Economics 112                      Principles of Microeconomics

J.R. Carter

Spring 2007

 

Texts:

 

Armen A. Alchian and Wiliam R. Allen, Exchange and Production, 3rd ed. (Wadsworth, 1983).  Referred to as A&A.  Excerpts available on ERes.  Password = econ112.

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, and David A Macpherson, Microeconomics, 11th ed. (Thomson South-Western, 2006).  Referred to as GSSM.  Required.

Burton Malkiel, A Random Walk Down Wall Street, 8th ed. (Norton, 2004).  Required for outside reading.

 

Graded Assignments:

 

Problem Sets                                                                                      10%

First Exam                  February 20                                                     30%

Second Exam             April 3                                                              30%

Final Exam                  May 5 (section 10), May 12 (section 09)         30%

 

Exemptions from problem sets and midterms require a note from the class dean.  Late problem sets are accepted with penalty until answer sheets are distributed.  Makeup exams are not given; assignment weights are redistributed.  Exams, including the final, must be taken at the appointed time with the section in which the student is registered.

 

 

Provisional Course Outline and Readings:

 

O.        Introduction

 

Economics, microeconomics, and Microeconomics

Invisible Hand Principle and the Fundamental Theorem of Exchange

Math Review

GSSM, Chap. 1.

GSSM, Chap. 1, Addendum.

 

I.          Theory of Exchange

 

Costless Exchange

Transaction Costs, Money, and Specialists

A&A, Chap. 2, pp. 13-15.

A&A, Chap. 3, pp. 45-51.

 

II.          Theory of Demand

 

Principles of Demand and Supply

GSSM, Chap. 3, pp. 56-75, 75-81.

Oral Double Auction (tentative)

Personal and Market Demand Curves

Total Revenue, Marginal Revenue, and Elasticity of Demand

A&A, Chap. 2, pp. 15-22.

GSSM, Chap. 7, pp. 154-163.

Elasticity and Excise Tax Incidence

GSSM, Chap. 4, pp. 94-102.

Allocation by Price

A&A, Chap. 4, pp. 69-73.

GSSM, Chap. 4, pp. 86-94.

 

III.         Production, Specialization, and Costs

 

Cost, Supply, and Coordination by Price

A&A, Chap. 7, pp. 135-141.

Production, Specialization, and Trade

A&A, Chap. 7, pp. 141-151.

Cost Curves

GSSM, Chap. 8.

 

IV.        Present and Future Values

 

Interest Rate

Present Value and Annuity Tables

Applications

GSSM, Chap. 14, pp. 294-303.

A&A, Chap. 6, pp. 107-112, 112-122.

 

V.         Theory of the Firm

 

Price Takers and Price Searchers

Price Taker Theory

Demand, Marginal Revenue, and Elasticity

Short-Run Supply

Optimums, Equilibria, and Long-Run Supply

Competitive Equilibrium and Efficiency

GSSM, Chap. 9.

Price Searcher Theory

Demand, Marginal Revenue, and Elasticity

Short and Long-Run Optimums

Price Searchers and Efficiency

GSSM, Chap. 10.

 

VI.        Restraints on Competition

 

Cartels and the Prisoner's Dilemma

GSSM, Chap. 11, pp. 235-246.

Monopoly Restraints on Entry and the Case for Free Trade

A&A, Chap. 7, pp. 151-157.