University of International Business and Economics International Summer Session. ECO 110: Microeconomics

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1 University of International Business and Economics International Summer Session ECO 110: Microeconomics Term: June 1-June 26, 2015 Instructor: Peter Wylie Home Institution: University of British Columbia, Canada Office hours: TBD Class hours: Monday through Friday, 120 minutes each day (2400 minutes in total) Discussion session: 3 hours each week (720 minutes in total) Credit: 4 Total contact hours: 69 hours (45minutes each) Course Description This course focuses on the fundamental concepts and analysis of microeconomics, including supply and demand, the price mechanism, costs and revenues, theories of the firm, market structures, factor markets, market failure and the impact of government in promoting economic efficiency. The course examines economic decision-making by individuals and firms and encourages students to apply microeconomic tools to current economic policy problems and issues such as pollution, rent controls, farm subsidies and welfare policies. No Prerequisite Course Overview This is an introductory level course in economics. Economics is all around us, everyday. One hundred years ago the famous economist Alfred Marshall called economics the study of mankind in the ordinary business of life. John Ferguson more recently stated Economics concerns itself with the greatest of all human dramas...the struggle of humanity to escape from want. Economics is the study of how to make choices among competing alternatives given scarce resources (and thus trade-offs) in order to improve our material well-being. It is hence a science of decision-making; the study of how people, institutions, and nations, as far as they are able to, manage their scarce resources (such as time, money and materials), how they make choices by comparing costs and benefits and act purposefully upon these choices, how they interact with each other, how their behavior reflects the incentives they face, and 1 / 6

2 how they can change behavior in response to different incentives; all with the goal of living a better life. Economics chief strength comes from its analytical framework which enables us to understand and explain the world around us and help us improve this world. Economics is a way of thinking about the world that improves our problem-solving and decision-making abilities. Mastering this course material will take some effort on your part, but it is not an overwhelming task. In Economics, a little knowledge goes a long way; a few basic ideas can be applied to many different situations. After taking this course, you should be able to read a newspaper and instinctively think about how economics applies to the situations and issues you read about. The overall learning objectives for the course are: 1. That you understand at an introductory level the basic principles of microeconomics. 2. That you are able to apply these basic principles to your everyday life and to your analysis of the world around you. 3. That you are able to discuss, using the principles of microeconomics, policy debates involving microeconomic issues such as demand and supply, price controls, taxation, international trade, government intervention in markets, firm behavior, market organization and firm market power, income distribution and inequality, and overall economic welfare. Course Goals A student who satisfactorily completes this course should understand at an introductory level the basic principles of microeconomics and be able to apply in their everyday life and in their analysis of the world around them these basic principles. There are seven sections of the course: 1: Fundamental Principles of Microeconomics; this covers the principles of opportunity cost and of comparative advantage; 2: Principles of Demand and Supply; the principles of demand, supply and market price and quantity determination and the effects of price controls and taxes in markets; 2 / 6

3 3: Principles of Markets and Welfare; how markets can lead to efficient and desirable quantity and price outcomes for society, but also how markets can sometimes lead to inefficient and undesirable quantity and price outcomes for society; how taxes being imposed in markets can affect the efficiency of these markets; and how international trade can lead to more efficient and desirable quantity and price outcomes for society; 4: Principles of Government Intervention; how externalities affect the social efficiency of markets, and what can be done to improve the social efficiency of markets in which externalities exist; how public goods can be provided, and how common resources can be managed for economic efficiency; and, in the context of taxation, the equity-efficiency trade-off in economics; 5: Principles of Firm Behaviour; the principle of rising marginal cost, its relation to average cost and other costs, and how costs for the firm differ in the short and long runs; the principle of profit maximization and how it is used by firms to determine their output in the short and long runs; and how the output and entry and exit decisions of firms in competitive markets determine the price and supply of output in the short and long runs; 6: Principles of Market Organization; how prices and outputs are determined in markets characterised by just one seller (monopoly), a few sellers (oligopoly), or by many sellers of unique but similar products (monopolistic competition); how, and in what sense, markets characterized by monopoly, oligopoly and monopolistic competition can have inefficient and undesirable quantity and price outcomes for society; and what public policy should be in regard to monopoly, oligopoly and monopolistic competition; 7: Principles of Income Distribution; the principles of demand and supply as they apply to labour markets and how wages are determined in these markets; how principles of demand and supply in labour markets can be used to explain the large differences in wages between occupations; and the nature of income inequality in modern market economies and what principles can be used to discuss public policy regarding income redistribution. Required Text N. Gregory Mankiw, Principles of Microeconomics: Sixth Edition. South-Western, This book is available electronically on CourseSmart For students also taking Macroeconomics with me this summer, you could alternatively purchase the combined text N. Gregory Mankiw, Principles of Economics: Sixth Edition. South-Western, 2012, also available electronically on CourseSmart ( which includes both Principles of 3 / 6

4 Microeconomics and Principles of Macroeconomics, at a combined price which is less expensive than the 2 texts seperately. These books are also available in US and international paperback editions, identical except for the covers. One online source for the paperback versions (at a price which is actually less than the CourseSmart electronic versions) is Edition%29-Mankiw.html In addition to reading the textbook also see the website for the textbook for extensive study tools and resources. Attendance Summer school is very intense and, to be successful, students need to attend every class session. Occasionally, due to illness or other unavoidable circumstances a student may need to miss a class. UIBE policy requires a medical certificate to be excused. Any unexcused absences may impact the student s grade. Moreover, UIBE policy is that a student who has missed more than one-third of the classes of a course will fail the course. Grading Policy In this course, grading will be based on the following: Class Attendance, Engagement and Participation 10% Friday Quizzes 45% (3 quizzes, 15% each) Friday Assignments 15% (3 assignments, 5% each) Final Exam 30% (Friday June 26) 100% Grading scale: Assignments and examinations will be graded according to the following grade scale: A A B B B C C / 6

5 C D F below 60 General Expectations: Students are expected to: Attend all classes and be responsible for all material covered in class and otherwise assigned. Any unexcused absence may impact a student's grade. A student who has too many unexcused absences may fail the course Complete the day s required reading and assignments before class Review the previous day s notes before class; make notes about questions you have about the previous class or the day s reading Refrain from texting, phoning or engaging in computer activities unrelated to class during class Participate in class discussions and complete required written work on time Course Schedules The planned schedule sketched out below may be modified to suit the interests or abilities of the enrolled students or to take advantage of special opportunities or events that may arise during the term. WEEK ONE (June 1 June 5): Fundamental Principles of Microeconomics Mon: Principles of Economics, Economic Thinking Chapters 1 and 2 Tues: The Gains from Trade, Supply and Demand Chapters 3 and 4 Wed: Supply and Demand, Elasticity Chapters 4 and 5 Thurs: Supply, Demand and Government Policy Chapters 5 and 6 Fri: Quiz and Assignment on Chapters 1-6 WEEK TWO (June 8 June 12): Principles of Markets, Welfare and Government Mon: Consumers, Producers and Markets Chapters 7 and 8 Tues: Applications: Taxation and Trade Chapters 8 and 9 Wed: Externalities and Public Goods Chapters 10 and 11 Thurs: Common Resources and the Tax System Chapters 11 and 12 Fri: Quiz and Assignment on Chapters / 6

6 WEEK THREE (June 15 June 19): Principles of Firms and Market Organization Mon: Costs of Production Chapter 13 Tues: Firms in Competitive Markets Chapter 14 Wed: Monopoly Chapter 15 Thurs: Monopolistic Competition Chapter 16 Fri: Quiz and Assignment on Chapters WEEK FOUR (June 22 June 26): Principles of Income Distribution Mon: Oligopoly Chapter 17 Tues: Factors of Production Chapter 18 Wed: Earnings and Discrimination Chapter 19 Thurs: Income Inequality and Poverty Chapter 20 Fri: Final Examination Academic Honesty Students are expected to maintain high standards of academic honesty. Specifically, unless otherwise directed by the professor, students may not consult other students, books, notes, electronic devices or any other source, on examinations. Failure to abide by this may result in a zero on the examination, or even failure in the course. 6 / 6