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The purpose of this course is to acquaint students with the terminology of economics, introduce them to the "way of thinking" it entails, and provide a survey of contemporary microeconomics.
Microeconomics is the branch of economics that focuses on economic activity from the perspective of individuals and firms, extending this analysis to the industry level. The way I will teach this course is to divide its subject matter into four parts. The first portion of the semester will be devoted to acquainting students with basic economic terminology and introducing two models that explain various aspects of economics. The first of these is production possibilities, which illustrates the nature of (relative) scarcity and the types of choices facing any economy. After this is completed, the basic model of market operation, supply and demand, along with a few extensions, will then be presented. This knowledge will be presupposed throughout the entire semester. The next part of this course details the nature of cost and production. Where possible, extensions to international trade applications (involving US businesses) and the stock market will be presented. The role of management in influencing costs will be emphasized, as will effects of worker training and work effort. The third part of the course will outline the ways in which these microeconomic variables are interrelated: market structure theory. A unifying theme for this course, which will emphasize the workings of a market economy such as ours, is the basis for and limitations of classical "laissez faire" theory, which sets forth the conditions under which markets provide the "best" outcome for society without much government intervention. The final portion of the course deals with labor market analysis, emphasizing what determines wages and employment, and how skill levels affect these, and market failure - when market-dictated outcomes are not necessarily what are best for society. Along with this comes an explicit role for government.
This is strictly an applications-oriented course. Students will be taught how to apply the material covered in class to events currently taking place. By working with this material, you will understand it better. Furthermore, by practicing the application of microeconomic theory, you will develop an intuition that you can use well after completing this course. Such knowledge is becoming ever more important as politicians sometimes misstate microeconomic principles and conclusions. As part of this effort, several widely held inaccuracies, such as the following, will be discussed:
The price of a good measures the true cost of that good;
- When costs rise, firms pass the entire increase on to consumers;
- Taxes on firms are passed on entirely to consumers, as are cost increases;
- Whenever shortages arise, the government must ultimately bring about their end;
- If wages are "high" labor is expensive;
- The major way to lower cost per unit (be more competitive) is to build a larger factory;
- If an endeavor (production of a good or occupation) is very lucrative, all one needs to do is enter that endeavor, and profit will be guaranteed; and
- Centralized planning is the best way to coordinate economic activity.
Required Text
E-book - McConnell, Brue, and Flynn, Microeconomics (18th edition) with CONNNECT
CONNECT Website:
http://connect.mcgraw-hill.com/class/l_lardaro_ecn_201_spring_2011_sec0008 (click REGISTER NOW to get started).
This is a General Education course. As such, you will be required to master a number of different skills identified in the Gen Ed program. Specifically, this course will require you to display the following General Education skills: Reading Complex Texts; the Use of Quantitative Data; and the Use of Information Technology. Please note that each of these elements is an integral part of this course - all are present throughout the entire semester.
The required text, McConnell, Brue, and Flynn, provides the formal economic tools that will be utilized, along with several applications. This is an e-book - you need to go to the URL above, purchase access and register (select "Buy Online" and "Buy Connect Plus"). If you would like to purchase a hard copy of the text with access to CONNECT, you can upgrade your subscription online. You can also get a used copy from Amazon.com or other places as well. CONNECT is an online resource that provides you access to practice and what will be graded questions throughout the semester. I expect you to read each assigned chapter in the text and to utilize the Internet resources available. However, there is no substitute for the constant exposure to economic processes at work that is provided by publications such as The Wall Street Journal and the Financial Times. I strongly urge you to read such publications during the semester and I also encourage you to view television shows that frequently discuss economic issues, especially the Nightly Business Report (on PBS). Weekly magazines are also helpful. I especially recommend the Economic Forecast page of Business Week and special sections of U.S. News and World Report. Finally, an ever-increasing number of useful sources of information now exist on the Internet. I have listed many of these on my homepage: http://members.cox.net/lardaro. Consult the section: "Recommended Sites." As many of you are no doubt interested in the stock market (and possibly bond markets), I strongly recommend that you consult the CNN Money web site http://money.com/ daily for stories relating to economic events written clearly. And, an excellent day-to-day reference that I recommend is MarketWatch: http://marketwatch.com. In general, you will be required to follow economic news and trends using Internet sources as well as reading the Internet references cited in the Course Outline (below).
Grading
Five exams will be given this semester, three in-class exams during the regular semester, a set of CONNECT quizzes that together will count as a single exam, and a final exam. Each of these will consist entirely of multiple choice questions. Makeup exams, however, if allowed, will consist of short-answer essay questions and problems. The final exam is selectively cumulative, testing proficiency in all of the material covered. You are responsible for all assigned readings. Test questions can be expected to deal with any of the readings in the course outline. You are also required to take four exams, one of which must be the final exam.
Your grade will be based on total points earned from: (i) the highest three of the four regular semester exams (three in class exams and the CONNECT quizzes in total); and (ii) the final exam. Please note: THERE IS NO SCALE! The weighting of these two components will be based on your individual performance. Whichever you have a higher average on will count as 60% of your final grade; the other component will account for the remaining 40% of your grade. Note, then, if you start out slowly but your performance gets better as the semester proceeds, so that your final exam grade exceeds the average of your best three exams, your final exam will have a weight of 60%, with the best three regular term exams counting as 40%. This is justified since the final exam is cumulative and, for a number of students, performance improves the longer they are exposed to the subject matter we will be discussing. Perhaps most importantly, I want to avoid discouraging students from continuing to participate in my course and attempting to master the material I cover.
Letter grades (with + and -) will be assigned on the basis of total points earned:
| A = 90+ average |
| B = 80-89.9 |
| C = 70-79.9 |
| D = 60-69.9 |
| F = less than 60% |
I strongly urge you to keep up with the material we are covering. THIS IS NOT A COURSE YOU SHOULD ALLOW YOURSELF TO FALL BEHIND IN! IT IS YOUR RESPONSIBILITY TO CONTACT ME IF YOU ARE HAVING PROBLEMS. If you are unable to come to the regularly scheduled office hours, please e-mail me or see me after class and we will arrange a mutually agreeable time for us to meet. Participation in this class, which includes seeking help during office hours, can potentially affect your course grade.
No outside work will be accepted as grade supplements. Incompletes are granted according to URI policy. If given an incomplete, you have one calendar year to complete all requirements. After that, you must re-take the entire course.
SUGGESTED METHOD FOR STUDYING
The material in this course is analytical. Because of this fact, you cannot merely read and memorize the notes and expect to pass the exams. YOU MUST READ BOTH THE TEXT AND THE NOTES THROUGHOUT THE SEMESTER. AND, YOU WILL NEED TO READ TEXT CHAPTERS MORE THAN ONCE TO MASTER THEM. Let me suggest the following procedure as a way to learn the material we will be covering.
- Read the chapter that is being covered. The first time you read it, you don't need to underline, just read it to get an overview of the main topics and ideas it contains.
- Review the online notes that pertain to that chapter (and be in class as I explain their basis). Use the online notes as an outline.
- Read the chapter a second time. Having read it once (along with the online notes), you should begin to master it. NOW you can underline parts of the chapter and make any additional notes you wish.
- Look at the summary points at the end of the chapter. Can you explain the underlying basis for each of these points? If not, you don't really understand the material it refers to. Go back and read the section it pertains to (along with online notes that apply). If you still can't explain a point, write this down and bring it to me either after class, during office hours, or by e-mail.
- In addition to the practice questions we will be doing in class, there are other questions available on CONNECT (the link is given above). Answer these questions and see how well you do. For the questions you get wrong, look at the part of the chapter it pertains to. What did the question require you to learn from this material? How did you learn this material? Synchronizing these will be crucial to your success in taking exams.
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1. Introduction
McConnell, Brue, and Flynn, Chapter 1 (pp.-10), Review Appendix for review of graphs
Online Notes #1: "Economics IQ Test":
http://www.uri.edu/artsci/ecn/lardaro/lectures/Econ_IQ.pdf
Online Notes #2: "Traditional Introduction to Economics":
http://www.uri.edu/artsci/ecn/lardaro/lectures/Trad_Intro.pdf
Online Notes: Rational Decision Making: http://www.uri.edu/artsci/ecn/lardaro/lectures/Rational Decision Making.pdf
Keep Your Resume Current: http://research.stlouisfed.org/publications/regional/05/01/lead_story.pdf
*"Amos Web Encyclonomic," http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd
*Salary Calculator: http://www.homefair.com/Find_A_Place/Calculators/SalaryCalc/
*A Journalist's Guide to Economic Terms: http://www.facsnet.org/tools/ref_tutor/econo_term/glossary.html
2. Scarcity, Production Possibilities and Economic Growth
McConnell, Brue, and Flynn, Chapter 1 (pp. 11-end).
Online Notes #3: "Production Possibilities":
http://www.uri.edu/artsci/ecn/lardaro/lectures/Production_Poss.pdf
Use "Excess" Sales Tax Revenue for Education: http://members.cox.net/lardaro/useexcess.htm
3. Supply and Demand Basics and the Market System
McConnell, Brue, and Flynn, Chapters 2, 3.
- CONNECT QUIZ -
Online Notes #4: "Supply and Demand":
http://www.uri.edu/artsci/ecn/lardaro/lectures/SUPPLY_AND_DEMAND.pdf
Grocery Bill Still High? http://www.msnbc.msn.com/id/27269544/page/2/print/1/displaymode/1098/
(Use Chapters 2 -3 as reference for the material (later) on perfect competition, etc.)
4. The Elasticity of Demand
McConnell, Brue, and Flynn, Chapter 6.
- CONNECT QUIZ -
Online Lecture notes: "Elasticity of Demand"
http://www.uri.edu/artsci/ecn/lardaro/lectures/Elasticity_of_Demand.pdf
How Retailers Get Into Your Head: http://www.msnbc.msn.com/id/25785197/print/1/displaymode/1098/
25 Logos with Hidden Messages: http://www.graphicdesignblog.org/hidden-logos-in-graphic-designing/
Grocery Prices Still High? http://www.msnbc.msn.com/id/27269544/page/2/print/1/displaymode/1098/
Ethanol: Economic Gain or Drain? www.stlouisfed.org/publications/re/2008/c/pdf/ethanol.pdf
*What is Driving Oil Prices? www.stlouisfed.org/publications/re/2005/a/pdf/oil_prices.pdf
TEST 1
5.Exchange Rates and International Trade
McConnell, Brue, and Flynn, Chapter 5.
Online Notes #5: "Flexible Exchange Rates":
http://www.uri.edu/artsci/ecn/lardaro/lectures/Flexible_Exchange_Rates.pdf
*Exceptional Currency Web Site: http://www.dailyfx.com/
Carry Trade: http://www.investopedia.com/printable.asp?a=/articles/forex/07/carry_trade.asp
Taking Advantage of a Weak Dollar: http://investopedia.com/printable.asp?a=/articles/forex/08/weak-usd.asp
*Burger Survey Provides Taste of International Economics: http://www.stlouisfed.org/publications/re/articles/?id=400
*The Morgan-Stanley Global Economic Forum": http://www.morganstanley.com/views/gef/index.html
*Forex Basics: http://www.investopedia.com/printable.asp?a=/articles/forex/08/forex-concepts.asp
*The US Trade Deficit: Sideshow to the New Economy?: http://www.stlouisfed.org/publications/re/2000/b/pages/economic-backgnd.html
*The Weaker Dollar is Good News: http://www.aei.org/publications/pubID.17220/pub_detail.asp
*The Currency Site: http://www.oanda.com
*Bloomberg Online - World Currencies:
http://www.bloomberg.com/markets/currencies/americas_currencies.html
*Economist.com Country Briefings: http://www.economist.com/countries/
6. Cost and Production Theory
a. Productivity Theory
McConnell, Brue, and Flynn, Chapter 7 (up to p.159).
Lecture Notes: Production, Productivity, and Cost (first 7 double pages):
http://www.uri.edu/artsci/ecn/lardaro/lectures/costs.pdf
Taking the Mystery from Productivity: http://members.cox.net/lardaro/labor_prod.htm
*The Microchip Flexes its Muscle: http://www.stlouisfed.org/publications/re/articles/?id=462
*"Have Computers Made Us More Productive? A Puzzle:" http:/oproduction.pdf
b. Costs of Production - Short-run and Long-run
McConnell, Brue, and Flynn, Chapter 7 (pp. 159 - end).
Lecture Notes: Production, Productivity, and Cost (page 7 to end):
http://www.uri.edu/artsci/ecn/lardaro/lectures/production.pdf
- CONNECT QUIZ -
*Remarks by Chairman Greenspan on Productivity and the New Economy:
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/19961016.htm
*Rising Oil Prices and Turmoil: http://www.stlouisfed.org/publications/re/articles/?id=475
7. The Profit System and Market Structure (Overview)
McConnell, Brue, and Flynn, Chapter 2 (again).
*A Look at Return to Invested Capital (for accounting majors): http://www.fool.com/news/foth/2000/foth000927.htm
*Industry Information Resource: http://www.fool.com/Seminars/2001/CSTMF/CSTMF_LP010622a.htm
Layoffs: Creative Destruction: http://www.fool.com/news/foth/2001/foth010726.htm?ref=em_fwcm1
TEST 2
8. Perfect Competition
McConnell, Brue, and Flynn, Chapter 9.
- CONNECT QUIZ -
Lecture Notes: Costs, Perfect Competition, and the Laissez-Faire Argument:
http://www.uri.edu/artsci/ecn/lardaro/lectures/PERFECT_COMPETITION.pdf
*"Building Wealth: The New Rules for Individuals, Companies, and Individuals" by Lester
The Churn: The Paradox of Progress: http://dallasfed.org/fed/annual/1999p/ar92.pdf
9. Monopoly
McConnell, Brue, and Flynn, Chapter 10.
Lecture Notes: Imperfect Competition: http://www.uri.edu/artsci/ecn/lardaro/lectures/IMPERFECT_COMPETITION.pdf
Layoffs: Creative Destruction: http://www.fool.com/news/foth/2001/foth010726.htm?ref=em_fwcm1
The New Economy: http://www.kc.frb.org/publicat/econrev/Pdf/4q01delo.pdf
10. Monopolistic Competition and Oligopoly
McConnell, Brue, and Flynn, Chapter 11.
Lecture Notes: Monopolistic Competition: http://www.uri.edu/artsci/ecn/lardaro/lectures/MONOPOLISTIC_COMPETITION.pdf
- CONNECT QUIZ -
*Offshoring in the Service Sector: http://www.kc.frb.org/publicat/econrev/Pdf/3Q04garn.pdf
What Impact will E-Commerce Have on the US Economy? http://www.kc.frb.org/publicat/econrev/Pdf/2q04will.pdf
TEST 3
11. The Labor Market
McConnell, Brue, and Flynn, Chapter 13, 22(optional).
Online Notes: The Labor Market: http://www.uri.edu/artsci/ecn/lardaro/lectures/LABOR_MARKET.pdf
Innovation, Technological Change, and the Economy: http://www.dallasfed.org/educate/everyday/ev6.html
Foreign Labor Statistics: http://146.142.4.24/cgi-bin/surveymost?in
BLS Major Indicator Releases: http://www.bls.gov/bls/newsrels.htm
*Producing More with Less: http://www.stlouisfed.org/publications/re/articles/?id=479
12. Market Failure
McConnell, Brue, and Flynn, Chapter 16 (pp.340 - end).
"The New Economy: What It Really Means," Business Week, 11/17/97: http://www.businessweek.com/1997/46/b3553084.htm
FINAL EXAM |
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