Assessment of 303
This document represents an inventory of the economic and mathematical concepts
Finkle covers in ECON 303 from a chronological perspective.
I.
II.
Course description: Intermediate Microeconomic Theory II – Examines the
economic decisions made by business firms. Subject matter includes production,
and cost theory, theory of the firm, market structures, and factor market analysis.
Enrollment Requirement: MATH 132 or 160, ECON 201 and 202.
Theory of the firm - Perloff chapter 6; 3 weeks
a. Definitions; firm’s objective – profit maximization; brief discussion of
nexus of contracts (transactions costs) and Demsetz
b. Production function: mostly numerical but some graphical exercises
i. Short run vs. long run
ii. Marginal and average products of labor (graphical and numerical)
iii. Diminishing marginal returns
iv. Isoquants: MRTS – once introduced, use of Cobb-Douglas
formulation
v. Returns to scale
c. Mathematics used
i. Precise graphing
ii. Basic calculus (simple derivatives); limited discussion of partial
derivatives; no integrals
iii. Basic algebra
III.
Costs – Perloff chapter 7; 3 weeks
d. Opportunity cost; opp./ opp. cost of capital
e. Short run costs – Almost exclusive use of continuous functions, no discrete
variables; fixed, variable and total costs
i. Precise graphing
ii. Numerical
iii. Relationship between production function and cost curves
iv. Taxes as an application
f. Long run costs
i. Cost minimization; no Lagrangian methods; discussion of the logic
of tangencies (suppose that MRTS ≠ W/R and show it is not
optimal for an interior solution); no corner solutions
ii. Isocosts
iii. Isoquants
iv. Graphical
v. Numerical
vi. Expansion paths
vii. Economies of scale
g. Long run vs. short run
h. Mathematics
i. Precise graphing
ii. Basic calculus
iii. Basic algebra; simultaneous equations
IV.
Perfect Competition and Profit Maximization – Perloff chapter 8; 3 weeks
i. Demand functions
i. Residual demand; adding (subtracting) linear equations
ii. Elasticity; revenues and profits
j.
Profit maximization
i. Marginal revenue; marginal cost
ii. Graphical
iii. Numerical
iv. Short run shutdown rule
v. Short run market supply
1. Summation of linear equations
2. Graphical
3. Numerical
vi. Long run
1. Supply; shutdown point
2. Summation of linear equations
3. Residual supply
a. Graphical
b. Numerical
4. Equilibrium
a. Dynamics
b. Graphical
c. Numerical
5. Mathematics
a. Basic calculus
b. Basic algebra: simultaneous equations; summation of
linear equations
V.
Monopoly and Pricing – Perloff chapters 11 and 12; 3 weeks
k. Demand functions; mostly linear but occasionally a non-linear demand
i. Revenues
ii. Elasticity
iii. Graphical
iv. Numerical
v. Measuring market power (Lerner index)
l. Welfare analysis (consumer surplus, producer surplus, deadweight loss)
i. Tax example (ad valorem vs. specific)
ii. Brief discussion of Posner’s rent seeking
m. Reasons for monopoly: Costs, intellectual property, barriers, etc.)
n. Regulation: Natural monopoly
o. Pricing
i. Price discrimination
1. Perfect
2. Quantity discrimination
3. Multi-market
4. Welfare analysis
5. Summation of linear equations
ii. Two-part tariff
iii. Tie-in sales
iv. Advertising
VI.
Imperfect Competition – Perloff chapter 13; 3 weeks; No game theory
p. Market types
q. Cartels: graphical
r. Noncooperative oligopoly
i. Cournot
1. Graphing
2. Calculus
3. Algebra (simultaneous equations
4. Differentiated product
ii. Stackelberg
iii. Bertrand
iv. Monopolistic competitive
VII.
Mathematics
s. Basic calculus: brief mention of partial derivatives; no Lagrangian
methods; no integrals
t. Simultaneous equations and basic algebra
u. Linear equations (summation)
v. Precise graphing
w. Geometry (basic welfare measures)
VIII.
Student Learning Objectives covered
x. Display command of and interpret existing economic knowledge
i. Understand and precisely explain key economic concepts
ii. Describe how economic concepts can be used
iii. Evaluate how economic concepts are used in economic analysis
published in the media (popular and scholarly)
iv. Summarize an economic argument
y. Apply existing economic knowledge
i. Formulate meaningful questions
ii. Understand and effectively employ relevant analytical and logical
skills to solve problems
iii. Reason systematically and understand the use of models
iv. Reason quantitatively
v. Communicate effectively (writing primarily)
z. Develop lifelong learning skills
i. Development an appreciation for using economic concepts, skills
and ways of thinking to answer questions one has about the world
IX.
X.
Assignments
aa. Reading quizzes (5%)
bb. Problem sets (15%)
cc. 5 Exams (80%)
Concepts not included
dd. No general equilibrium
ee. No efficiency in production
ff. No externalities
gg. No public goods
hh. No game theory