Economics 101Principles of MicroeconomicsFall, 2008Instructor: Joseph GuseOffice: HH114, 463-8915Email: [email protected] website: home.wlu.edu/˜gusej/econ101Office Hours: 10-12, MW; 1-3, Th; by appointment.Time and Location: Huntley Hall 327, 9:05 - 10, MWFCourse DescriptionCourse Description Microeconomics is the study of individual economic agents such as householdsand firms. This course will tell a story about how these agents come together in markets and therole these markets play in the economy. We will begin by learning about consumer preferences andproduction - the underpinnings of demand and supply. We will ask how demand and supply cometogether under ideal circumstances to determine prices in a competitive market. We will look athow some types of government policies might change market outcomes. Finally we will learn aboutsome of the shortcomings of markets. By the end of this course, you should• have some familiarity with the standard model of household decision making and what liesbehind a market demand curve,• understand how economist think about the profit maximizing behaviour of firms and whatlies behind a market supply curve,• be familiar with the market conditions necessary for competitive markets to efficientlyproduce and allocate output,• understand the efficiency and distributional impliciations of government policies such astaxes and price controls, and• understand why markets almost always “fail” at least to some degree and when governmentintervention may be able to address these failures.Readings• Primary. Michael Parkin, Microeconomics, 8th edition. If you have a slightly older edition,you’ll be fine.• Secondary. The Economists’ Voice, Berkeley Electronic Press, http://www.bepress.com/ev/.This a journal with non-technical essays written by top economists on policy issues. I willassign specific essays to read througout the term from this journal as well as occasionalnewspaper articles.GradingGrades will be based on problem sets (10%), essay responses (10%), quizzes (10%), a midtermexam (30%), a final exam (40%).• Problem Sets (10%). You are encouraged to form study groups and work together on theproblem sets. However each student must turn in their own write-up. Homeworks will begraded for effort and completion - not necessarily accuracy. You will be responsible forchecking the accuracy of your analysis against the answer keys.12• Essay Responses (10%). One page responses to articles from the Economists’ Voice. Yourresponse should brie fly describe the issue or question being addressed, identify the author’smain thesis, and summarize the arguments or evidence presented to support it. In otherwords, what is it about? what is the p oint? how does the author try to convice us?• Quizzes (10%). I will occasionally give short unannounced in-class quizzes based on theday’s reading or previous lectures. There will be no opportunity to “make-up” a missedquiz - no matter how good your excuse is. However, I will drop your worst quiz score frommy grade tally.• Exams (70%). Exams will be based on the readings, lectures and homeworks. The midtermwill be given in class on Monday October 13 after the reading period. The final exam willbe administered through the Williams Scho ol during exam week.Topics and ReadingsThe following is a tentative list of topics we will do our best to cover in lecture.Topic ReadingsI. Introduction.a) What is Economics. Parkin, Ch 1b) The Economic Problem Parkin, Chapter 2EV,“Do Economists Agree on Anything? Yes!”II. An Initial Look at Marketsa) Equilibrium and Shifters Parkin, Ch 3b) Elasticity Parkin Ch 4Newspaper Articles on Gas PricesIII. Demand and Supply in Deptha) Budget Lines & Preferences Parkin, Ch 8b) Deriving a Demand Curve Parkin, Ch 8EV, “Economics of Capital Punishment”c) Output and Cost Parkin, Ch 10d) Perfect Competition Parkin, Ch 11IV. Applicationsa) Efficiency and Equity Parkin, Ch 5b) Markets in Action Parkin, Ch 6EV, “Curing Spam”c) International Trade Parkin, Ch 20d) Externalities Parkin, Ch 15EV, “A New Agenda for Global Warming”e) Public Goods Parkin, Ch 16EV, “Should the Government RebuildNew Orleans or Just Give Residents Checks?”V. Factor Marketsa) Labor Parkin Ch 17EV, “The Gender Pay Gap”b) Capital Parkin, Ch 17c) Inequality Parkin, Ch 18EV “Garrison America”EV = Economists’ Voice, BE