Class schedule: MWF 11-11:50am, Heady 160
Lab Session 5: W 2:10-4pm, Heady 274
Lab Session 6: R 2:10-4pm, Heady 274
Textbook: Jeff Perloff, Microeconomics: Theory and Applications with Calculus, Pearson, 2008
Econ Help Room:
The Economics Department provides an Economics Help Room in 178 Heady Hall.
This room will be staffed by special Help Room TAs from 9:00 a.m. to 6:00 p.m.
Mondays through Thursdays and from 9:00 a.m. to 5:00 p.m. on Fridays throughout the semester.
(Additional hours may be scheduled and announced if staffing permits.)
Problem Sets:
1. There will be weekly problem sets, excluding the weeks of exams, due in class on Fridays.
2. Problem sets will be out of three points each. Only your best 8 problem sets will count towards your final grade in the class. You should, however, complete all the problem sets as they will form the basis for the exam material.
3. You may work in groups on the problem sets; turn only one copy and clearly list the names of all group members. Group size should be limited to three at most. You may also work individually on the problem sets, but group work is encouraged. All exams, of course, are individual.
Grading policy:
Your course grade will be based on 3 exams (15% each), a cumulative final (35%), problem sets (15%) and class participation (5%). Poor individual exam scores which are obviously out of line with other grades will be discounted, and upward trends in performance will receive extra weight, as will exceptionally strong performance on the final exam. Complaints about apparent grading errors will be considered, but requests for "extra credit" or other special consideration in assigning grades must regrettably be ignored.
Course description:
Prereq: 101; Math 160 or 165. Recitation required for 4 credits. Nonmajor graduate credit. This course covers major topics in microeconomic theory including theory of consumer and business behavior; optimal consumption choices and demand; theory of firm behavior; costs, production, and supply; competitive and imperfectly competitive markets; theory of demand for and supply of factors of production. The tools learned in this class are immediately useful in other Economics and Ag Business classes and in many jobs in business and government.
Because microeconomic theory is mathematical, calculus is a prerequisite for this course and we will use calculus extensively. Mathematical tools essential for further study in economics are introduced gradually throughout the course. We will use a combination of lectures, experiments, class discussions and problem sets to explore the material in depth.
Major Course Topics:
1. Review of Supply and Demand Model.
In this part of the course, we will review some of the basic material from Econ 101 about supply, demand and market equilibrium. You will also learn to calculate elasticities.
2. Consumers, Utility Maximization and Demand
In this part of the course, we will study how consumers maximize their satisfaction subject to their resource constraints. You will learn how to do constrained optimization graphically and with calculus, derive individual demand curves and aggregate them to get industry demand curves. You will learn about normal, inferior and Giffen goods as well as substitutes and complements.
3. Prices in Competitive Markets.
In this part of the course, we study how supply and demand interact to determine prices in competitive markets, i.e., those in which individual firms perceive they lack the power to determine the industry price level. You will learn how to solve profit maximization and cost minimization problems for firms in competitive markets. You will investigate how firm and industry supply curves are derived from costs and capacity information, and how to use these curves, along with information about demand, to determine the market price and its likely evolution.
4. Government Intervention and Its Effects on Prices in Competitive Markets
In this part of the course, you will learn how government policy affects the level of prices and the distributions of rents in competitive markets. We will study taxes, quotas, minimum wages, price ceilings, etc. We will also discuss the politics of why and how these interventions are introduced.
5. Profit-maximizing Pricing Decisions of Firms with Market Power.
In this part of the course, we turn our attention to firms that do have the power to affect prices in the markets either because they are monopolies in their markets (such as DeBeers in the diamond industry) or because they are only a few major firms in the market (such as Coca-Cola and Pepsi in the soft drink industry). We will learn how cost and demand fundamentals interact to determine profit-maximizing price levels. You will also learn how firms can exploit differences in the willingness-to-pay of consumers to capture additional profits by pricing differentially.
6. Strategic Interactions
In this part of the course, you will learn how to use game theory to model various forms of competition between business firms in oligopoly markets. In particular, we will study capacity or quantity competition between producers of commodity products and price competition between producers of differentiated products. We will investigate how time affects such competition (that is, the firms compete against each other over and over) and the mechanisms of collusion. We will also discuss applications of game theory in other settings.
Disabilities statement:
It is Iowa State’s policy to help students with disabilities.
Please contact me and/or Disability Resources Office, 1076 Student Services Building, 294-6624.
Miscellaneous:
1. It is highly recommended that you attend all lectures and one weekly review session. Students are responsible for material covered and announcements made in class. If you cannot attend a lecture, please notify me by email in advance.
2. When contacting me by email include “Economics 301, Section 5 – Question about …” in the subject line. I will typically respond to all email inquiries within 48 hours.
3. Feedback is appreciated at any time!
Last updated: Sunday, January 11, 10:00pm
