ECO 200Y: Microeconomic Theory Instructor: Silvia Martínez Gorricho Email: smartine@chass.utoronto.ca Website: http://www.chass.utoronto.ca/~smartine/eco200.htm Office hours: Tuesdays 2:30-4:00 pm at SS5017 or by appointment. Class Time: Tuesdays and Thursdays from 10 am to 1 pm, at BA 1130. Prerequisites: The Department of Economics checks for prerequisites in all Economics courses and students who do not meet them WILL be removed from the course. If you are not sure what the prerequisites for any course are, check at: http://www.artsandscience.utoronto.ca/ofr/calendar/crs_eco.htm Students who wish to use courses completed at another institution for prerequisites purposes must submit an official transcript from that institution to Ms. Robbie Innes (Undergraduate Administrator) or Ms. Jenny Fan (Commerce Assistant) at the Department of Economics. Course Description: The goal of this course is to deliver a broad but rigorous introduction to the theoretical foundations of microeconomics, which deals with the behavior of individual economic units. Microeconomics attempts to explain the choices individuals make given the opportunities and constraints in their environments. For example, it explains how consumers make purchasing decisions and how their choices are affected by changing prices and incomes. It also explains firms decisions about quantities, prices and labor to hire. By studying the behavior and interaction of individual firms and consumers, microeconomics reveals how industries and markets operate and evolve, why they differ from one another, and how they are affected by government policies and global economic conditions. Warning: This course will be challenging for all of us. We will go through a lot a material, pretty much equivalent to the regular fall / winter course and you have to assimilate it in just four months. Thus, you need to be mentally prepared for it. You will need to sacrifice a fair amount of time in the sun in order to work at your desk doing ECO 200 problems. If you are not ready to commit to this, you probably should not enrol in the course. 1
Textbook: The recommended textbook for this course is: - E. E. Browning & M. A. Zupan, Microeconomics: Theory and Applications, 9 th Edition, 2006, John Wiley & Sons. Although the 9 th edition is superior in terms of up-todate examples, you can use the 8 th Edition or even the 7 th Edition if you wish to do so. This book is being used by the other instructors of the course. Another good reference for you is: - Pindyck and Rubinfeld, Microeconomics, 6 th Edition, Pearson Prentice Hall. Although the content of both books is similar, I like more the structure provided by this latter book (in my opinion, the material is better organized and it offers more graphs). The main drawback from this book is that it does not cover important material such as The Labor-Leisure Choice and The Intertemporal Choice. I encourage you to check both references and buy the one you feel more comfortable with. Independently of which textbook you choose, it is important that all of you get the Study Guide for Microeconomics, 9 th Edition, by Browning & Zupan. Problem sets: In order to master the material, you need to practice the concepts and techniques and know when to apply them. It is not enough to understand what is done in class. Like swimming or playing the violin, you don t improve your speed or stamina while watching others swim or play. The biggest requirement is practice! There will be assigned questions for each topics covered. You need to test yourself by doing the questions. You must do the exercises in order to do well on the tests and final exam. If you get them wrong or get stuck, do not worry, you are doing what needs to be done to learn microeconomics. The most important thing is to realize why you got them wrong, get a fully understanding of the right solution and get them right on the final! Although you do not need to hand the assigned questions in for grading, you are strongly encouraged to try them out. Ideally, you team up with one or two of your classmates to form a study group to try and discuss them. In general, I will dedicate the last hour of each session to go over the solutions for some of these questions. You are urged to try these problems in advance, rather than attend to copy answers. Aid Centre: Two teaching assistants (TAs) and myself will hold office hours every week (times and location to be announced). TAs will also be available to answer questions by email provided that the student shows some indication of having attempted to solve a question before seeking clarification from e-ta. Please, check the website for further information in this regard. 2
Grading Scheme: Your grade for the course will be based on two term tests ( 25% each ) an a final exam ( 50% ). The final exam will cover the entire course material. Policy on Illness: If you miss a test due to an approved reason, you must submit official documentation to the Department of Economics within one week of the missed test in order not to be awarded a mark of zero. For example, if you missed a test due to a valid medical reason, then you must provide a signed and detailed copy of a University of Toronto Medical certificate stating the nature of the illness and the fact that you were too ill to write an examination. A copy of this certificate is available from your college registrars, health services or on the following URL: http://www.utoronto.ca/health/forms/medcert.pdf Students who miss one term test due to a valid and certified reason are eligible to write a comprehensive make-up test in the last week of class based on the entire term s work. It is important to understand that the make-up midterm will not be given and graded prior to the drop date. Therefore, students writing the make-up test will not be able to drop the course without academic penalty if they do not perform well. Appeals: If you appeal to re-grade a test, please submit your complaint to me in written format. I will re-grade not only the parts that you have complained, but also the other parts that you have not. Note that this may lead to a lower overall grade. Important Dates: Monday, May 15 th Classes begin Monday, May 22 nd Victoria Day Tuesday, June 13 th Tentative date for first term test Monday, July 3 rd Canada Day Thursday, July 13 th Tentative date for second term test Sunday, July 23 rd Last day to withdraw from course without academic penalty Monday, August 7 th Civil Holiday Friday, August 11 th Classes end August 14-18 th Final examination period * 3
* The faculty of Arts and Science selects the date for this examination. Students must not make travel, employment or other plans which may conflict with the date chosen for the examination in this course. Any such conflict will not be accepted as ground for writing a deferred examination. Course Outline: Lecture time will not be spread evenly over the material discussed in the textbook. Disproportionate time will be devoted to the more important or difficult ideas while ideas that are likely to fall into place easily will not be reiterated in the lectures. Also, occasionally, ideas that are not considered in the textbook will be discussed. Thus, the lectures and the textbook are complements, not substitutes for each other! This is an outline of the topics to be covered in this course. The exact dates of the schedule are subject to revision. Check the webpage for lecture notes and suggested problems. 1. The Basic of Supply and Demand, Chapter 2; [Ch 2]. 2. Consumer Theory Basics of Consumer Choice, Chapter 3; [Ch 3]. Individual and Market Demand, Chapter 4 (4.1-4.6); [Ch 4, 4.1-4.4]. Using Consumer Theory, Chapter 5 (sections 5.1-5.3); [x]. Intertemporal Choice, Chapter 5 (section 5.4); [x]. Labor-Leisure Choice, Chapter 17 (sections 17.1-17.2); [x]. Uncertainty and Consumer Behavior, Chapter 5 (5.6-5.7); [Ch 5, 5.1-5.3]. 3. Theory of the Firm Production, Chapter 7 (sections 7.1-7.4); [Ch 6]. Cost curves, Chapter 8 (sections 8.1-8.10); [Ch 7, 7.1-7.5]. 4. Firms as Suppliers of Output Perfect Competition, Chapter 9 and Chapter 10 (sections 10.1-10.4); [Ch 8, 9]. 4
Monopoly, Chapter 11 and Chapter 15 (sections 15.1-15.3); [Ch 10, 10.1-10.4]. Price Discrimination, Chapter 12; [Ch 11, 11.1-11.4]. Monopolistic Competition and Oligopoly, Chapter 13; [Ch 12]. 5. Firms as Employers of Inputs Perfect Competition, Chapter 16 (sections 16.1-16.5); [Ch 14, 14.1-14.2]. Monopoly, Chapter 16 (sections 16.6-16.7); [Ch 10, 10.5-10.6, Ch 14, 14.3-14.4]. Applications, Chapter 18 [x]. 6. General Equilibrium and Efficiency, Chapters 6 and 19; [Ch 16] (if time permits). 7. Game Theory and The Economics of Information, Chapter 14 [Ch 13, 17] (if time permits). Note: To assist you, the first reference for each topic is associated with the BZ book. The chapters in brackets [ ] refer to the PB book. [x] means that the topic is not covered in the PB book. 5