Université d’Ottawa/University of Ottawa
Faculté des sciences sociales /Faculty of Social Sciences
Science économique/Economics Department
MICROECONOMIC THEORY II
ECO 2145
VICKY BARHAM
FALL 2012
Course schedule: Mondays 14:30-16:00 and Thursdays 16:00-17:30; DGD Tuesdays 2:30 – 4:00 p.m.
Course location: SITE A0150
Office: 55 Laurier Ave, FSS 9005
Office hours: Mondays 1:00 to 2:00 p.m. or by appointment
Telephone: 613-562-5800 x1419
E-mail: vbarham@uottawa.ca
Assistant: TBC
COURSE DESCRIPTION
Official course description Market structures: monopoly, bilateral monopoly, imperfect competition, duopoly,
oligopoly. Alternative theories of the behaviour of firms and their actual behaviour. General equilibrium. Inputoutput analysis. Welfare economics: Pareto optimality, Arrow's impossibility theorem, compensation principles,
second best, consumer surplus, X-efficiency. Intertemporal decisions and assets. Uncertainty: decisions, risk
aversion, insurance, information. Externalities and property rights. Public goods and government role.
Economics of regulation. Distribution of income. Technological change.
…This course builds on the ideas introduced in ECO2144. It first considers the impact on the determination of
prices and quantities of departing from the assumption of perfect competition, and supposing that firms have
market power. Subsequently, we explore the issues of risk and uncertainty, trying to understand how these
factors affect decision making by firms and individuals. Next, we delve into general equilibrium theory, to
understand how markets are inter-related. Finally, we consider the behaviour of markets when there are
externalities or public goods, and show that in such circumstances market outcomes are generally inefficient.
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PREREQUISITES
The prerequisite for this course is ECO2144. If you did not pass Micro I, you will be automatically deregistered
from Micro II. (And, yes, I know that you can re-register, but you will again be automatically deregistered.)
REQUIRED COURSE MATERIALS
Besanko, David and Ronald R. Braeutigam. Microeconomics, 4th edition. Hoboken, NJ: John Riley and Sons, Inc.,
2008.
Rockett, Catherine. Study Guide to Accompany Microeconomics Third edition by David Besanko and Ronald R.
Braeutigam. Hoboken, NJ: John Riley and Sons, Inc., 2008.
Both textbook and study guide are available at Agora Bookstore and Internet Café, 145 Besserer street. The two
items can be purchased as a package deal, or they can be purchased individually.
With the purchase of the textbook you will be given a registration code that will allow you to access online
resources, i.e. eGrade Plus. It provides an online version of the text, interactive simulations and some problems
with their respective solutions.
Note: eGrade Plus, which includes an electronic version of the text, can be purchased separately or with the
study guide.
There is very little substantive difference between the 4th edition and previous editions. I will provide end-ofchapter problem guidance for both the 3rd and 4th editions.
You will also need to use chapters 10 and 11 of Intermediate Economics by Hal Varian. These are available as
a .pdf on the course website.
EVALUATION
Mideterm 1: October 4 – covers chapters 11 + 12
Midterm 2: November 5 – chapters
Final exam (not cumulative: 1h20min)
Graded homework (2 x 5%)
30%
30%
30%
10%
No make-up exams or extra assignments will be provided for student who do poorly. Homework is due in class;
any homework submitted late is assigned a grade of 0.
Unless you can present a valid medical certificate, you will receive a grade of 0 should you miss any exam or
quiz.
PROBLEM SETS + TUTORIALS
As you may be aware, ECO2145 is a course which has proven difficult for a significant proportion of our
undergraduate students. Moreover, students who earn less than a C grade are unlikely to pass ECO3153. So,
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this year the department has decided to try something new to support student learning – and we will be looking
for your feedback on the different strategies we are implementing.
The cornerstone of our new approach is the introduction of 6 problem sets. These will be posted according to
the schedule indicated below. Each student in the class has been assigned to one of three different tutorial
groups (they each meet in the same time slot), and you will also be expected to attend tutorials on two of the
problem sets. You will receive an e-mail sent to your uOttawa e-mail account indicating which tutorial group
you are assigned to; you may also check with me after class. You are not permitted to attend tutorials except
according to the schedule indicated below. You will also be required to submit two of these problem sets for
grading (see schedule below). All students will have access to the solutions for the problem sets, which will be
posted on the class website following the tutorial. (This is why no homework will be accepted late.) If for any
reason – including illness - you cannot attend class when your homework is due, you must make
arrangements to submit it beforehand.
PROBLEM SET
DISTRIBUTION DATE
September 10, 2012 Monopoly
September 17, 2012 –
Monopoly + price
discrimination
October 11, 2012
October 18, 2012
November 12, 2012
November 19, 2012
PROBLEM SET
SUBMISSION DATE
TUTORIAL DATE
PROBLEM SET
SOLUTIONS POSTED
September 17:
GROUP A MUST SUBMIT
September 24:
GROUP A MUST SUBMIT
September 18:
GROUP B MUST ATTEND
September 25:
GROUP B MUST ATTEND
September 18, after 4:00
p.m.
September 25, after 4:00
p.m.
October 18: GROUP B
MUST SUBMIT
October 25: GROUP B
MUST SUBMIT
November 19: GROUP C
MUST SUBMIT
November 25: GROUP C
MUST SUBMIT
October 23:
GROUP C MUST ATTEND
October 30: GROUP C
MUST ATTEND
November 20: GROUP A
MUST ATTEND
November 26: GROUP C
MUST ATTEND
October 23, after 4:00
p.m.
October 30, after 4:00
p.m.
November 20, after 4:00
p.m.
November 26, after 4:00
p.m.
As part of the course evaluation process, we will be soliciting feedback from you on the effectiveness of the
problem sets, and on whether you found the tutorials/graded homework to be helpful. Your frank evaluation of
these tools will be taken very seriously.
COURSE OUTLINE AND READING LIST
Market Power
Imperfect Competition and Strategic Behavior
Risk and Information
General Equilibrium Theory
Externalities and Public Goods
Chapters 11 and 12
Chapters 13 and 14
Chapters 15
Chapters 16
Chapter 17
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LECTURE SCHEDULE
Although I can’t be absolutely sure of how much material each lecture will actually cover, this is the tentative
schedule.
Chapter 11: September 6, 10, 13, 17.
Chapter 12: September 20, 24, 27.
Chapter 13: October 1, 11, 15.
Chapter 14: October 18, 22
Varian – Chapter 10: October 25, 29
Varian – Chapter 11: November 1, 8
Chapter 15: November 12, 15
Chapter 16: November 19, 22, 26, 29
Chapter 17: December 3, 5.
It is a rule of thumb that students need to see material at least three times before they start to achieve any
degree of mastery. Moreover, seeing the material several times within a short time frame dramatically
increases the speed of acquisition of new concepts. You are strongly encouraged to read through the relevant
chapter before the lecture (first exposure), and to review the chapter again, making detailed notes for
subsequent revision, within the 24 hour period that follows the lecture (third exposure). Once you have
prepared your study notes, you should then try to work as many problems as possible. By following this
disciplined approach, you will minimize the total amount of time that you actually have to spend studying
microeconomic theory, and you will maximize your final grade.
GENERAL COMMENTS
Class notes will be posted on the class web site. I do not post the answers to the end-of-chapter problems.
Students are greatly encouraged to try as many problems from the study guide (and textbook) as possible. If you
would like to have your answers checked, you can hand them in to the T.A. He or she will also be holding regular
office hours during the term.
A FINAL WORD
There is no such thing as a dumb question. (Well...at least, there are no dumb questions about microeconomic
theory.) If you don’t understand something, ask me to try again. If you don’t ask questions, I will assume that
my explanations are limpid, and that the pace and intensity of the course should be stepped up.
And, finally, I love microeconomic theory. I derive tremendous intellectual satisfaction from studying theoretical
models, and understanding how they work. I really hope that, by the end of the course, you will come to share
my passion, and that you will also fall in love with the theory of general equilibrium. I have my fingers crossed!
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