Understand ways in which government policies can affect economic activity.
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1 Econ , Econ C. Whiting Fall 2008 Smullin 305 Office Hours: M, W 9:00-10:00; 3:00-4: T 9:45-11:15; 1:00-2:45 F 9:00-10:00 and by appointment PRINCIPLES OF MICROECONOMICS This course is an introduction to microeconomic analysis and its applications for public policy. Tools, concepts and models of economic analysis will be developed and applied to current events and public policy issues. The course focuses on the neoclassical theory of the role of consumers and businesses in determining the allocation of scarce resources, the mix of goods and services produced, and the distribution of income. The performance of different types of markets is analyzed, along with public policies aimed at improving market performance. Course goals include developing the student's ability to: 1 Apply deductive reasoning and simplified models to help understand economic activity. Thinking like an economist involves problem solving, analytical reasoning, and critical thinking. (These fundamental skills transcend the discipline of economics and are at the core of the capabilities we aspire to cultivate in all Willamette students.) Identify public policy questions involving some aspect of scarcity and apply the analytic tools of economics to illuminate the tradeoffs among alternative courses of action. In this regard, students should be able to characterize efficient allocations of scarce resources and explain how markets might, or might not, achieve efficiency. Analyze complex problems using the analytical framework of economics. This involves deductive and abstract reasoning, making assumptions to simplify complex relationships, and use of deductive reasoning to draw implications from a model. Students should also understand the advantages and limitations of economic models. Students should be able to use models in the context of a more complex reality by carefully evaluating the model s implicit and explicit assumptions. Understand ways in which government policies can affect economic activity. Neoclassical theory is the dominant paradigm in economics. As a Mode of Inquiry course in the Understanding Society group, this course will examine the explanatory power of that theory in light of its underlying assumptions, and consider alternative approaches. Comprehension is developed on both the theoretical and the practical levels. Emphasis on core microeconomic theory is supplemented with applications of the theory and with the development of problem-solving capabilities. I strongly urge you to form study groups to review concepts and work through problems together. Required texts: Microeconomics, David Colander, 7 th ed. Supplementary readings as assigned, available on WISE, library reserve, or in handouts Strongly recommended: Study Guide to accompany Microeconomics The New York Times, available at the west entrance to Smullin and elsewhere on campus. 1 The bullet points are reproduced, with some revisions, from the Economics Department's statement of its curricular goals.
2 Reading schedule Colander writes in a more colloquial style than most economics text authors. I encourage you to read the section "For those who are new to the book" in the "Preface for the professor," pp, iv-v. He also discusses alternative perspectives more thoroughly than most text authors. I strongly encourage you to read the "Preface for the student: Alternative perspectives," pp. xi-xiv. Week Topic Reading 1 (9/2-9/5) Economics and economic Ch. 1 reasoning 2 (9/8-9/12) Production possibilities model: Ch. 2 + Appendix Scarcity, choice, and opportunity cost Economic institutions Ch. 3 Demand and sup 3 (9/15-9/19) Chapter 4, 5 cont d. CE write-up #1 due Fri., 9/19 4 (9/22-9/26) Elasticity Ch. 6 Gains from trade: consumer and Ch. 7 producer surplus, applications 5 (9/29-10/03) GFT cont'd The logic of individual choice Ch. 8 6 (10/06-10/10) Ch. 8, cont d Midterm #1: Wednesday, October 8 Production and costs Chs. 9, 10 7 (10/13-10/17) Production and costs, cont'd Schlosser, pp ; The model of perfect competition Ch (10/20-10/22) Ch. 11, cont d excerpt from The Neoclassical Model 3 (handout) Schlosser, pp Friedman, pp Adams & Brock, Social Efficiency 5 10/24: No classes Mid-semester day 9 (10/27-10/29) Ch. 11, cont d Monopoly model Ch Schlosser, Eric, Fast Food Nation: The Dark Side of the All-American Meal (Boston: Houghton Mifflin), Galbraith, John Kenneth, Economics and the Public Purpose (Boston: Houghton Mifflin Co.), Friedman, Milton, Capitalism and Freedom (Chicago: University of Chicago Press), Adams, Walter, and James W. Brock, The Bigness Complex (New York: Stanford University Press), 2004.
3 10 (11/3-11/7) Models of imperfect competition: Ch. 13 monopolistic competition, oligopoly CE write-up #2 due Fri. 11/7 11 (11/10-11/14) Real-world competition and technology Ch. 15 Antitrust and regulation Ch (11/17-11/21) Ch. 16, cont d 13 (11/24-11/26) Midterm #2: Monday, 11/24 Market failures and government policy: Ch. 19 externalities, public goods, imperfect information 14 (12/1-12/5) Ch. 19, cont d Labor markets and the firm's demand for labor Ch appendix 15 (12/8-12/12) Ch. 17, cont d Income distribution Ch. 18 Wrap-up Please Note: The reading schedule is subject to change. Class discussions take unpredictable amounts of time, and student interests might make it appropriate to explore particular topics in greater depth. Any changes in due dates will be announced in advance. FINAL EXAM : Section 03: Thursday, December 18, 2:00-5:00 p.m. Section 04: Friday, December 19, 2:00-5:00 p.m. Please read carefully through the rest of this syllabus. If you have any questions, please ask. Otherwise, I ll assume that you are aware of and understand the expectations and requirements laid out below. Expectations and requirements Attendance and preparation for class Effective learning requires your active participation. Because of the nature of the material, the class is largely lecture-based; however, I favor a question-and-answer style that calls on a combination of your knowledge from the reading and thoughts about the material. You will also occasionally be asked to apply your knowledge ingroup work. This means it is essential for you to attend class and come prepared from working through the assigned material prior to class. Class sessions will include a combination of interactive lecture, small-group work, and discussion. Participation counts, and daily attendance is expected. You should come to class each day prepared to participate and to work problems based on the assigned material. Preparation from each chapter should
4 include reading the chapter prior to class and, if I have distributed a study guide, working through it so that you are prepared to answer the questions in class. Grading Grades will be determined according to the criteria listed below. Midterms Final Current events write-ups Quizzes, homeworks, in-class exercises, and other participation Total 200 pts. total (100 pts. each) 100 pts. 40 pts. 160 pts. 500 pts. The final will be comprehensive. In addition to covering material subsequent to the second midterm, it will include key points from earlier in the semester. A study guide will be distributed for the comprehensive portion of the final. Note that 160 points (32% of your grade) will reflect your on-going work throughout the semester. Homeworks will occasionally be assigned, typically with a week s lead time. "In-class exercises" will consist of brief quizzes or short paragraphs in which you briefly address some aspect of the assigned reading, often before it has been discussed in class. They will often be questions from the study guide. These will typically occur at the beginning of a class session and will not usually be announced in advance. More formal quizzes will be announced in advance. You might occasionally be asked to write a short piece outside of class. "Other participation" includes attending daily and participating in small-group work and class discussion. Although I don t formally take roll, I do generally note absences and record them. N.B. Other participation includes what I would term negative participation: behavior that detracts from the classroom learning environment. An obvious example is talking to others when class is in session. You are expected to be mindful of classroom etiquette and be courteous to your fellow classmates. Negative participation will, at a minimum, reduce a student s participation grade. Extra Credit Some limited options for extra credit are available. This course spans a wide range of possible topics, too many to develop fully in class. If something specifically catches your interest (e.g., a relevant newspaper or magazine article or a topic raised in class on which you would like more information) talk with me about it and we can arrange for you to pursue the topic further and give a brief (5-10 minutes) presentation. These would typically be worth 5 points. N.B.: The purpose of these extra credit options is to allow individuals to pursue a topic of interest that will also enhance their classmates' knowledge. They are NOT intended as remedial and will not be available at the end of the semester for purposes of grade improvement. The last date for arranging with me to give an extra credit presentation will be Friday, Nov. 14. Cell phones and laptops Be sure your cell phone is turned off while you are in class. If you need to use a laptop to take notes, please clear it with me beforehand. Otherwise, use of laptops is not permitted in class. Make-up Policy
5 To be fair to everyone in the class, I will not make individual exceptions, so please note the following carefully. Make-up exams will not be given unless I have been contacted prior to the time of the exam and I have approved your absence. An message is not sufficient. If you cannot reach me in my office ( ), you may leave a message with the Economics office ( ). Leave your telephone number so that I may discuss with you your reason for requesting not to take the exam at its scheduled time. The excuse must be accompanied by written verification (e.g., a note from the R.A. or your doctor if you are ill). This policy is non-negotiable. Giving a make-up exam requires that I write a separate exam. I cannot guarantee that it will be available in a timely fashion or that it will be strictly comparable to the exam your classmates have taken. Missed quizzes or in-class exercises will not be made up. Late homeworks will not be accepted after the answers have been distributed; those that come in late but before the answers are distributed will suffer a significant point penalty. Adjustments will be made if a school-sponsored event requires you to miss class; be sure to talk with me before missing class. No early finals will be given.
6 Current events write-ups 20 pts. each A primary goal of this course is to learn to apply microeconomic reasoning and models to real-world phenomena. Toward that end, I'm asking you to find two newspaper articles about current events that seem to you to be applications of course material and to do a write-up of each article. The format of the write-up is described below. By "current events," I mean an article written this semester. An obvious example would be an article about a freeze in Florida that affects citrus crops, or heavy rains in California that affect lettuce. There are plenty of other, more complex, possibilities, such as the effects of the boost in ethanol production or a merger between two large firms in an already tightly oligopolistic industry. The complexity of the issues and applicable analysis will increase as the semester progresses. 6 You will be responsible for submitting write-ups of two articles. Due dates are listed on your syllabus as CE write-ups. Use any of the newspapers available on campus to students, or do a newspaper search through the library's website for an article on a particular subject of interest. For example, during spring semester 2007, news about the pet food recall led to news about other problems with outsourcing to China (e.g., lead in children's toys). A student interested in this subject could readily locate newspaper articles on related subjects through an online library search. Write-up format 1. Title of article, author, newspaper source, date. 2. A paragraph in your own words summarizing pertinent facts of the article. 3. A paragraph or two in your own words explaining the economic analysis that applies to these events. For example, if the article reports that a freeze in Florida has destroyed a large portion of the Florida orange crop, you would show how supply and demand analysis would be used to predict the outcome in the market for oranges. A Note on Plagiarism Your write-ups are to be entirely your own work. Choose your articles and do your write-ups independently from any of your fellow classmates. I will not accept write-ups on the same article that are similar to each other in structure and language. You should know that I have zero tolerance for representing someone else s work as your own. Regardless of whether it is the written work of another student or a published author (including the textbook), submitting someone else s wording as yours is intellectually dishonest and will result, at a minimum, in no credit for the assignment. My consistent policy when I have caught plagiarism has been to turn the document(s) and supporting evidence over to the Dean s Office, where the Associate Dean determines what further steps to pursue in accordance with Willamette s policy on cheating. 6 N.B. These are to be examples of microeconomic analysis. Note Colander's discussion of the difference between micro and macro analysis. If you are uncertain as to whether your article involves micro or macro, please ask me.
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