Economics 520 (5/9/2012)Microeconomics Fall 2012Dr. Stokes

Economics 520 (5/9/2012)Microeconomics – Fall 2012Dr. Stokes

Microeconomics 520

Dr. Houston H. Stokes

722 UH

E-mail

Web

TA:Zhongkai Wen

750 UH

Texts:

Pindyck, Robert & Daniel Rubinfeld, Microeconomics, 8th Edition, Prentice Hall, 2013

Suslow, Valerie & Jonathon Hamilton, Study Guide Microeconomics Robert S. Pindyck & Daniel Rubinfeld, Prentice Hall 2013 Or earlier editions

Study Notes:

Stokes, Houston H., Microeconomics Study Notes, 2012. Available on line from

Economics 520 web page. These notes form the basis of the lectures. They can be down loaded and edited.

2. See also "Quantitative Skills Refresher" In the Study Guide.

General Outline of the course:

Microeconomics is concerned with scarcity and how to make rational choices in the face of alternatives. The goal of this course is to equip you with the necessary theoretical and analytical skills that would allow you to make reasoned choices among various alternatives. Thus the main focus of the course is on problem solving. Students will be using Excel, MATLAB and B34S as necessary.

Goals of Course

The course will discuss the relevant theory and will illustrate this theory by showing how to structure a spreadsheet to solve key managerial decisions such as:

-Whether to lease or buy?

-Whether to buy a big machine or a small machine

-How to determine the shape of the cost curve of a production process

-How to price a product

-How to estimate Demand for a product

-How to forecast Demand

-How to estimate a production function

-How a production function can be used to set wages

-How to determine the appropriate level of advertising

-How to estimate the cost of service of a utility

-How to determine the minimum cost of a diet

Tests:

There will be two tests, and one final; all will be worth 25%. Questions will be short answer, multiple choice and fill in. Problems will be assigned and discussed in class. There will be 3-4 graded problem sets which will be worth 25%. Students must turn in problems, and take tests on time to obtain credit. For all class tests students will be allowed to bring one sheet of notes the size of this handout written on both sides. The lecture discussion of problems is a practice for the tests in class. The study guide contains the type of questions that will be used. It is important that you work very hard with this resource. The emphasis of the course is on practical problem solving. Students are expected to do the reading prior to class and to attend class and be ready to discuss the problems. The reading consists of the text and the study guide. In general one chapter will be covered per class period. Class participation can influence grades at the margin. Problem sets can be done by yourself or as part of a two person team. If you decide to form a team, then the team cannot be broken up. All members of the team must work on the project.It is recommended that students bring the text to class and print out the study notes which form the basis of the lectures.

Academic Integrity

The University of Illinois is dedicated to learning and research, and hence is committed to truth and accuracy. Integrity and intellectual honesty in scholarship and scientific investigations are, therefore, of paramount importance. These standards require intellectual honesty in conducting research, writing of research results and relationships with colleagues.

Academic dishonesty includes, but is not limited to:

Cheating: either intentionally using or attempting to use unauthorized materials, information, people, or study aids in any academic exercise or providing to, or receiving from, another person any kind of unauthorized assistance on any examination or assignment.
Fabricating: knowing or unauthorized falsification, reproduction, lack of attribution, or invention of any information or citation in any academic exercise.
Facilitating academic dishonesty/plagiarism: intentionally or knowingly representing the words or ideas of another, as one’s own in any academic exercise.
Offering bribes, favors, or threats: bribing or attempting to bribe or promising favors to or making threats against any person with the intention of affecting a record, grade or evaluation of academic performance and any conspiracy with another person who then takes, or attempts to take, action on behalf of, or at the direction of the student.
Taking an examination by proxy: taking or attempting to take an exam for someone else is a violation by both the student enrolled in the course and the proxy or substitute.
Grade tampering: any unauthorized attempt to change, actual change of, or alteration of grades or any tampering with grades.
Submitting non-original works: submission or attempt to submit any written work, written in whole or in part, by someone other than the student.

The academic Integrity discussion above is based on the University Honor Code which is excepted below:

Honor Code for the College of Business Administration

As an academic community the College of Business Administration at the University of Illinois at Chicago is committed to providing an environment in which teaching, learning, research, and scholarship can flourish and in which all endeavors are guided by academic and professional integrity. All members of the college community – students, faculty, staff, and administrators – share the responsibility of insuring that high standards of integrity are upheld so that such an environment exists.

In pursuit of these high ideas and standards of academic life, as a student I hereby commit myself to respect and uphold the University of Illinois at Chicago (UIC) College of Business Administration Honor Code during my entire matriculation at UIC. I agree to maintain the highest moral and ethical standards in all academic and business endeavors and to conduct myself honorably as a responsible member of the college academic community. This includes the following:

Not to seek unfair advantage over other students, including, but not limited to giving or receiving unauthorized aid during completion of academic requirements;
To represent fact and self truthfully at all times;
To respect the property and personal rights of all members of the academic community.

An abbreviated version of the Honor Code pledge may be printed on course syllabi, exam booklets, and other uses as deemed appropriate. The abbreviated version is as follows:

This course and its associated coursework are being administered under the policies of the University of Illinois at Chicago (UIC) College of Business Administration Honor Code. All students are expected to respect and uphold this code.

Honor Code Violations and Enforcement

Violations of the Honor Code are just causes for discipline under the University of Illinois at Chicago Student Disciplinary Procedure, and all allegations of Honor Code violations shall be handled pursuant to that Procedure.

(For a complete description of just causes for discipline, disciplinary procedures, and sanctions, see the pamphlet “Student Disciplinary Procedure of the Senate Committee on Student Discipline,” available from the Office of the Dean of Students, SSB, Suite 3030, 1200 W. Harrison St., M/C 318.)

Problem sets

Problem sets must be typed and turned in on time to receive credit. The presentation of your report will be heavily weighted in the grade.

Study Tips:

Students are expected to study the chapter summaries and questions in the Study Guide that provide a good review for the tests. Students should do the assigned problems and be ready to discuss them in class. It is important that the reading be done prior to the class where it is discussed. Bring the text and the study guide to each class. A complete set of class notes is on line in MS Word 97 format. Students with laptops can down load this file and annotate these notes during the lecture. After reading each chapter try the tests. Answers are provided at the end of the study guide. Microeconomics is best learned by problem solving, not memorization. The main purpose of this class is to equip you with the tools of micro analysis that will allow you to lead productive lives, both in business and in personal finance.

Excel Files Available on Class Web Site

utility- Illustrates Utility Theory and Market Supply and Demand
ch1_1.xls - Economic Data from Table 1.2
ch2_1 - Demand and Supply Curves are given. Calculates P & Q

Example 2.5

ch2_2 - Given Demand and Supply elasticity and Market P and Q get

Demand and Supply Curves

ch2_3- Data from Stigler Theory of Price Ed(4). Estimate C Function.
ch3_1- Utility Theory Solution
ch7_1.xls - Solves the Appendix to Chapter 7
ch9_1- Agricultural Market equilibrium and Policy Analysis (Fig 9.12)
ch9_2- Tariff and Quota Analysis (Figure 9.15 & 9.16)
ch9_3- Effect of a Government tax in Dollars on Consumer Welfare
ch9_4- Effect of a Government tax in % on Consumer Welfare
ch12_1- Nash Equilibrium of Two Firms with different price and products
ch12_2 - P & G decision Model Template
p354_12- Special Case of Problem 12 page 354
- Problem 5 page 396
table4_6- Table 4-6 P & Q Data

Excel Application Files

large_small.xls -Large vs Small Machine Template
pricing.xls -Pricing Template
demand.xls-Demand Template
sales.xls-Sales Forecasting
Test_lp1.xlsx-Excel LP setup

Students are expected to attend all classes and participate in the discussion. Class attendance may figure in the final grade.

Assignments

Introduction: Markets and Prices

Chapter 1 Preliminaries

Discuss questions for review 1, 2 and 5 page 19

Study Exercises 1 and 2.