Degree in Philosophy, Politics and Economics School Year 2013/14
Microeconomics (22928)
Year: 1st
Term: 2nd
ECTS credits: 6
Professor: Alexis León, Dept. of Economics and Business, UPF, 20.299bis
Language
of instruction: English
Office hours: Fri. 4:30-6 p.m., or by appointment ([email protected]).
Lectures: Thurs. 9-11 a.m., in room 40.253.
From 10 February to 27 May (13 sessions).
Mon. 28 April 3-5 p.m.: make-up lecture, in room 40.253.
Seminar sessions: Wed. 11 a.m.-1 p.m., in room 23.S03.
19 March: group 101. 26 March: group 102.
2 April: 1st midterm (all). In room 40.253 9 April: group 102.
30 April: group 101. 7 May: 2nd midterm (all) in room 40.253
1. Course Description
The aim of this course is to present the fundamental tools and methods used in modern economic analysis. It covers the basic economic models on consumer theory, producer theory, partial equilibrium (with and without perfect competition), competitive general equilibrium, and an introduction to welfare economics and market failures.
Because of its placement as the first economics course in the program, it constitutes the earliest opportunity for students to become familiar with the basic toolkit of a micro economist. This makes the course both valuable -as a stepping stone toward more advanced economic courses- and challenging. Learning how to formalize the analysis of economic phenomena through the construction of a model and the interpretation of its results is a process comparable to that of studying a new language -it requires repeated practice. Just as it is impossible to write (or even read) an essay without knowledge of the alphabet or grammar, one cannot carry out (or comprehend) economic analysis without having acquired a good command of its basic elements.
2. Prerequisites
In order to succeed in this course, students must have some basic mathematical skills (particularly algebra, calculus, and optimization). These are covered in the first-semester course Mathematics (22924).
3. Educational Objectives and Core Competencies
General skills:
- Ability to analyze, synthesize and interpret information.
- Ability to apply theoretical knowledge in different contexts.
- Capacity for independent thought and new idea creation.
- Capacity for independent learning and autonomous work.
- Ability to speak in public and communicate clearly (in particular, how to formally model and solve problems), through class participation.
Specific skills:
- Ability to develop and solve simple microeconomic models formally.
- Ability to identify determinants of consumer demand and firm supply decisions.
- Ability to understand the concept of economic efficiency and to characterize a market equilibrium, or the result of a market intervention, as efficient or inefficient.
- Ability to use knowledge of elasticities (of demand and supply) to assess the effects of a tax or other public policy.
- Ability to apply a basic mathematical framework to analyze economic phenomena.
4. Content Outline
Topics marked with an asterisk (*) will be covered if time permits:
Topic 1. Introduction
Topic 2. Consumer Theory
2.1. Budget Constraints
2.2. Preferences, Indifference Curves and Utility Functions
2.3. Optimal Choice and Consumer Demand
Topic 3. Applications of Consumer Theory
3.1. Consumer's Surplus
3.2. Labor Supply (*)
Topic 4. Producer Theory
4.1. Technology, Production Factors and Profit Maximization
4.2. Cost Minimization, Cost Curves and Firm Supply
Topic 5. Partial Equilibrium and Market Structure
5.1. Equilibrium in a Competitive Market
5.2. Monopoly
5.3. Oligopoly and Cournot Equilibrium (*)
Topic 6. General Equilibrium and Welfare
6.1. Pure Exchange and the Fundamental Theorems of Welfare Economics
6.2. Aggregation of Preferences, Social Welfare Functions, and Arrow's Impossibility Theorem
6.3. Envy, Equity and Fairness (*)
Topic 7. Market Failures
7.1. Externalities (*)
7.2. Public Goods
5. Instructional Methods and Grading Criteria
Course topics will be introduced in the lectures. These will cover the main concepts and models, as well as some numerical examples and exercises. Some of these will appear in problem sets that will be posted online (on Aula Global) throughout the semester. Students are strongly encouraged to work on solving these problems independently -even if they discuss them with classmates in study groups. Problem sets are designed to help students practice applying the concepts developed in the lectures.
Seminar sessions will be largely devoted to discussing exercises from the problem sets. During the seminars, students are expected to contribute proposed solutions as well as both raise and answer questions on particularly challenging problems or concepts. For the seminars to run smoothly and be productive, student participation is indispensable.
The final course grade will be determined as follows:
Continuous Evaluation (compulsory) comprises two midterms and class participation.
- 1st midterm test (Wednesday 2 April): 20% of the final course grade.
- 2a midterm test (Wednesday 7 May): 20% of the final course grade.
- Class participation (especially seminars): 10% of the final course grade.
Both midterm tests will be multiple choice tests (with a single valid answer to be chosen from among the options given) with questions similar to those in the problem sets and the examples seen in class. All tests in this course are closed-book, closed-notes, with no calculators or other aids (electronic or otherwise) permitted.
Final Examination (compulsory): 50% of the final course grade.
The final exam is comprehensive; it will cover all the material in the course. It will also follow the same format (multiple-choice) and rules (no aids allowed) as the midterm tests. It will be given during the final exams week (from 2 June to 6 June), with the exact date and time to be determined by the School.
To pass the course, students must achieve a final course grade of 5 (out of 10) or higher. In addition, they must have obtained a final exam score of 4 (out of 10) or higher; otherwise, the final course grade will be either 4 or the weighted average described above, whichever is lower, and a 'Fail' will be awarded.
No out-of-schedule tests will be given. Only in case of absence due to serious illness or grave family matter, properly documented, may a missed midterm test score be substituted with the other midterm test score --that is, the latter will double its weight in the computation of the final course grade. Midterm test scores cannot substitute for a final exam absence.
Students who earn a 'Fail' grade after having attended and participated in course activities and examinations throughout the semester may take a remedial exam ("recuperació") to make up their grade. This exam will be given during the remedial exams week (from 25 June to 1 July), with the exact date and time to be determined by the School. A student who misses the final exam cannot take the remedial exam.
This exam will follow a similar format as the final exam and will cover the whole semester. It will replace the 90% of the final course grade that was based on midterm and final exams --only the participation score will be re-used to compute the new final course grade.
In the event of failing the course after taking the remedial test, no component of the final course grade will be saved for next year.
6. Learning Resources
The basic reference, and recommended textbook for this course, is:
Varian, H., Intermediate Microeconomics: A Modern Approach, 8th ed., W. W. Norton & Co. (2010). Translation into Spanish available from Ed. Antoni Bosch (2011).
The following textbooks may prove helpful as additional, complementary references:
Begg, D., Fischer, S. and Dornbusch, R., Economics, 9th ed., McGraw-Hill (2008).
Morgan, W., Katz, M., and Rosen, H., Microeconomics, McGraw-Hill (2009).
Silvestre, J., Microeconomia, Editorial UOC (2006). In Catalan.
Additional course materials will be provided throughout the term via Aula Global. These resources, which include the problem sets, are required reading.