Course Outline & CalendarDepartment of Economics, LH-702; Phone: 278-2228 California State University, FullertonEconomics 315 Intermediate Business Microeconomics (MWF 10:00 – 10:50 LH-306) Fall 2003Professor Eric J. Solberg, Ph.D.Office Hours: MW 11:00 - 12:00 & by appointmentOffice: LH-711 Phone: (714) 278-2237email: [email protected] Web site: http://business.fullerton.edu/esolberg Prerequisites: principles of economics and Math 135; co requisites BusAd 301and statisticsRequired Text: Eric J. SolbergMicroeconomics for Business DecisionsD. C. Heath & Company, 1992(photo copy of chapters from bookstore)V. Brajer and E. SolbergExercises in Microeconomics for Business Decisions(study guide downloaded from Solberg’s web site)Testing: Three exams plus a comprehensive final:1. No make-up exams.2. If you miss a midterm, the other exams will be weighted commensurately higher.3. The final exam is mandatory.4. Closed notes & closed books exams5. “Blue-books” required (large size). You can’t take an exam without one.6. Exam questions will be from assigned problems.7. University policy (see University catalog) allows for an “F” grade for the course in cases of cheating.Grading:Each exam is assigned a score that is translated into a letter grade. At the end of the semester, exam grades will be converted to an overall grade-point-average: 4.0 to 3.5 will be “A”; 3.49 to 2.50 will be “B”; 2.49 to 1.5 will be “C”; 1.49 to 0.5 will be “D”; 0.49 to 0.00 will be “F.” The worst midterm will be dropped. Two midterms will have 30% weight each, and a 40% weight will be applied to the final. If you miss a second midterm, the weights will 40% and 60%. If you miss all three midterms, the final will have 100% weight. The final is comprehensive, and you can’t do worse that the final. There will be no makeup exams, and the final is mandatory.Practice Problems:Practice problems will be assigned from the textbook and the study guide. Solutions can be downloaded from my Web page. Variations of assigned problems from chapters and the study guide will be used on exams.C5: 1-17 SG5: 1-14, 17-25C6: all SG6: 1-18, 20-22C7: 1-15 SG7: 1-9, 13-16C10: 1-16, 21-23 SG10: 1-12, 14-16, 20-21C11: 1-23 SG11: 1-4, 6, 11-18, 21-22C12: 1-15, 21 SG12: 3-17, 19C13: 1-6, 10, 12 - 15 SG13: 1-12, 14, 18-19C14: 1-6, 9-15 SG14: 1-4, 71Behavior: Behavior that persistently or disruptively inhibits other students’ ability to learn and the instructor’s ability to instruct is considered disruptive and may be subject to disciplinary action. A student responsible for disruptivebehavior may be required to leave class pending a resolution to the problem, and may be reported to the Dean of Students Office, Judicial Affairs for further action.Please treat your instructor and other students with respect. Rude and uncivil behavior can be disruptive. Late arrival to class can also be disruptive, particularly when instruction is affected. Bring your books to class.Course Outline & CalendarDate Days Topic Reading8/25 – 8/29 MWF Revealed Preference & Demand 59/1 M No class9/3 – 9/5 WF Utility Maximization & Applications 59/8 – 9/12 MWF Intertemporal Choices 69/15 – 9/17 MW Intertemporal Choices 69/19 F review9/22 M 1st Exam (C 5 & 6)9/24 – 9/26 WF Information, Risk, and Uncertainty 79/29 – 10/3 MWF Technology & Production 1010/5 – 10/10 MWF Technology & Production 1010/13 – 10/17 MWF Costs of Production 1110/20 – 10/22 MW Costs of Production 1110/24 F review10/27 M 2nd Exam (C7, 10 & 11)10/29 – 10/31 WF Pure Competition 1211/3 – 11/7 MWF Pure Competition 1211/10 – 11/14 MWF Monopoly and Monopsony Power 1311/17 – 11/21 MWF Monopoly and Monopsony Power 1311/24 – 11/29 M-F Recess – no class12/1 M review12/3 W 3rd exam (C12 & 13)12/5 – 12/10 FMW Oligopoly and Games 1412/12 F final review12/15 M Study day – no class12/19 F Final Exam (9:30 – 11:20) comprehensive2Detailed Course Outline by Chapter (key perspectives indicated)5. Individual Choice & Demand5.1 The Budget Constraint5.1 Revealed Preference5.3 From Individual to Market Demand5.4 Pure Income Effects5.5 Substitution & Price-induced Income Effects5.6 Preference & Indifference5.7 Utility Maximization5.8 Substitution & Marginal Utility5.9 Utility Maximization & Demand5.10 Substitution & Income Effects Reconsidered5.11 Buying & Selling5.12 Work – Leisure Choices: Supply of Labor Time5.13 Gains from Voluntary Exchange (ii)6. Time & Intertemporal Choices6.1 The Time Value of Money6.2 Saving & Borrowing6.3 Evaluating Alternatives6.4 What Interest Rate?6.5 Assets & Present Value6.6 Valuing Assets Under Certainty6.7 Investment Decisions6.8 The Internal Rate of Return & Investment Alternatives6.9 Investment Demand & the Supply of Capital Value6.10 Determination of the Market Interest Rate6.11 Public Investment Decisions & Cost-Benefit Analysis (iii)7. Information, Risk & Uncertainty7.1 Asymmetric Information7.2 The Principal-Agent Problem7.3 Uncertainty & Risk7.4 How to Assign Probabilities to Risky Alternatives7.5 Expected Utility & Risk Aversion7.6 Using Expected Values7.7 Why Buy Insurance?7.8 Using Variance & Standard Deviation to Measure Risk7.9 Mean-Variance Utility & Portfolio Choice7.10 Using Covariance to Measure Risk7.11 Valuing Risky Assets Using Beta7.12 Valuing Risky Cash Flows7.13 Avoiding Uncertainty by Hedging7.14 Decisions Under Uncertainty10. Technology & Production (iv)10.1 Technology as a Constraint10.2 Technological Efficiency & Isoquants10.3 Technological Dominance & Efficiency10.4 What Happens in the Short Run?10.5 Diminishing Returns & Efficiency10.6 Back to the Future — Efficient Input Substitution10.7 Returns to Scale in the Long Run10.8 Empirical Production Functions10.9 Technical Progress10.10 A Multiproduct Firm10.11 Linear Programming & Efficiency311. Measuring the Costs of Production (iv)11.1 Measuring Costs as Opportunity Costs11.2 Short-run Costs & Output11.3 Average & Marginal Costs11.4 Short Run Changes in Input Prices11.5 Back to the Future — Part II: Long Run Cost Minimization11.6 Expansion & Long-run Cost(omit 11.7)11.8 Short & Long Run Costs Compared11.9 Scale Effects & Economies of Size11.10 The Number of Plants in an Industry11.11 Economies of Scope11.12 External Economies & Dis-economies11.13 Input Prices, Technology & the Input Ratio11.14 Statistical Cost Analysis11.15 Empirical Long-run Cost