DEPARTMENT OF ECONOMICS - QUEENS COLLEGE OF CUNY
703 Price & Distribution Theory
COURSE OUTLINE
Microeconomics (Class Website: www.profdatqcecon.org)
Prof. M. Dohan
Fall 2005
Due to family obligation on November 23, each class will end 9:30 to make up for the missed class.
Reminder: This course assumes that you remember algebra, geometry, the first parts of calculus and
your 102 Introduction to Microeconomics Course. Start using the Aplia Online Teaching Module
ASAP You can review your math and graphing skills there.
I. Analysing Economic Problems
Aug. 31
Sep. 07
Key Concepts, New Concepts and a Review of Supply and Demand in a Single Market
Opportunity costs as real costs, concept of rational behavior, principal-agent problem, social costs versus private
costs, externalities, common property, property rights, private versus public goods.
Marginal cost, marginal benefit: the principles of optimal choice
Three Key Analytical Tools: Constrained Optimization, Equilibrium Analysis, Comparative Statics ..................... 1
Supply and Demand and Society The Algebra of Supply and Demand .................................................................. 2.1
Exogenous events and policies, interdependence of markets and impacts on markets. Shifts versus movement along.
Math for Economists: Review ................................................................................. Appendix (A.1 and A2)
Price Elasticity of Demand and related concepts
Measuring Responsiveness Quantity Demanded to Price Changes ..................................................................Ch. 2.2
Determinants: Brand versus market, Income and supply elasticities and long vs short run ...................... Ch. 2.2-2.4
Using elasticity to estimate demand curves and more back of the envelope calculations ....................................... 2.5
III. Consumer Behavior and Market Behavior
Sep. 14
Consumer Preferences, Revealed Preferences, Ordinal Utility, Ratios of Marginal Utilities ................. Ch. 3
Diminishing Marginal Utility, Ordinal versus cardinal, concept of indifferences curves and meaning of shapes
Graphical/Mathematical Analysis of utility functions and indifference curves->marginal rate of substitutionxy
Consumer Choice with Budget Constraints: The Dual: Utility Maximization or Cost Minimization? .. Ch. 4
Budget Constraints and prices, Optimal choices assuming utility maximization.
Mathematics of Consumer Choice (also look at finding maximums and minimums) ....................... Appendix A.1-A.5.
Sep. 21
***Theory of Demand: Income and substitution effects, deriving demand curves ...................... Ch. 5.1 & 5.2
Sep. 28
Consumer surpluses and Price Changes, Network Externalities and the Demand Curve .............. 5.3, 5.4, 5.5
Applications: Network Externalities, Backward Bending Supply Curve of Labor .........................................Ch. 5.6
Quiz: Chapter 1-5 8:00 to 9:30 on Sept 28 based on questions in Aplia, Blackboard, selected question in workbook and text
and from class, through Chapter 5.Keep up with your work.
No Class on Wednesday Oct 3 Rosh Hashanah and Wednesday October 12 Yom Kippur
During this two weeks of no Wednesday classes, read and do Chapter 6
IV. Theory of the Firm: Production and Cost-Minimization,
Oct. 19
Production Functions: One variable & Law of Diminishing Marginal Returns ............................. Ch. 6.1, 6.2
Graphics and Mathematics of Total, Average and Marginal Revisited (Productivity Curves)
Production Functions with Two Variables: Isoquants & Economies of Scale ..................................... .6.3- 6.6
Cobb-Douglas Production Function, Elasticities of Input Substitution ....................................................6 Appendix
Oct. 26
Cost Minimization and Choice of Inputs ..................................................................................................... Ch. 7
Short run versus long run, sunk-costs, fixed costs and variable costs. Expansion paths for higher Q
Price elasticity of demand for inputs, the mathematics (looks like consumer theory all over again)
Nov. 2 Cost Curves for Various Levels of Output
Cost Curves in the Long Run, Economics of Scale, Scope and Experience, Shepard’s Lemma ........... Ch. 8.1
Short Run and Shut Down .......................................................................................................................... Ch. 8.2
Special Topics: Economies of Scope, Economies of Learning by Doing ........................................................ 8.3
V. Profit Maximization: in Perfect Competition)
Nov. 9
Profit Maximization and Perfect Competition: Supply Curves: Firm and Industry ............................... Ch. 9
Economic Efficiency: Producer and Consumer Surplus Maximized
Lots of in-class problems.
Nov 16
Competitive Models and Public Policy (Taxes, Subsidies, Price ceiling & supports, quotas tariffs) ............ Ch. 10
Public Goods & Externalities: Property Rights, Coase Theorem, Optimum supply of public goods .... Ch. 17
Nov 23
(This class will be a review followed by an exam from 8 to 9:30 if I have to take my 94 year
old mom to Seattle). My colleague will teach the class. Have a nice Thanksgiving.
VI Market Structure and Market Failure
Nov 30
Monopoly and Monopsony: Exercising Power and Measuring Monopoly Power ................................. Ch. 11,
Dec 7
Price Discrimination and Capturing Consumer Surplus: Regulating Monopoly and Industries .......... Ch. 12
Dec 14
Oligopoly and Cartels (OPEC) and Monopolistic Competition ................................................................ Ch. 13
Finals Period During Finals Week, Dec 16 – Dec 23
The Final is Cumulative
1. REQUIRED TEXT and Study Guide Package: Microeconomics, An Integrated Approach, by David
Besanko and Ronald R. Braeutigam, 2nd Edition Wiley 2005, Study Guide for Besanko and Braeutigam
Microceconomics by Katharine Rockett, 2005 along with E-Grade Plus and Blackboard Study Assistance.
ISBN 0-471-78065-0. DO NOT BUY A USED TEXTBOOK.
2. Aplia for Besanko and Braeutigam ($28.00)
3. REQUIRED NEWSPAPER or Economist: Wall Street Journal 32.00 including free online
subscription. Often the examples in lecture will be based on current articles in the Wall Street Journal.
You are required to read the 1st page of the WSJ. Focus your reading on “oil and gas markets”, automobile
sales, wages, fares, and industrial structure in the airline industry, popular music, the pharmaceutical
markets, and housing markets. Keep those articles or at least notes for the occasionally mini-essays you
will be asked to write. No need to read the financial sections for this course (e.g. Money and Investing).
Price Theory is like a great symphony: Contrary to common belief, “Price Theory” is really a straightforward “fun” course with many real life applications and lots of “puzzle solving” as you will see in
reading the Wall Street Journal. Although we teach it with lots of graphs and mathematics at times, there
really are a few repetitive themes – marginal analysis and optimization - that appear again and again, like
in a great symphony, played on different instruments.
Studying for Quizzes and Exam
Virtually every question on a quiz or exam will be taken either from 1. the “Learning-by-Doing
Exercises” in the text, 2. problems from Aplia, the online study guide, 3. the review questions or the
problems at the back of the text , 4. Problems from the Study Guide and 5. Handouts. Of course, the
numbers will be changed, but the concepts and methodology to solve the problems are the same.
A highly productive way of studying is to read the chapter, practice the Aplia practice problems and then
try all the problems at the back of chapter before class. Try to form some “study-buddy groups”.
Think about studying about 8-10 hours per week including 4 hours preparing the assigned problems
and answering the review questions. An hour or two reading the Journal for the above topics and for
building your vocabulary. This is really a “core” course and learning the methodologies, theoretical
concepts – and the institutional and factual information – will greatly help you to excel in your other
economics courses and in the accounting profession.
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QUEENS COLLEGE - DEPARTMENT OF ECONOMICS
Economics 703 Price & Distribution Theory
Graduate Class Fall 2005
This class will also counts as Eco 205 and Eco 225.
Prof. M. R. Dohan
Useful Information
1. CLASS MEETINGS: 6:30 to 9:30 Wednesdays. PH 132 Notice room change and added 10
minutes. Office hours are after class..
2. Class Website: www.profdatqcecon.org will have old exams, announcements.
3. By going over as many problems as you can in the book, workbook and Aplia as well as Blackboard,
you will learn the most and do well in the course. The quizzes will drawn a significant portion if not
the entirety of the exams and quizzes from these problems.
4. Tutoring: I shall remain after every class from 9:30 for extra tutoring and answering specific
questions. This is not the lab however. Office hours are not suitable for tutoring because I do
advising during these hours. So use this extra after-class time I am giving you.
5. Office and Office Hours for advisement and transfer evaluation.
1. Powdermaker Hall, Room 306 F, (718) 997-5461 (but BEST SEND ME E-MAIL).
2. Mondays 3:30-4:30 & 6:30-7:30 and Wednesdays 3:30-4:30 (These are also the office hours for
transfer evaluation and advisement, who have priority.). Our “after class office hours” are best
6. APLIA PROBLEM SETS AND LABS: Economics 703 does not have an additional lab. Aplia provides
the extra practice problems as well as graded quizzes.You must register for Aplia for Besanko and
Breautigam at http://econ.aplia.com using the course key found in the 703 Course Information at
www.profdatqcecon.org. Be sure to use the right code and to pay for the course (about $30) when
you sign up. Also note the Assignment Completion Deadlines after which you can NOT work
further on the graded quiz. Up to that date, you can work on it, change answers, etc.
7. E-Mail: mrdqcecon@citidexli.com or michael_dohan@qc.edu.
VIP In order to get through my spam filter, always enter first in the subject line QCEco 703: then
your name and topic. NOTICE THE COLON AFTER 703. Then your email will get through.
8. Communication with class: From time to time I will make announcements, put copies of old
exams and problems and give extra credit assignments on my website www.profdatqcecon.org or
handouts, either in class or via e-mail, using the address registered in your Bb account. You
should immediately be sure that your correct e-mail address is registered in Bb and that your spam
filter does not block messages from my e-mail address. Some of these announcements may modify
some of the arrangements set out in this syllabus. You are responsible for keeping track of these
announcements, even if you miss class for good reason, enroll after the first day, or miss e-mails.
9. PHOTO: Each student should send me a digital photo so that I can remember your name.
10. READING TEXT IS REQUIRED: Doing the reading, working through the problems and reviewing
carefully the “Learning by Doing Problems” in each chapter in advance of class is strongly recommended.
11. READING The Wall Street Journal or the Economist IS REQUIRED: Focus on the front page
and on articles about the industries identified at the beginning of the semester.
12. STUDY GROUPS: Try to form a study group of three or four students to work together on
problems, take notes in your absence. You are not competing against each other for grades.
Everybody can get an A if you all learn it well. You may record or videotape my lectures.
13. FAIRNESS TO FELLOW STUDENTS AND ACADEMIC INTEGRITY:
i. Lateness: Try to come to class on time but I know your schedules and work makes it difficult at time.
Come to class even if you are late. I shall understand.
ii. Absences: Please e-mail me before a class if you know you will be absent. Or at least afterward. Have
someone take notes
iii. Academic Honesty You are expected to be fair to your fellow students by observing the highest
standards of academic integrity as outlined in the College Bulletin. See statement below.
iv. In class exams are closed book (no books, no notes, and no similar study aids are permitted to be
used). No talking during exams or quizzes. Do not represent other's work as your own. Any failure to
observe these standards at any time will (at least) drop your grade to an F for the course.
v. Aplia graded problem sets should reflect your own work. Discussion with the study-buddies is
expected. But write your own answers and explainations and math equations. Above all, make sure
your answers are right on any take-home problems. Your study-buddy’s answer could be wrong. So
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when you finally write your answer for the take-home, be confident of the methodology and math.
14. GRADING: There is no predetermined grading curve. Everybody can earn A’s or B’s or C’s and D’s.
Your grade is based on two exams, Aplia score, prepared class participation, the final, and the WSJ
analyses using concepts developed in the course. Being prepared for class (having done the problems and
reading) further improves your grade. The Final is Cumulative and drawn only on the two exams and
take-home problems – with different numbers or example, but the same underlying question or concept.
The final has the largest weight and if you fail the final badly, you fail the course.
15. VOCABULARY LISTS: The text is rich in example and vocabulary. Keep a list of new words used in
lecture, the textbook and the Journal. Any word in the reading may be used in exams and quizzes.
16. ASSIGNMENTS AND STUDY HABITS: Please read the chapters before the lectures. This course
cannot be "crammed" or understood if you do not keep up with the reading and doing the problems in the
workbook. Plan on about 8-10 hours of study every week plus more for exams. This is one of your
most challenging courses because it is not simple memory but rather problem solving.
The following is borrowed liberally from my colleague Ted Levine who taught Economics 225..
Course Overview:
This course provides a mathematically and theoretically rigorous grounding in neoclassical (also called
“mainstream” or “orthodox”) price theory (otherwise known as microeconomic theory). We will treat this
body of theory primarily as an object to be studied and understood thoroughly from the inside, to be used
to understand economic phenomena and to predict the consequences of different economic institutions
and policy interventions. The foundation we will build will prepare students for advanced courses in the
many applications of microeconomic theory. We will also seek to contextualize and evaluate the
theoretical foundations as we develop them.
Our public discourse—concerning the relative virtues of alternate economic systems, the benefits, costs,
winners and losers of globalization, the effects of policy decisions over taxes and tariffs, minimum wages,
over-time, and health and safety laws, and practically every other aspect of public life—is infused through
and through with the language, concepts and many of the results of microeconomic theory. Its
applications daily inform business and policy decisions the world over. A careful understanding, of its
foundations, structure, applications and limitations, is therefore important for voters, policy-makers and
businesspeople – and accountants -- alike. Of course, it is especially important for technicians of various
sorts (actuaries, financial market analysts, etc.) and economists who will make direct use of
microeconomic theory in their daily work.
Topics to be Covered:
We will emphasize a thorough and rigorous understanding of the foundational core of microeconomic
theory and, time permitting, will address selected applications and modifications of the theory. Thus, we
will strive to follow to the schedule of topics, moving ahead where possible, slowing down where needed:
General Expectations:
As adult college students in an intermediate economics class, you are responsible for staying informed and
responding appropriately to information and announcements, using common sense and taking initiative to
solve logistical problems promptly, continuously assessing your own mastery of material covered in class
and doing extra work as needed to fill in gaps in understanding, keeping up with readings and
exercises in the textbooks, using available resources and seeking my help, coming to class prepared to
discuss the material to be covered or to take short quizzes, and participating actively in class. Students
should expect exams to require them to apply material they have learned to new problems and situations.
Students should establish support systems by getting to know classmates, and knowing how to contact
them in case of missed classes, lost textbooks and other such unforeseen events. Students, who add this
class after the first day or miss classes or e-mails, are still responsible for being aware of all information
and announcements given out and meeting all requirements and deadlines. Students should have access to
copies of required textbooks as of the second day of class, even if they plan to order them on line or access
them by other means.
Prerequisites: Students who do not meet prerequisites (Eco 102, algebra and 1st course in calculus) listed
for this course in the College Bulletin and Schedule of Classes, before beginning this class, should know
that they are not likely to pass this class and may be dropped. (However, there is no entitlement to be
dropped in lieu of a low or failing grade.)
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Course Requirements:
Students should take it upon themselves to read the covered chapters (including appendices and the
corresponding chapter in the study guide) and work as many of the problems in Aplia, at the end of the
chapters and in the study guide as needed to be certain that they could work similar types of problems on
exams. Students should do this continuously throughout the course as material is covered (as opposed to
trying to cram it in before exams), and seek my help along the way with any difficulties. I will expect
students to come to class prepared and to attend and actively participate in all class sessions. I may call on
students and may give short, unannounced quizzes from time to time.
In addition to the above work that students should regularly do on their own, I will specifically assign the
following:
 The Aplia Practice and Grade Programs for the Chapters assigned. You will see them.
 2 mid-term exams and a final exam.
(The final exam will be cumulative, and the second mid-term will be somewhat cumulative only to the
extent that the material covered on the second exam depends on material covered earlier. Exams will,
in general, not be curved. If I do find it necessary to curve a particular exam, this does not in any way
indicate that subsequent exams will be curved.)

Two short (about 5 minutes) presentations, applying some aspect of microeconomic reasoning or
theory to a article in the WSJ (or Economist)
(These presentations will be part of class participation. The quality and quantity of class participation
and preparedness (including quizzes), may affect student grades positively (if participation is good) or
negatively (if participation is lacking or students are seriously or repeatedly disruptive).
The first step in computing a course grade will be to compute a base grade as follows:
Aplia and Blackboard:
20%
Midterm I:
20%
Midterm II:
20%
Final Exam:
40%
The formula may be modified to give greater weight to later exams than earlier ones, in the event that students
show significant improvement. However, I will not “drop the lowest grade.” The final course grade may be
higher, lower or the same as the base grade computed this way, depending on student participation.
All homework and exams are required. This means that, except in the case of documented
emergencies, students may fail this class for failing to take one or more exams or failing to submit one or
more homework assignment by the announced deadline, regardless of the grade they would receive if they
got a zero on the assignment in question. The only exceptions are documented personal or family medical
emergencies, in which students notify me as soon as reasonably possible and provide satisfactory
documentation as soon as reasonably possible. Students, who must miss one of the mid-term exams due
to a legitimate, documented emergency, will have that exam grade replaced by a weighted average of the
two remaining exam grades. Students who miss a homework deadline for a legitimate, documented
reason must still complete the Aplia homework which I shall make available on a case by case basis..
Academic Honesty:
Students are responsible for knowing and following the College’s policy on Academic Dishonesty,
Cheating and Plagiarism. Students who cheat or commit plagiarism (even once) will receive an F for the
course, and will be referred to the Dean of Students for further disciplinary action. In an exam setting,
students are responsible for making sure there is no reason to suspect cheating. That means that students
must not look at other students papers or communicate with other students, must not wear baseball caps or
other hats with brims (or sunglasses), must not put anything into or take anything out of bags or pockets
during exams, and must make sure that the aisles and empty chairs/desks around them are absolutely clear
of papers, books, bags, jackets, other clothing, electronic devices and debris. Your desk top must be free of
all writing related to our course. All personal electronic devices (except simple calculators and watches)
must be turned off. Electronic foreign language translators are not allowed. Calculators capable of
producing graphs, solving equations or memorizing notes or formulas are not permitted. Students who only
have such calculators should borrow or purchase a simple calculator that only performs basic
operations. Materials not permitted to be used during exams must be inside completely enclosed bags, and
stored completely beneath students’ own chairs or at the front of the room. Students not adhering to
these rules will be presumed to be cheating. No warnings will be given other than this one.
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Group work I highly encourage students to study together and work together on assigned homework in
this class, and will not penalize students who do so. However, students must hand in their own
assignments and do their own Aplia Assignments to receive credit.
The Golden Rules of Class Behavior
Please do not talk to your classmates during lecture. If you have a question, please raise your hand and
ask me.
Please do not blurt out answers to a question directed at a specific student.
Please turn off all cell phones. You should take a voice mail and have a special announcement that you
are in class and will call back during break or after 9:30. If you are expecting a “crucial phone call” or
have children at home alone, please let me know for exceptions to this rule.
Students are not permitted to leave the classroom during lectures or quizzes for any reason.
Any student whose behavior disrupts the learning atmosphere of the class will be sent to the Dean
of Student.
Religious Requirements and Special Needs:
Students, who will be prevented by religious requirements from attending class on certain days, are responsible for
notifying me at the beginning of the semester, and again before exams are scheduled. On exam days, students who
have specific religious clothing requirements must bring appropriate clothing that complies with my policy on
academic honesty. Students with disabilities requiring special accommodations should go to the Office of Special
Services at the beginning of the semester and follow all notice requirements provided by that office
Student Access to BlackBoard on CUNY – Fall 2005
1.
How is BlackBoard different from previous semesters?
If you have used BlackBoard before, the following information is very important. If this is your first time using BlackBoard for
a course, you can skip to number 2.
BlackBoard is now running on a central server at CUNY, not on a local server at Queens College. You should no longer use the
URL blackboard.qc.edu to access BlackBoard, and you no longer have any use for the BlackBoard user ID and password you
have been using. BlackBoard is now accessible using the CUNY Portal, available at www.cuny.edu. For this, you need a Portal
ID and password. The CUNY portal contains a great deal of information aside from BlackBoard.
2.
Getting a Portal ID is the first step.
The only information you need to log on to BlackBoard is a Portal ID and a Password. To get a Portal ID, go to www.cuny.edu.
Click on the "Log In" link in the left frame on the bottom. Click on "Register Now!". You will be asked for your last name,
Social Security Number and date of birth. (All of this information has been supplied to the Portal by the Registrar.) You will
then be asked to create a Portal ID and password. Obviously, you need to remember these items! If you have been successful at
getting a Portal ID, proceed to number 3. Otherwise, the following problems may occur:
a. The Portal does not recognize you.
If you get the message "One or more fields below did not exactly match the data we have in our records. Please try
again.", this means the information supplied by you was entered incorrectly, or it does not match what the Registrar has
on file, or your information is not in the Portal database. The student help desk in I-Building may be of assistance in
looking up your information.
b.
The CUNY Portal is not available.
This happens more often than we would like, and the only thing you can do is try later.
3.
Logging on to the Portal and BlackBoard
After registering for your Portal ID, or after going to www.cuny.edu and clicking "Log In", you should enter your Portal ID
and password. You will get a screen with a lot of information. Before you do anything else, you should make sure that your
email address for the Portal system is correct. Click on "My Profile" on the bottom of the left frame. Check you email
address that appears, correct it if necessary and click "Save". This is important, because if you forget your password, it will
be emailed to that address. You may need to click on the "My Page" link a the right of the top horizontal frame.
Now you can log in to BlackBoard. In the top left balloon labeled "SSO Applications..." you should see a link for
BlackBoard. Click on that. You will see a screen with all the CUNY Colleges, and links saying "student" by any college in
which you are using BlackBoard. Click on the "Student" link next to Queens College. This should bring you into the
Queens College BlackBoard page, and you are finished with the log in process. It is a good idea to click on "Personal
Information" in the Tool Box at the left. Click on "Edit Personal Information" and make sure your email address is correct.
4.
5.
If the Portal is down, are you doomed?
If the Portal is down, but BlackBoard is running, you will get a page from www.cuny.edu with a link to the "doorway".
This is so you can still enter your Portal ID and password and get to BlackBoard, even though you cannot log in to the
Portal.
Forget something?
If you forget your password, there is a "Forgot Password" link on the Portal Login page. It will email your password to
you. The email address it uses is the one on file with the Portal. As noted in part 3, you should make sure this is a current
email address. If you email address is wrong, you will need to consult the Student Help Desk in I-Building.
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Econ 703, Fall 2005, Prof. Dohan, Price Theory and Distribution
Student Statement of Understandings
I have read the course syllabus in its entirety, have had the opportunity to ask the instructor questions and
clarify any doubts about any aspect of the syllabus, and have received full and clear answers to all such
questions.
I understand that certain information contained in the syllabus may be changed during the course of the
semester, and that such changes may be communicated either in class or by e-mail. I acknowledge that it
is my responsibility to keep up with such announcements, even if I miss class or e-mails or add the class
after the first day, and it is my responsibility to ensure that my Blackboard settings and e-mail settings
allow me to receive e-mails sent to the address registered for me in Blackboard.
_______________________________
PRINT NAME
_______________________
Last 4 digit STUDENT ID
_________________________________________
SIGN
DEGREE PROGRAM AT QC_____________________________
Home Phone__________________________________________________________________________
Cell Phone _________________________________________________________________________
Email (non-College) __________________________________________________________________
College Email _______________________________________________________________________
Work Phone _________________________________________________________________________
Work Address _______________________________________________________________________
Type of Work and Position _____________________________________________________________
Hours per Week ______________________________________________________________________
Planning or have taken CPA exam _______________________________________________________
Previous Education
Undergraduate College, Degree and GPA __________________________________________________
Economics Courses Taken and When _____________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
Math Courses Taken, Grades and When ___________________________________________________
___________________________________________________________________________________
Optional Language Spoken at Home ____________________________________________________
Optional Other Languages Spoken _____________________________________________________
Optional Place of Birth________________________________________________________________