DEPARTMENT OF ECONOMICS - QUEENS COLLEGE OF CUNY
703 Price & Distribution Theory COURSE OUTLINE Prof. M. Dohan
Microeconomics (Class Website: www.profdatqcecon.org) Fall 2005
Due to family obligation on November 23, each class will end 9:30 to make up for the missed class.
Reminder: This course assumes that you remember algebra, geometry, the first parts of calculus and your 102 Introduction to Microeconomics Course. Start using the Aplia Online Teaching Module ASAP You can review your math and graphing skills there.
I. Analysing Economic Problems
Aug. 31 Key Concepts, New Concepts and a Review of Supply and Demand in a Single Market
Opportunity costs as real costs, concept of rational behavior, principal-agent problem, social costs versus private costs, externalities, common property, property rights, private versus public goods.
Marginal cost, marginal benefit: the principles of optimal choice
Three Key Analytical Tools: Constrained Optimization, Equilibrium Analysis, Comparative Statics 1
Supply and Demand and Society The Algebra of Supply and Demand 2.1
Exogenous events and policies, interdependence of markets and impacts on markets. Shifts versus movement along.
Math for Economists: Review Appendix (A.1 and A2)
Sep. 07 Price Elasticity of Demand and related concepts
Measuring Responsiveness Quantity Demanded to Price Changes Ch. 2.2
Determinants: Brand versus market, Income and supply elasticities and long vs short run Ch. 2.2-2.4
Using elasticity to estimate demand curves and more back of the envelope calculations 2.5
III. Consumer Behavior and Market Behavior
Sep. 14 Consumer Preferences, Revealed Preferences, Ordinal Utility, Ratios of Marginal Utilities Ch. 3
Diminishing Marginal Utility, Ordinal versus cardinal, concept of indifferences curves and meaning of shapes
Graphical/Mathematical Analysis of utility functions and indifference curves->marginal rate of substitutionxy
Consumer Choice with Budget Constraints: The Dual: Utility Maximization or Cost Minimization? Ch. 4
Budget Constraints and prices, Optimal choices assuming utility maximization.
Mathematics of Consumer Choice (also look at finding maximums and minimums) Appendix A.1-A.5.
Sep. 21 ***Theory of Demand: Income and substitution effects, deriving demand curves Ch. 5.1 & 5.2
Sep. 28 Consumer surpluses and Price Changes, Network Externalities and the Demand Curve 5.3, 5.4, 5.5
Applications: Network Externalities, Backward Bending Supply Curve of Labor Ch. 5.6
Quiz: Chapter 1-5 8:00 to 9:30 on Sept 28 based on questions in Aplia, Blackboard, selected question in workbook and text and from class, through Chapter 5.Keep up with your work.
No Class on Wednesday Oct 3 Rosh Hashanah and Wednesday October 12 Yom Kippur
During this two weeks of no Wednesday classes, read and do Chapter 6
IV. Theory of the Firm: Production and Cost-Minimization,
Oct. 19 Production Functions: One variable & Law of Diminishing Marginal Returns Ch. 6.1, 6.2
Graphics and Mathematics of Total, Average and Marginal Revisited (Productivity Curves)
Production Functions with Two Variables: Isoquants & Economies of Scale .6.3- 6.6
Cobb-Douglas Production Function, Elasticities of Input Substitution 6 Appendix
Oct. 26 Cost Minimization and Choice of Inputs Ch. 7
Short run versus long run, sunk-costs, fixed costs and variable costs. Expansion paths for higher Q
Price elasticity of demand for inputs, the mathematics (looks like consumer theory all over again)
Nov. 2 Cost Curves for Various Levels of Output
Cost Curves in the Long Run, Economics of Scale, Scope and Experience, Shepard’s Lemma Ch. 8.1
Short Run and Shut Down Ch. 8.2
Special Topics: Economies of Scope, Economies of Learning by Doing 8.3
V. Profit Maximization: in Perfect Competition)
Nov. 9 Profit Maximization and Perfect Competition: Supply Curves: Firm and Industry Ch. 9
Economic Efficiency: Producer and Consumer Surplus Maximized
Lots of in-class problems.
Nov 16 Competitive Models and Public Policy (Taxes, Subsidies, Price ceiling & supports, quotas tariffs) Ch. 10
Public Goods & Externalities: Property Rights, Coase Theorem, Optimum supply of public goods Ch. 17
Nov 23 (This class will be a review followed by an exam from 8 to 9:30 if I have to take my 94 year old mom to Seattle). My colleague will teach the class. Have a nice Thanksgiving.
VI Market Structure and Market Failure
Nov 30 Monopoly and Monopsony: Exercising Power and Measuring Monopoly Power Ch. 11,
Dec 7 Price Discrimination and Capturing Consumer Surplus: Regulating Monopoly and Industries Ch. 12
Dec 14 Oligopoly and Cartels (OPEC) and Monopolistic Competition Ch. 13
Finals Period During Finals Week, Dec 16 – Dec 23
The Final is Cumulative
1. REQUIRED TEXT and Study Guide Package: Microeconomics, An Integrated Approach, by David Besanko and Ronald R. Braeutigam, 2nd Edition Wiley 2005, Study Guide for Besanko and Braeutigam Microceconomics by Katharine Rockett, 2005 along with E-Grade Plus and Blackboard Study Assistance. ISBN 0-471-78065-0. DO NOT BUY A USED TEXTBOOK.
2. Aplia for Besanko and Braeutigam ($28.00)
3. REQUIRED NEWSPAPER or Economist: Wall Street Journal 32.00 including free online subscription. Often the examples in lecture will be based on current articles in the Wall Street Journal. You are required to read the 1st page of the WSJ. Focus your reading on “oil and gas markets”, automobile sales, wages, fares, and industrial structure in the airline industry, popular music, the pharmaceutical markets, and housing markets. Keep those articles or at least notes for the occasionally mini-essays you will be asked to write. No need to read the financial sections for this course (e.g. Money and Investing).
Price Theory is like a great symphony: Contrary to common belief, “Price Theory” is really a straight-forward “fun” course with many real life applications and lots of “puzzle solving” as you will see in reading the Wall Street Journal. Although we teach it with lots of graphs and mathematics at times, there really are a few repetitive themes – marginal analysis and optimization - that appear again and again, like in a great symphony, played on different instruments.
Studying for Quizzes and Exam
Virtually every question on a quiz or exam will be taken either from 1. the “Learning-by-Doing Exercises” in the text, 2. problems from Aplia, the online study guide, 3. the review questions or the problems at the back of the text , 4. Problems from the Study Guide and 5. Handouts. Of course, the numbers will be changed, but the concepts and methodology to solve the problems are the same.
A highly productive way of studying is to read the chapter, practice the Aplia practice problems and then try all the problems at the back of chapter before class. Try to form some “study-buddy groups”.
Think about studying about 8-10 hours per week including 4 hours preparing the assigned problems and answering the review questions. An hour or two reading the Journal for the above topics and for building your vocabulary. This is really a “core” course and learning the methodologies, theoretical concepts – and the institutional and factual information – will greatly help you to excel in your other economics courses and in the accounting profession.
QUEENS COLLEGE - DEPARTMENT OF ECONOMICS
Economics 703 Price & Distribution Theory Graduate Class Fall 2005
This class will also counts as Eco 205 and Eco 225.
Prof. M. R. Dohan Useful Information
1. CLASS MEETINGS: 6:30 to 9:30 Wednesdays. PH 132 Notice room change and added 10 minutes. Office hours are after class..
2. Class Website: www.profdatqcecon.org will have old exams, announcements.
3. By going over as many problems as you can in the book, workbook and Aplia as well as Blackboard, you will learn the most and do well in the course. The quizzes will drawn a significant portion if not the entirety of the exams and quizzes from these problems.
4. Tutoring: I shall remain after every class from 9:30 for extra tutoring and answering specific questions. This is not the lab however. Office hours are not suitable for tutoring because I do advising during these hours. So use this extra after-class time I am giving you.
5. Office and Office Hours for advisement and transfer evaluation.
1. Powdermaker Hall, Room 306 F, (718) 997-5461 (but BEST SEND ME E-MAIL).
2. Mondays 3:30-4:30 & 6:30-7:30 and Wednesdays 3:30-4:30 (These are also the office hours for transfer evaluation and advisement, who have priority.). Our “after class office hours” are best
6. APLIA PROBLEM SETS AND LABS: Economics 703 does not have an additional lab. Aplia provides the extra practice problems as well as graded quizzes.You must register for Aplia for Besanko and Breautigam at http://econ.aplia.com using the course key found in the 703 Course Information at www.profdatqcecon.org. Be sure to use the right code and to pay for the course (about $30) when you sign up. Also note the Assignment Completion Deadlines after which you can NOT work further on the graded quiz. Up to that date, you can work on it, change answers, etc.
7. E-Mail: or .
VIP In order to get through my spam filter, always enter first in the subject line QCEco 703: then your name and topic. NOTICE THE COLON AFTER 703. Then your email will get through.
8. Communication with class: From time to time I will make announcements, put copies of old exams and problems and give extra credit assignments on my website www.profdatqcecon.org or handouts, either in class or via e-mail, using the address registered in your Bb account. You should immediately be sure that your correct e-mail address is registered in Bb and that your spam filter does not block messages from my e-mail address. Some of these announcements may modify some of the arrangements set out in this syllabus. You are responsible for keeping track of these announcements, even if you miss class for good reason, enroll after the first day, or miss e-mails.
9. PHOTO: Each student should send me a digital photo so that I can remember your name.
10. READING TEXT IS REQUIRED: Doing the reading, working through the problems and reviewing carefully the “Learning by Doing Problems” in each chapter in advance of class is strongly recommended.
11. READING The Wall Street Journal or the Economist IS REQUIRED: Focus on the front page and on articles about the industries identified at the beginning of the semester.
12. STUDY GROUPS: Try to form a study group of three or four students to work together on problems, take notes in your absence. You are not competing against each other for grades. Everybody can get an A if you all learn it well. You may record or videotape my lectures.
13. FAIRNESS TO FELLOW STUDENTS AND ACADEMIC INTEGRITY:
i. Lateness: Try to come to class on time but I know your schedules and work makes it difficult at time. Come to class even if you are late. I shall understand.
ii. Absences: Please e-mail me before a class if you know you will be absent. Or at least afterward. Have someone take notes
iii. Academic Honesty You are expected to be fair to your fellow students by observing the highest standards of academic integrity as outlined in the College Bulletin. See statement below.
iv. In class exams are closed book (no books, no notes, and no similar study aids are permitted to be used). No talking during exams or quizzes. Do not represent other's work as your own. Any failure to observe these standards at any time will (at least) drop your grade to an F for the course.
v. Aplia graded problem sets should reflect your own work. Discussion with the study-buddies is expected. But write your own answers and explainations and math equations. Above all, make sure your answers are right on any take-home problems. Your study-buddy’s answer could be wrong. So when you finally write your answer for the take-home, be confident of the methodology and math.
14. GRADING: There is no predetermined grading curve. Everybody can earn A’s or B’s or C’s and D’s. Your grade is based on two exams, Aplia score, prepared class participation, the final, and the WSJ analyses using concepts developed in the course. Being prepared for class (having done the problems and reading) further improves your grade. The Final is Cumulative and drawn only on the two exams and take-home problems – with different numbers or example, but the same underlying question or concept. The final has the largest weight and if you fail the final badly, you fail the course.
15. VOCABULARY LISTS: The text is rich in example and vocabulary. Keep a list of new words used in lecture, the textbook and the Journal. Any word in the reading may be used in exams and quizzes.
16. ASSIGNMENTS AND STUDY HABITS: Please read the chapters before the lectures. This course cannot be "crammed" or understood if you do not keep up with the reading and doing the problems in the workbook. Plan on about 8-10 hours of study every week plus more for exams. This is one of your most challenging courses because it is not simple memory but rather problem solving.
The following is borrowed liberally from my colleague Ted Levine who taught Economics 225..
Course Overview:
This course provides a mathematically and theoretically rigorous grounding in neoclassical (also called “mainstream” or “orthodox”) price theory (otherwise known as microeconomic theory). We will treat this body of theory primarily as an object to be studied and understood thoroughly from the inside, to be used to understand economic phenomena and to predict the consequences of different economic institutions and policy interventions. The foundation we will build will prepare students for advanced courses in the many applications of microeconomic theory. We will also seek to contextualize and evaluate the theoretical foundations as we develop them.
Our public discourse—concerning the relative virtues of alternate economic systems, the benefits, costs, winners and losers of globalization, the effects of policy decisions over taxes and tariffs, minimum wages, over-time, and health and safety laws, and practically every other aspect of public life—is infused through and through with the language, concepts and many of the results of microeconomic theory. Its applications daily inform business and policy decisions the world over. A careful understanding, of its foundations, structure, applications and limitations, is therefore important for voters, policy-makers and businesspeople – and accountants -- alike. Of course, it is especially important for technicians of various sorts (actuaries, financial market analysts, etc.) and economists who will make direct use of microeconomic theory in their daily work.