Northeastern University College of Professional Studies DRAFT

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1 CED Northeastern University College of Professional Studies Applied Microeconomics Spring 2017, 13-Week Term Monday Sept. 18 Saturday Dec. 16 Blended: Via Blackboard Meeting Time Tuesday 5:50PM-8:00PM Location TBD Virtual Office Hours Required Text(s)/Software/Tools: 1. Frank, Robert H., Microeconomics and Behavior, Ninth Edition, ISBN Free Web site: The Online Learning Center Web site is free, and contains a great many study resources for students including, for each chapter, a Study Guide, Outlines, Practice Problems, Practice Quizzes, and PowerPoints, (see Low Cost Alternatives: Required Supplementary Readings: Older editions, International editions, and Used books are available on the web. Access to an ebook version of the Frank text is available at Major news media sources. Suggestions: Boston Globe ( New York Times ( Washington Post ( and or the Wall Street Journal ( In addition to the readings from the text, students are encouraged to follow current events on the decision-making process of federal, state and local government, local businesses (small and large), or local community groups, and the interaction and motivation of these decisions. For example, decisions on defense spending, housing subsidizes and rent control,

2 transportation and education funding, environmental impacts, professional sports ticket prices and player salaries, and business location. It is also interesting and important to follow national and international issues and their impact on industrial output, employment, inflation, fiscal and monetary policy, the budget deficit, the trade deficit, and other areas of macroeconomics. These macroeconomic policies often influence microeconomic decisions. Course Prerequisites None Course Description This course is about the efficient allocation, and fair distribution of scarce resources. This course explores the microeconomic theory required to apply the leading literature and develop models to explain behavior of households, firms, and markets, as well as to evaluate economic policy. Various elasticity concepts and applications, theories of demand and production, and derivation of cost curves comprise the core theory for this course. Focusing on analyses of pricing and output behavior in the several market structures with the allocation of welfare and the pricing of resources, this course establishes the microeconomic foundation for students of Commerce and Economic Development. Course Outcomes Economics provides a unifying optimization theory of social and political institutions that frame Commerce and Economic Development. This course introduces the analytical tools necessary for assessing managerial decisions, consumer behavior and public policy. Microeconomics is used to explain individual consumer and producer decisions, and generally the efficient allocation of scarce resources. Commerce represents the institutional constructs defining the business environment. This course is a necessary second step to support subsequent Masters-level consideration of public policy issues. Students will have the opportunity to learn how to apply critical and analytical thinking to understanding markets and their environments. Using economic tools and models, students will analyze current events as well as historical concepts. Students are expected to model and apply problem-solving skills in economics. Upon the successful completion of this course, students should have an enhanced ability to model and analyze product and resource markets and clearly identify institutional constraints.

3 In the course students will access major media sources (such as The Wall Street Journal and The Boston Globe) in order to learn more about current events and the application of economics. By studying these issues, students will gain an understanding of how economics is used to understand rational decision-making, social institutions and norms, and their consequences. Learning a way of thinking, not a set of facts, will help students to independently analyze events and situations. Students will have the opportunity to become knowledgeable and conversant about the following: 1. Supply and Demand. Equilibrium Analysis. Marginal Analysis. Positive and Normative Questions 2. Consumer Behavior--Rational Consumer Choice Theory. Optimization Procedures. Individual and Market Demand. Elasticity. 3. Application of Rational Choice Theory--Gas Tax, School Vouchers, Intertemporal Choice, etc. 4. Rational Choice under Uncertainty--Information Economics, Expected Utility, Insurance, Adverse Selection, Moral Hazard, Lemons. 5. Firm Theory--Short, and Long-run Production, Costs, Cost Minimization, Profit Maximization. 6. Market Structure--Perfect Competition, Monopoly, Game Theory--Strategy and Exchange in various market power, and selling environments. 7. The Role of Government--Efficiency and Equity Concerns. Market Failures-- Externalities, Public Goods, Property Rights. 8. General Equilibrium and Market Efficiency. Course Methodology Each week, students are expected to: 1. Review the week's learning objectives. 2. Complete all assigned readings. 3. Complete all lecture materials for the week. 4. Participate in the Discussion Board. 5. Complete and submit all assignments and tests by the due dates.

4 Grading/Evaluation Standards Grading will be based upon: 1. Discussion Board Participation (25% total) 2. Weekly Problem Sets (25% total) 3. In Class Midterm (25%): Tuesday, Nov. 7, In Class Final (25%): Tuesday, Dec. 12, 2017 Each student s final course grade will be based on a final course score calculated from the weighted scores of the four above grading opportunities. An A represents impressive, superlative work across all areas Two Exams There will be two exams and each is 25 percent of the course grade. The dates for the two exams are: In Class Midterm (25%): Tuesday, Nov. 7, 2017 In Class Final (25%): Tuesday, Dec. 12, 2017 There will be two exams and each is 25 percent of the course grade. A schedule for the two exams is listed above and below. Each exam should take students approximately 60 minutes to complete; one and one-half hours will be allowed to complete the exam once begun. Sample question will be posted to assist students in exam preparation. Weekly problem sets are also a good indicator of some exam questions. Students are expected to work independently on all exams and abide by the Academic Honesty and Integrity Statement; any breach of academic integrity (i.e. cheating on an exam or plagiarism in the writing assignment) will result in a failure for the entire course. Homework/Problem Sets Your weekly homework includes Reading Assignments, graded problem sets, and Non-Graded Homework Assignments. Weekly graded problem sets are in your Assignments folder, will have 15 to 25 questions, and should take students approximately 60 to 120 minutes each week. Students must complete the problems by the due date and time. Late submissions will not be considered without a documented legitimate reason (illness, family emergency, etc.). Weekly homework will be due Sunday by 11:59PM. Students are expected to independently submit all homework assignments. Once your assignment has been graded,

5 you will be able to view the grade and feedback by clicking on Tools, View Grades from the Northeastern University Online Campus tab. Your reading assignments are in your Reading, Listening and Viewing folder. Each week s non-graded homework: Go to the Free Online Learning Center Web site For that week s chapter, your assignment is to read the study guide, do the practice problems in the guide, and do the practice quiz. These are not graded. Discussion Board One or two questions will be posted to the discussion board every other week. This exercise is worth 25% of the course grade and is designed to help and check students ability to process information, systematically analyze the data/evidence and verbally articulate the information that you have learned from the course lectures, and the required readings. Questions may come from Frank s the Economic Naturalist or the Review Questions, or Problems, section of Microeconomics and Behavior. Questions may also come from current news events. Students must post one (1) primary response -- answering the discussion question -- by 11:59PM on Wednesday of that week. Students must post one (1) secondary response (response to one other student s post) by 11:59PM on Sunday. Answers must be complete and concise -- less than or equal to 100 words -- and follow college-level academic style guides for writing, and should be free of typos and grammatical errors. In addition to presenting a thoughtful and analytical answer, it is important for students to define and discuss basic economic principles in the question. As students comment on answers by their peers, it also appropriate to comment on the underlying economics as well. Typically students will need 60 minutes to successfully demonstrate understanding of the question, pose an answer based on economic principles and analysis, and support their classmates with insights based on course material. Posting an answer to a class discussion question or responding to a posted answer after the discussion period is complete is not acceptable. Students are expected to present their own answers to discussion questions. All referenced materials require appropriate attribution.

6 Class Schedule / Topics Outline Week Dates Topic Assignments 1 9/18 9/24 2 9/25 10/1 3 10/2 10/8 4 10/9 10/ /16 10/22 Introduction Thinking Like an Economist Role of Economic Theory Marginal Analysis, Incentives Positive, and Normative Supply and Demand Supply, Demand, Equilibrium, Taxes, Rent Control, Algebra Rational Consumer Choice Budgets, and Preferences Optimization Composite Good Substitutes, Complements Application--Cash vs. Food Stamps Individual and Market Demand Utility Functions, and Optimization with Calculus Price, and Income Effects Normal and Inferior Goods Income and Substitution Effects Market Demand Elasticity--All Types Frank, Ch. 1. Frank, Ch. 2, and Discussion Board #1 Frank, Ch. 3, and Application of Rational Choice Gas Tax, School Vouchers, Frank, Ch. 4, and Appendix Discussion Board #2 Frank, Ch. 5

7 6 10/23 10/ /30 11/5 8 11/6 11/ /13 11/19 Consumer Surplus Intertemporal Choice, Present Value, Patience Permanent Income/Life-Cycle Hypothesis Information and Choice Under Uncertainty Communication, and Signaling Costly to Fake, Full Disclosure Choosing Employees, Lemons Principle Expected Utility Risk Preferences, Insurance Production Input/Output--Short and Long Run Marginal Products, etc. Isoquants/Isocosts Diminishing Returns, Returns to Scale Study for, and take Midterm Exam In Class Midterm Tuesday Nov. 7 Costs Short Run--Total, Variable, Fixed Long Run Optimal Input Combination Frank, Ch. 6, and Appendix Discussion Board #3 Frank, Ch. 8, and Discussion Board #4 Study for, and take Midterm Exam Frank, Ch. 9, and 10 11/20 11/ /27 12/3 Thanksgiving Break Perfect Competition None Frank, Ch. 10, and

8 11 11/27 12/ /4 12/ /4 12/ /11 12/16 Profit Maximization Conditions for Existence of Competition Short Run, and Long Run Equilibrium Efficiency of Equilibrium Monopoly Definition and Sources Optimality Condition Price Discrimination Efficiency Loss, Public Policy Imperfect Competition: A Game Theoretic Approach Discussion Board #5 Frank, Ch. 11. Parts of Frank, Chs. 12, 13 Nash Equilibrium Repeated Play Strategies Sequential Games Cournot, Bertrand, Stackelberg Models Discussion Board #6 Monopolistic Competition Labor/General Equilibrium Parts of Frank, Chs. 14, 16, 17, 18 Derivation Equilibrium Government Policy Supply and Demand Shocks Edgeworth Box/Market Efficiency Study for, and take Final Exam In Class Final Tuesday Dec. 12 Academic Honesty and Integrity Statement Study for, and take Final Exam The University views academic dishonesty as one of the most serious offenses that a student can commit while in college and imposes appropriate punitive sanctions on violators. Here are some examples of academic dishonesty. While this is not an all-

9 inclusive list, we hope this will help you to understand some of the things instructors look for. The following is excerpted from the University s policy on academic honesty and integrity. For the complete policy, click the link to download the Student Handbook. Cheating intentionally using or attempting to use unauthorized materials, information or study aids in an academic exercise. This may include use of unauthorized aids (notes, texts) or copying from another student s exam, paper, computer disk, etc. Fabrication intentional and unauthorized falsification, misrepresentation, or invention of any data, or citation in an academic exercise. Examples may include making up data for a research paper, altering the results of a lab experiment or survey, listing a citation for a source not used, or stating an opinion as a scientifically proven fact. Plagiarism intentionally representing the words or ideas of another as one s own in any academic exercise without providing proper documentation by source by way of a footnote, endnote or intertextual note. Unauthorized collaboration Students, each claiming sole authorship, submit separate reports, which are substantially similar to one another. While several students may have the same source material, the analysis, interpretation and reporting of the data must be each individual s. Participation in academically dishonest activities Examples include stealing an exam, using a pre-written paper through mail order or other services, selling, loaning or otherwise distributing materials for the purpose of cheating, plagiarism, or other academically dishonest acts; alternation, theft, forgery, or destruction of the academic work of others. Facilitating academic dishonesty Examples may include inaccurately listing someone as co-author of paper who did not contribute, sharing a take home exam, taking an exam or writing a paper for another student. Northeastern University Online Policies and Procedures For comprehensive information, please click the link to download the Student Handbook. Northeastern University Online Copyright Statement Northeastern University Online is a registered trademark of Northeastern University. All other brand and product names are trademarks or registered trademarks of their respective companies. This course material is copyrighted and all rights are reserved by Northeastern University Online. No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system, or translated into any language or computer language, in any form or by any means, electronic, mechanical, magnetic, optical, chemical, manual, or otherwise, without the express prior written permission of Northeastern University Online. Copyright 2012 by Northeastern University Online Reserved. All Rights