NORTHEASTERN STATE UNIVERSITY

COLLEGE OF BUSINESS AND INDUSTRY

DEPARTMENT OF BUSINESS ADMINISTRATION

Tahlequah, OK

INSTRUCTOR:

Instructor: Dr. Wier, Assistant Professor

Office: PA 300B

Office Hours: Posted

Telephone and voicemail: 456-5511 ext. 2916

Home Number: 431-0754 (use between 9:00 AM and 9:00 PM)

Fax: 458-2337

E-mail: wier@cherokee.nsuok.edu

COURSE TITLE AND NUMBER:

ECONOMICS 2213: Principles of Economics II (Microeconomics)

PREREQUISITES: NONE

CATALOG DESCRIPTION AND COURSE PURPOSE:

An introduction to modern microeconomics. Market structure and functioning, cost and supply relationships, consumer behavior, demand theory, product and resource pricing, revenue and profit relationships, business ethics, and international specialization and trade.

EXPECTED COURSE OUTCOMES:

1. Demonstrate mastery of terms by written definition, concepts by question preparation, and mastery of graphs by depiction and interpretation on quizzes and exams (all chapters).

2. Delineate between the methodology of economics as practiced by economists vs. the proper method of social sciences (Ch. 2 and lecture).

3. Describe and explain the four major systems of political economy and a figure for delineating between them (Ch. 2 and lecture).

4. Define and explain the rules of optimization involved in the demand for products and resources (Ch. 21 & 27).

5. Identify the determinants of, and their relationships with (direct or inverse), demand and supply (Ch. 3).

6. Analytically describe the impact on demand, supply, or equilibrium price and quantity of a change in a single or multiple determinants (Ch.3).

7. Demonstrate mastery through calculation of elasticities of demand and supply and their interpretation (Ch. 20).

8. Demonstrate mastery of the concepts and graphs concerning the costs of production through graphical analysis.

9. Demonstrate mastery through graphical analysis and description of the concepts and graphs concerning entrepreneurial decision-making in the environments of pure competition, monopoly, monopolistic competition, and Oligopoly in both the short-run and long-run (Ch.s 23-25).

10. Demonstrate mastery through graphical analysis and description of the concepts and graphs concerning the determination of prices and quantities of resources demanded and supplied in the resource markets for labor, land, capitol, and entrepreneurship (Ch.s 28 & 29).

REQUIRED TEXT:

McConnell, Campbell and Brue, Stanley, ECONOMICS: Principles, Problems, and Policies, 15^th. Ed., McGraw-Hill, Inc., 2001.

INSTRUCTIONAL PROCEDURES:

CHAPTER TITLE AND TOPIC

DAY 1: Course introduction- How Not To Flunk Dr. Wier=s Class!

OBJECTIVE ONE: Introduction, The Psychology of Markets and Basic Optimization

Ch. 1 The Methodology of Economics

Ch. 2 The Economizing Problem?

Ch. 2 (Cont.: 4 basic systems of political economy)

Ch. 2 (Cont.: 4 circular flows)

Ch. ? Perfect Markets? and Contracting

Ch. 3 Supply and Demand: Demand (acceptance)

Ch. 3 Supply and Demand: Supply (offer)

Ch. 3 Supply and Demand: Equilibrium (consideration)

Ch. 20 Demand and Supply: Elasticities and Applications

Ch. ? Optimization: The Economizing Behavior (Not a Problem)

Ch. 21 Consumption, Diminishing MU, and the Demand for Goods

EXAM I

OBJECTIVE TWO: Resource Market Conditions

Ch. 27 Production, Diminishing MP, and the Demand for Resources

Ch. 28 Labor Markets (Perfectly Competitive)

Ch. 28 (Cont. Monopsony)

Ch. 28 (Cont. Inclusive Unions in a Competitive Environment)

Ch. 28 (Cont. Bilateral Monopoly-Inclusive Unions in Monopsony)

Ch. 29 Rent, Interest, & Profit

EXAM II

OBJECTIVE THREE: Product Market Conditions

Ch. 22 The Costs of Production

Ch. 23 Price and Output Determination: Pure Competition

Ch. 24 Price and Output Determination: Pure Monopoly

Ch. 25 Price and Output Determination: Monopolistic Competition

Ch. 25 (Cont.) Price and Output Determination: Oligopoly

Ch. 32 Antitrust Policy & Regulation

Ch. 29 Revisited…

EXAM III (Final) - date to be announced

STUDENT PERFORMANCE ACTIVITIES:

READING: It will be key to your success in this class to be conscientious in your reading as most of the material in the lectures will be taken primarily from the text. Economics is a difficult subject and thus, each topic requires multiple exposure. If the material is covered once in reading and subsequently in class then the main ideas will be developed and understood. If not, the experience of economic thought will be a frustrating and fruitless one. Given the difficulty of passive reading students should not attempt to read the text without being active. The activity required for this class is notetaking before the class. Read below for further information on this process.

CLASS AND ESSAY PREPARATION TOPICS: You will be provided with a set of class and essay preperation topics to guide your reading and in-class notetaking. You should read the questions from each chapter before you read it in the text. These are the topics the instructor considers important. These are the questions that you will be expected to answer by class time and prepare for essays on the exam. Questions with asterisks are not from the text and will be presented in class only. The answers to those without asterisks may be quizzed on at the beginning of class.

NOTES: There are several levels of understanding. Definition of terms is the lowest level. Concepts are the next level. The course lecture will be at the concept level. This requires mastery of terms and other issues, such as graphs, before class. To provide a more fruitful reading experience students are expect to write notes on notecards with one topic per hand written card (like flashcards). Term on one side, definition on the other. Title on one side, graph or figure on the other, etc. While taking notes in class be sure to read the class preparation questions for the relevant material before class and listen for answers in the lectures. Do not let a lecture go by if you do not have the answer to the questions for that day. Ask a question, IN CLASS, if you do not understand! I am happy to answer questions anyplace and anytime but they are never more fruitful than when asked in class when other students my benefit from the answer.

QUIZZES: A quiz covering the terms, figures, concepts and preperation questions from each chapter will be given it is lectured on. Class should be considered your last chance to get the information, not an introduction to it. To facilitate this a quiz will begin each class. If students prepare handwritten notecards they can be used on the quizz (but NOT on the test). The notecards should not be thought of as preparation for the quiz though! They are study aids for the test and the quizzes are for them. To assure the instructor that you are doing the preparation as you go rather than cramming at the last minute. I promise you that approach is not a good idea…

ATTENDANCE: Attendance at lectures is required for the full benefit of this course to be attained. There will be a quiz almost every class day. Special announcements regarding assignments and dates that are made during lectures will carry the full force of assignments and instructions contained in this syllabus. Quizzes missed during class cannot be made up, EVER. University excused abscenses will result in the missed quiz being removed from the students overall average, they will not be made up.

EXAMS: There will be three exams (two during the term, one during finals) each counting 25 percent of the final grade. Each will cover a distinct part of the material and none will be comprehensive. This will allow for tough but fair exams that foster in-depth study of the subject at hand throughout the semester. If an exam must be missed the instructor must be notified prior to the exam (directly or by message at extension 2916) If an emergency occurs (within the guidelines specified by the University), then instructor notification must occur before the next class period. NO EXCEPTIONS WILL BE MADE.

STUDENT EVALUATION:

FINAL GRADE: The final grade in this class will be calculated as below:

Quizzes 25%

Exam I 25%

Exam II 25%

Exam III (Final) 25%

Total 100%

CLASS AND ESSAY PREPARATION TOPICS

(Topics with asterisks “*” are not in the book)

OBJECTIVE I:

A. Introduction and Methodology

Chapter 1

1. Draw, label, and explain a figure that shows the methodology of economics as

practiced today (Titled “The relation between Facts, Theory and Policy in

Economics”

*2. Draw, label, and explain a figure of the methodology that should be used to describe

any social science.

Chapter 2

*3. Draw, label, and explain a figure that shows the relationship of the four basic systems

of political economy

4. Draw, label and explain the four accompanying circular flow diagrams. (Only one is

given in the text, prepare it for class)

 B. Introduction to Basic Market Concepts

Chapter 3

5. Describe the Law of Demand as it relates to the relationship between price and

quantity in the mind of a demander.

6. List the Determinants of demand.

7. Name the relationship between demand and each of the determinants (Direct or

Inverse).

8. Describe the Law of Supply as it relates to the relationship between price and quantity

in the mind of a demander.

9. List the Determinants of supply.

10. Name the relationship between supply and each of the determinants (Direct or

Inverse).

*11. Describe the concepts of Supply, Demand, and Equilibrium in a “contracting framework”.

C. Elasticity

Chapter 20

1. Do the elasticity calculations (i.e. you don’t have to graph anything but you should use your formula four times) in key question 2 and answer key question 5 using the rule that I will give you in class (Only answer the ones about demand).

D. Consumption, Utility and the Demand for Products

Chapter 21

1. Prepare Key question 5, and then attempt Key question 4.

OBJECTIVE II:

A. Production and the Demand for Resources

Chapter 27

1. Explain the profit maximizing and cost minimizing rules for employing resources; particularly focusing on why they guarantee maximum profit and minimum cost.

B. Perfect Labor Markets

Chapter 28

1. What type of labor market is depicted above?

2. What will the wage and quantity of labor in the market and firm be? (Also show

graphically)

3. What is missing from the graph and how do you find it? (Also show graphically)

4. Why is the supply of labor perceived in this manner?

C. Monopsony

Chapter 28

1. What is different about the situation depicted in the graph below?

2. How does monopsony power impact the outcome of the wage and quantity of labor in

the market above?

3. Why is the supply of labor curve separated from the Marginal Resource cost curve in Monopsony markets?

4. How is the outcome in a monopsony labor market different from the perfect

competition outcome (show graphically and explain)?

D. Union Model (perfectly competitive environment)

Chapter 28

1.What wage and quantity of labor will prevail in this market?

2. Why?

3. How is the market above different than the monopsony market?

4. How is it the same?

5. How is the outcome in this union labor market different from the perfect competition

outcome (show graphically and explain)?

6. What kind of nature is assumed to exist in the above market if the union were not in it?

7. What impact does this have on value judgments about the Union?

8. What kind of an environment would lead to a different assessment of Unions?

E.Bilateral Monopoly (union model with monopsony environment)

Chapter 28

1. What type of labor market is graphed above?

2. What does that mean?

3. How would the outcome of wage and quantity of labor be determined in the market

above?

4. In the absence of a perfect world, which is preferable, a market with power in the

hands of the supplier only or in the hands of the demander only? (trick question)

5. What is the alternative?

6. How is the minimum wage like the bilateral monopoly model above?

7. If the analogy holds then what role is the government playing?

8. What then does your value judgment about minimum wages depend upon?

F. Rent, Interest, and Profit

Chapter 29

1. What is the difference between graph A and B for land markets?

2. If graph A is correct what does that suggest about the role of rents in this market?

3. What if graph B is correct?

4. Why is interest considered to be the payment to capital?

5. What is the real payment to capital?

6. How is the interest rate like normal profit?

7. What is the payment to entrepreneurship?

8. What then is economic profit?

OBJECTIVE III:

A. The costs of Production

Chapter 22

1. Draw and label a graph of production costs in the short-run. Pick a level of output and state the marginal costs, average variable costs, average total costs, and average fixed costs.

2. Draw and label a graph of production costs with multiple technologies in the long run. What is the minimum efficient scale of production on your graph and which technology should be chosen?

*B. 3 Short-Run Questions

*1. What are the three questions that any entrepreneur must ask about production in a

market?

*2. What is the rule used to answer question number 1?

*3. Explain the conditions under which you should:

a. produce in the short and long-run

b. produce in the short-run but shut down in the long run

c. shut down in the short-run

*4. What are the rules for determining profit or loss in situations a, b, & c?

C. Pure Competition

Chapter 23

1. Where do prices come from in a perfectly competitive firm?

2. How is the short-run demand curve perceived by the firm?

3. What is the firm’s short-run supply curve?

4. How is output determined in the short-run by a firm in a perfectly competitive product market?

5. How does profit or loss affect perfect markets in the long run?

6. Be prepared to answer the three questions in B. above for any situation in a Purely

Competitive environment.

7. What is long-run equilibrium and how is efficiency related to it?

D. Monopoly

Chapter 24

1. What are the reasons for monopoly?

2. Where do prices come from in a monopoly?

3. How are output and pricing decisions made by a monopolist entrepreneur?

4. Be prepared to answer the three questions in B. above for any situation in a monopoly

environment.

5. What happens in the long-run to the monopolist and what does this say about

efficiency?

E. Monopolistic Competition

Chapter 25

1. How is monopolistic competition different from perfect competition?

2. Be prepared to answer the three questions in B. above for any situation in a

monopolistically competitive environment.

3. Is there a long-run equilibrium in monopolistically competitive markets and if so how is it different from perfect competition? (Draw and label)

4. What impact does this have on efficiency?

F. Oligopoly

Chapter 25

1. What is collusion?

2. What is the difference between a collusive oligopoly and a monopoly?

3. What does non-collusive behavior do to the oligopolist’s perception of the demand

curve?

4. Why? How is the perception of a price decrease different from their perception of a

price increase?

5. How is price determined by non-collusive oligopolists?

6. How do prices change in non-collusive oligopolys?

7. What happens in an oligopoly market in the long run?

G. Antitrust, Regulation, and Industrial Policy

Chapter 32

1. What are the two sides of antitrust law?

2. What actions do the major acts of antitrust law make illegal?

3. What is the difference between a structuralist and a behavioralist application of

antitrust law?

Chapter 29 Revisited

*1. “Market Capitalist” societies are supposed to be based upon two institutions: private property and Afree@ markets. What impact does it have on a capitalist society if land rents or wages are higher (or lower) than the value of providing that land or labor, or if capital gains more return than the interest charged, or if entrepreneurs gain more than a normal profit? What institution is the basis for an individuals right to keep these "rents" or "unearned" incomes? What institution must then work "perfectly" in the long-run for a capitalist system not to require short-run intervention from a democratic government? (Is it any wonder then that so many claim they do?)

*2. List the means for gaining economic profit and any policies or actions involved with limiting these means. What then are the “accepted” and “ethical” means for achieving Economic profit?