MicroEconomics (EC202) Fall 2009 Instructor: Travis Wiseman Economics 202 Syllabus Class time: M-W-F: 9:00-9:50AM Office/Hours: Clark C 320A M-W-F: 10:00-11:00 and by appointment Phone: 970.491.5336 Email: travis.wiseman@colostate.edu Course Description: Most modern economists define economics as a social science, which studies how societies solve the problems, which flow from relative scarcity. These problems are commonly divided into four parts: allocation, distribution, stability, and growth. The study of allocation problems – what to produce and how much -, and the distribution problem – how real income is distributed among society’s members – are termed Microeconomic Theory. In microeconomics the major theoretical tools are marginal revenue, marginal cost, demand and supply analysis applied at the level of the household, the firm and the industry. Course Prerequisite: A basic understanding of algebra and geometry. Course Objective: A fundamental objective of microeconomics theory is to explain the forces that determine relative prices, which economists believe to be essential factors in allocating resources and distributing income. Required Text: Campbell McConnell, Stanley Brue, and Sean Flynn, Economics: Principles, Problems, and Policies, McGraw-Hill/Irwin; 18th edition. Course Evaluation: There will be two one-hour exams (35%), nine twenty-minute quizzes (35%), and a final examination (30%). Make-up exams are given at the instructor’s discretion and are only possible one day before or after a scheduled exam. No other arrangements will be made. There will be no make-ups for quizzes. Grade: A B C D F 90-100 80-89 70-79 60-69 below 60 Course Attendance: Students are expected to attend class on a regular basis. If, however, a student is absent from class, the absence must be authorized. There will be a grade reduction of 5% off the following exam for each unauthorized absence. Class Participation: Students are strongly encouraged to participate in this course. The blackboard is a key tool used in the learning process. Students who do not wish to go to the blackboard may approach me after the first class and will not be penalized for not participating. Current Events: You may want to keep informed on current economic development by reading the following: Wall Street Journal, Business Week, and the Economist. You will have the opportunity to subscribe to these publications at a discounted rate. Though these readings are not required, it helps to stay current on issues related to the economy as this will help facilitate class discussion. Class Schedule Your reading assignments are listed on the syllabus. Deviation from this schedule will be announced in class. What is Economics The basics of economics Scarcity and choice Terminology Economic goals The circular flow Chapter 1 The Economic Problem Graphs and their meaning Scarce resources Opportunity cost Production possibilities curve Chapter 2 Understanding Individual Markets Demand The law of demand Change in demand Change in quantity demanded Supply Chapter 3 Quiz 1 The law of supply Change in supply Change in quantity supplied Quiz 2 Understanding Individual Markets, cont’d Chapters 7, 20 Price elasticity of demand Price elasticity of supply Income elasticity Cross price elasticity Quiz 3 Understanding Individual Markets, cont’d Price ceiling Price floor Black market Rent control Quiz 4 Understanding Individual Markets, cont’d Consumer choice The theory of demand Total utility and marginal utility Consumer decision Income effect Substitution effect EXAM 1 Chapters 8, 21 Chapters 1,2, 3, 7, 8, 20, 21 Exam 2 material begins here Production and Cost Production function Production in the short run Marginal products Average products The law of diminishing returns Quiz 5 Production and Cost, cont’d Short run cost, fixed cost, variable cost, Chapters 9, 22 Marginal cost, average cost, long run cost Economies and dis-economies of scale Quiz 6 Profit Maximization and Pure Competition Chapters 10, 23 Quiz 7 Market supply The firm’s short run supply curve The decision to shut down in the short run The long run supply curve EXAM 2 Chapters 9, 10, 22, 23 Monopoly Chapters 11, 24 Pure monopoly How monopolists maximize profit Evaluating market outcomes under pure monopoly The social cost of monopoly Quiz 8 Chapters 11, 12, 24, 25 Price discrimination Regulating monopoly Monopolistic competition Quiz 9 Oligopoly Cartel, price leadership, and the kinked demand curve REVIEW CUMULATIVE FINAL EXAM: 60% on material covered after exam 2, 20% on exam 2 material, 20% on exam 1 material