7[.3(exam 1) + .3 (exam 2) + .4(final)].
We have a prefector, Josh Dripps, who will set up times for help sessions early in the term.
Please use the prefector and prof as resources if, after you review your notes and readings carefully, you
still don’t understand something – the term is short, so don’t stay confused for long!
Required Readings
Parkin, Microeconomics, 10th ed. (readings indicated in parentheses in the course outline)
Various readings (in course folder – keep looking if you don’t see it at first; it’s there! – or via url)
Predicted Course Outline
PART 1: FUNDAMENTALS
Mar 27: Introduction, basic concepts, and course objectives (Ch. 1, including appdx)
EXERCISE 1
Becker --The Economic Approach to Human Behavior
This syllabus
Mar 29: Opportunity cost, comparative advantage, exchange, production (Ch. 2)
EXERCISE 2
Basic Concepts (Pawnshops, Free the Sharks, Cities look harder at cul-de-sacs, Light one up for Social Security, Cease-fire
in diaper wars, Drinking water will be purer, Getting to the heart of the cholesterol issue, Does widening the interstate
worsen, Mileage vs. Mortality, Killer air bags); Sea Captains;“Stadiums, Kids,”
http://www.clevelandfed.org/Forefront/2010/09/ff_2010_fall_05.cfm
Response paper 1: please read both but choose one of the following (due Mar 29, discuss Apr 3) -Basic Concepts (Punctuality pays, True costs of SUVs)
Apr 3: Demand and supply: use of models, marginal analysis, markets, prices (Ch. 3, 5)
EXERCISES 3 and 4
Demand & Supply 1 (Love Canal homes to go on sale, The miracle of trade, LA solves manhole mystery, Condom
shipments to Egypt, Firms buy policies from those needing, At last 'guests')
Response paper 2: please read all but choose one of the following (due Apr 3, discuss Apr 5) -- Demand
and Supply 1 (Washington’s Underworld Entrepreneurs), Under Kidney Transplant Proposal, A Meter So
Expensive http://nyti.ms/yu7JoI
Apr 5: Demand and Supply: efficiency, impediments to exchange, policy (Ch. 6-7)
EXERCISE 5
Problem set 1 due Apr 5
Demand & Supply 2 (Minnesotans' magnanimity, How to increase supply of organs for those in need, Air travelers need a
federal fare standard, How Congress raises the price of your clothes, Should drug use be legalized?, Why fuel price
protests command wide support, Ethicists call organ donations 'social duty', Do all airlines deserve a taxpayer rescue?,
Steel tariffs, Game theories)
Response paper 3: please read both but choose one of the following (due Apr 5, discuss Apr 10) –
Elasticity (A drink at all costs, Great Liberal Smokeout)
3
Apr 10: Elasticity (Ch. 4), review for exam
EXERCISE 6
Elasticity (As the worm turns playing, Price plays key role)
Apr 12: TERM EXAM
PART 2: CONSUMER THEORY
Apr 17: Budget constraints, utility, preferences, and demand (Ch. 8, Ch. 9 to p. 213)
EXERCISES 7, 8, 9
Consumer Theory 1(More states including Minnesota…)
Response paper 4 (due Apr 17, discuss Apr 19) – Consumer Theory 1 (The economics of fat)
Apr 19-24: Substitution and income effects, output demand and labor supply (rest of Ch. 9)
EXERCISE 10
Apr 24-26: Multiperiod optimization, present value (pp. 434-5)
EXERCISE 11
Problem set 2 due Apr 24
May 1: Risk, expected utility, financial markets, arbitrage (Ch. 20)
EXERCISE 12
Problem set 3 due May 1
Consumer Theory 2 (Probable future of Minnesota’s lottery, Pennies from hell, Exuberance is rational, Economic sleuths,
DH as moral hazard, Students find $100 textbooks)
May 3: TERM EXAM
PART 3: THEORY OF THE FIRM
May 8: Firm organization and behavior (Ch. 10)
Response paper 5 (due May 8, discuss May 10)
The social responsibility of business (inexplicably included in Consumer Theory 2)
May 10-15: Perfect competition, cost curves, supply curves (Ch. 11-12)
EXERCISE 13
Competition (The Monks of St. Benedict, State and Market)
May 17-22: Monopoly (Ch. 13, skim Ch. 14)
EXERCISE 14
Monopoly (Report finds excess profits…), Coffee, Tea ….
Response paper 6: please read both but choose one of the following (due May 17, discuss May 22)
Samuelson-The Gates …; Ticketmaster http://www.nytimes.com/2011/04/19/business/19pricing.html
4
May 24: Oligopoly, game theory (Ch. 15); Factor markets (Ch. 18)
Problem set 4 due May 24
Game playing
EXERCISE 15
Oligopoly (A bad deal on trash – inexplicably included in Monopoly, Report: Saudis exceed ..., 70 new taxi licenses,
OPEC nears agreement …) Contracts, Combinations…,
Response paper 7: Please read both but choose one of the following (due May 24, discuss May 29)-Million Dollar Men, Minimum Wage
PART 4: SPECIAL TOPICS
May 29: Public goods, externalities, taxes, general equilibrium (Ch. 16-17)
EXERCISE 16
Problem set 5 due May 29
Special Topics (Private profit-public service, Smokers less of a cost burden than drinkers, Cyanide devastates tropical fish,
Tolling would benefit/Citizen verdict in)
Take me out to the ballgame at http://www.nytimes.com/2002/01/10/business/economic-scene-take-me-ballgame-but-dont-make-taxpayers-build-ballparkhigh.html?scp=5&sq=substitution%20and%20income%20effects&st=nyt&pagewanted=1
FINAL EXAM during scheduled exam-period time Sat. June 2, 3:30-6 pm; No self-scheduling
5
A few tips on writing well – J. Wahl
Write from the top down. Start with your most important point, then develop it. Don’t keep your reader guessing.
Use good topic sentences. Topic sentences should tell your reader the point of the paragraph.
New thoughts generally require new paragraphs.
Use transition sentences for flow. When you turn to a new thought, be sure your reader can connect backward and
forward to other parts of the text.
Eschew the passive voice. “Mary hit the ball” is better than “The ball was hit by Mary.” (PASSIVE)
Avoid indirect wording. As much as possible, eradicate the phrases “there are,” “it is,” and the like from your
writing. Use participles and gerunds if appropriate.
Avoid run-on sentences. (R/O)
Vary sentence structure to enliven your writing.
Watch your spelling (sp), grammar, and punctuation. Look out for singular/plural agreement. (S/P) Note: the word
“data” is plural. Use semicolons appropriately (that is, to separate complete sentences). Don’t overuse
parentheticals – dashes can be your friends as well.
Watch for dangling clauses. “Hot from the oven, I ate the pizza.” This sentence implies that I (not the pizza) am hot
from the oven.
Use parallel phrases. “I like to swim, read, and eat” is better than “I like swimming, to read, and food.”
Avoid unclear referents (like “it” without an obvious connection to what “it” is).
Plain English is best. Don’t overwrite.
Use your topic paragraph effectively.
Good titles are nice. So are zippy first sentences.
Learn the difference between “because” and “since.” “Since” refers to time: “Since 1940, women’s hemlines have
crept up.”
Know the difference between “that” and “which.” Generally, if you can use “that,” do so.
Don’t be wordy. For example, you rarely need to use the term “in order to.”
Rewriting is the key to writing well.
Consider your audience. Use the appropriate tone and style; above all, don’t be boring!
GOOD WRITING RESOURCES: Strunk and White, Chicago Manual of Style, Zinsser (On Writing Well, Writing
to Learn), Turabian, Harcourt-Brace College Handbook