ECN 143: Principles of Microeconomics

ECN 143: Principles of Microeconomics Dr. J.F. Schnell Sec. 03 306 Administrative Science Bldg. Phone: 824-6710 E-mail: [email protected] Office Hours: Drop by or by Appointment

Economics is the study of choice  any choice. The purpose of this economics course is to provide you with the basic principles of economic analysis. The successful completion of it will allow you to begin to analyze choice problems correctly, i.e., to start to think like an economist. And, make no mistake about it, being able to think like an economist is an important skill. John Maynard Keynes in a famous passage in his book, The General Theory of Employment, Interest, and Money, had it right when he wrote, . . . the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else.

Consider the following expression of a choice problem, with conflict, which can be correctly understood and addressed with economic principles: The Once-ler: I meant no harm. I most truly did not. But I had to grow bigger. So bigger I got. I biggered my factory. I biggered my roads. I biggered my wagons. I biggered the loads. The Lorax: 'Once- ler!' You're making such smogulous smoke! My poor Swomee-Swans...why, they can't sing a note! No one can sing who has smog in his throat. [Dr. Seuss, The Lorax (1971)].

We will examine this complex problem after examining simpler ones, always keeping in mind the following thought on the economist's approach to the study of behavior: . . . to find meaningful simplicity in the midst of disorderly complexity [Herbert A. Simon, Models of My Life (1991), p. 275].

To aid you in achieving the objective of this course  using economic principles in your thinking  the text available in the bookstore on campus is W. Baumol & A. Blinder (B&B), Economics: Principles and Policy, 9th edn. I do not strictly “teach out of the textbook,” so please bear in mind this advice: No textbook will be a reliable substitute for the classroom presentation and discussion; rather, a textbook is supplementary to this activity. (I advise you not to bring your textbook to class.) Below, the chapters in the text are related to the course topics.

Homework may be given, and we may have in-class exercises, from time to time.

Four exams will be given. The first exam will be worth 20 percent of your grade. The second and third exams will be partly comprehensive and each will be worth 25 percent. The fourth exam (Ok, Ok, call it a Final) will be comprehensive and worth 30 percent of your grade. Generally, no make-ups will be given for, and no early- or late-taking of, any of these exams will be permitted. Exceptions may be granted but only if arrangements are made with me before the exam.

The exam schedule, and other important dates for this class, are,

Exam No. 1: Thursday, September 12 Fall Break (no class): Thursday, October 3 Exam No. 2: Thursday, October 17 Exam No. 3: Thursday, November 14 Thanksgiving: Thursday, November 28 Exam No. 4 (final): Tuesday, December 10, 12:30-2:00 pm (in the designated final exam time).

I may give unannounced quizzes during the semester. If so, the points from these quizzes will be added to your score. You should commit yourself now to attending every class. WARNING: Class attendance is not explicitly counted but is necessary to do well in the course. If you miss a class, you are still responsible for what was discussed in that class and will need to get notes from another student in the class.

The subject headings listed below correspond to the topic to be covered and are listed in the likely order in which they will be discussed. Some topics may require only a part of a lecture while others will be examined over a series of several lectures.

ECN 143 Syllabus page 1 Textbook Chapter B&B I. Introduction

A. Our Topic of Study and representing ideas with graphs 1 & Appendix B. The Economic Problem: Scarcity and Choice 2 C. Supply and Demand: An Initial Look 3

II. Consumer Choice

A. Consumer Choice: Individual and Market Demand 4 B. Market Demand, and Demand and Supply Elasticity 5

III. Producer Choice

A. Input Choices and Production Costs 6 & Appendix to Ch. 7 B. Output Pricing and Marginal Analysis 7 C. One Extreme: Perfect Competition 8 D. The Price System: Hands Off? 9 E. The Other Extreme: Monopoly 10 F. Between the Extremes 11 Monopolistic Competition Oligopoly and Games (the fun stuff)

IV. The Market Mechanism: Shortcomings & Remedies

Market Failure: Hands On? 12 Externalities (the problem of the Once-ler and the Lorax) Public goods

Some Rules for Class Sessions

These rules are courtesies. They are designed to minimize the negative externalities (which we will discuss formally later in theclass) your behavior may produce for the rest of the class, thereby inhibiting my ability to teach and your classmates’ ability to learn.

• Come to class on time (“on time” means being in your seat ready to listen when I start to speak). • Unless you are the National Security Advisor to the President of the United States, your cell phones must be turned off while you are in class, and I don't mean turned to the happy, vibrating "silent mode." • Do not sleep or look like you are sleeping in class. • Do not talk when I am (or a classmate is) talking. If you have a question, raise your hand and ask me. I like questions. (And, generally, I will give better answers than your neighbor.) • Do not get up during class and leave, whether you are coming back or not (unless it is absolutely unavoidable). If you absolutely have to leave a class early, have the courtesy to let me know that ahead of time. • You can be bored, just don’t act bored.

Breaking these rules, at least initially, will not invoke formal sanctions (like points subtracted from your exam scores). If you break these rules, however, I (and many of your classmates) will notice it. This will make me sad. This will make me particularly sad if it happens more than the isolated time. You do not want me to be sad when I am determining your final grade. You want me to be happy, and there will be opportunities throughout the semester for you to create positive externalities. These make me happy.

ECN 143 Syllabus page 2