Introductory Microeconomics, Michaelmas Term 2023

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Tutor

Brian A'Hearn

Tutorials

We will meet in my room, at the top of Staircase 1. If you wish to switch groups in any particular week, that's fine as long as you find someone who will swap places with you. I don't want more than three in a tutorial.

Thursday 2:00 -

Thursday 3:15 -

Thursday 4:30 -

Maths classes

No specific maths instruction will be offered in College. For those without A-level maths or the equivalent, the Department puts on a good series of classes which you can attend. If you sign up and start that course, you are expected to see it through. It is not offered on a drop-in or try-it-and-see basis.

You should review the material in the Department's Maths Workbook, up to constrained optimisation. (Partial differentiation could be new to some of you.) You can access the Workbook via Canvas.

Schedule overview

Week	Topic
1	Jumping right in
2	Exchange, supply, and demand
3	Individual decision making
4	More individual choice
5	Firms and perfect competition
6	Firms: imperfect competition
7	Market failure
8	Economics and the environment

click week number to jump to detailed information

Teaching

Lectures

The Economics Department organises and delivers lectures for the course. Consult the Canvas pages for the course for more information on lectures: link.

Examinations

The Department sets and marks the Preliminary Examination in economics, which you will sit in June of next year, and which you must pass before continuing on to your second year. (There are re-sits in September for any who fail the June exam.) The University thus does lecturing and examining.

Tutorials, classes, and collections

The College provides teaching in the form of tutorials and classes, and monitors your progress by means of "collection" exams set and marked by your tutors. A collection normally happens at the beginning of the term after you have studied a subject, e.g. in 0th Week next January for this course. Your college tutors will cover most of the same material as the Departmental lectures, but not necessarily in the same way, at the same pace, or in the same sequence. Tutors have autonomy about how and what they teach.

With only a small number of sessions together, we cannot possibly cover everything in tutorials. The point cannot be emphasised too much that your studies at Oxford will be mostly self-directed and independent. You will teach yourselves and each other, rather than us teaching you.

Part of our job is to help prepare you for the prelims exam. But our real goal is to help you become good economists. We do not teach with one eye fixed on the exams. Do not expect feedback of the form "you could earn two more marks here if ...". In fact, do not expect marks at all, as I won't give them for tutorial and class work. (Collections are different.) I want your focus to be on asking questions, articulating answers, and learning economics, not on earning marks. You will receive a lot of feedback in tutorial and class discussions, so use them wisely, and actively.

Tutorials will be an opportunity for serious discussion of work that you have prepared: sometimes essays, sometimes shorter questions and problems. You should be doing most of the talking in a tutorial. In another century, in another country, a colleague once told me "After a few years our students will remember almost nothing that we say, but they will remember what they say." Tutorials should maximise how much you say.

Essays

You will be asked to write essays in some weeks. These should not exceed 1600 words in length, should have a bibliography listing any sources used, and should be submitted by 12:00 on the day before your tutorial by e-mail, in pdf format (not a Word document or similar, please).

Do not copy text from your sources without attribution: that is plagiarism. Copying many two-sentence passages from several different sources is plagiarism. Copying three sentences, in which you change just one or two words in plagiarism. Using an AI to write your essay, if not exactly plagiarism, is equally bad.

The essays are about both substance and style - style in the sense of crafting a persuasive argument, not ornament. A good essay will display lucid economic reasoning, will make use of tools like diagrams, and will bring relevant evidence to bear. Feel free to start your research with websites and journalistic sources, but to do good job try to consult a few sources authored by professional researchers and published in academic journals, working papers, or policy reports.

Problem sets

Most weeks you will also be set some economics problems to solve. Unlike the essays, problem sets do not need to be submitted in advance; bring your written solutions to your tutorial. Please attach a cover sheet on which you indicate any difficulties you have had.

Textbooks

There is no single text that the lectures follow or which the Department recommends.

A new and unconventional text that I like a lot is The Economy, by "The CORE Team" (Oxford: OUP, 2017). You should find hard copies in book shops and the library; the entire text is also freely available online here. References to this text are made in the lectures, and some problems from the book are included in the Department's sample tutorial questions. But the Department does not follow the unusual structure of this book (part of what makes the book interesting and worthwhile!), and that makes it a little awkward for us to work with.

There are a number of other texts that cover the right material at about the right level, each with its own style, its own strengths and weaknesses. I recommend that you have a look at several and pick a favourite, along perhaps with a backup for a different viewpoint. Four texts that I think are good, and which are also recommended by the Department, are the following.

MKR: Morgan, W, M. Katz, and H. Rosen. Microeconomics (McGraw-Hill, 2nd European ed.).
F: Frank, R. Microeconomics and Behaviour (McGraw-Hill, 8th int'l ed.).
V: Varian, H.Intermediate Microeconomics (Norton, 7th int'l ed.).
P: Perloff, J. Microeconomics with Calculus (Pearson, 2nd int'l ed.).

The edition details refer to the versions on my shelf; other editions are fine but may differ in pagination, chapter numbers, etc. These books are all well-known, widely-used texts. The last two are somewhat distinctive, V for its abstract style, P for its use of calculus in the body of the text (rather than appendices or footnotes). F and P have a lot of interesting examples and applications, something I particularly appreciate.

Week by week schedule

Essay topic:

Is rent control a good policy to ensure a supply of affordable housing for people of limited means, and to defend historic communities against gentrification?

(Note there is no right answer to this question that I am expecting.)

Here are some readings that you may find a good starting point:

Tierney, John, "The Rentocracy: At the Intersection of Supply and Demand," New York Times Magazine, 4 May, 1997. Online here.

Arnott, Richard, "Time for Revisionism on Rent Control?" Journal of Economic Perspectives, vol. 9 no. 1 (Winter 1995), pp. 99-120.

A recent article from my hometown, partly about issues of gentrification: here.

There is a Freakonomics podcast on rent control here.

Possibly interesting, but I haven't read, by an early figure in New Institutional Economics:

Cheung, Steven, "Rent Control and Housing Reconstruction: The Postwar Experience of Prewar Premises in Hong Kong," Journal of Law & Economics, vol. 22, no. 9 (April, 1979), pp. 27-53.

Cheung, Steven, "Roofs or Stars: the Stated Intents and Actual Effects of a Rents Ordinance," Economic Inquiry, vol. 13 (March, 1975), pp. 1-21.

No problems or additional readings this week.

Essay topic:

No essay this week

Problems for this week here.

Readings: read one (preferably more) of the following for this week.

CORE Units 6, 8*
MKR: Ch. 1
F: Chs. 1, 2
V: Ch. 1
P: Chs. 1, 2
* The CORE text, in Unit 8, makes use of concepts like marginal cost and isoprofit curves that it introduces earlier, but which we won't encounter until later. You don't need to understand these concepts for this week, so don't worry if it's difficult and you think you haven't understood everything. We will come back to these topics in future.

This week we diverge from the lectures, and stick with the sequence of topics in the textbooks, i.e. first households and then firms. You can access the slides for last year's lectures on consumer behaviour via the course Canvas page.

Essay topic:

No essay this week.

Problems for this week here.

Readings:

CORE Unit 3*
MKR: Chs. 2-3
F: Chs. 3-4
V: Chs. 2-6
P: Ch. 3
* There is a focus here (in CORE) on labour supply, which our problems don't address this week. We'll come back to labour supply later; in the meantime the technical analysis of choice presented in The Economy is what we want, the same as applicable to other consumption decisions.

Essay topic:

Why do Americans work so much more than Europeans?

The title is taken from a paper by (Nobel Prize winner) Ed Prescott, which could be one place to start your reading (you should be able to find plenty on this topic). The topic is now covered in the CORE textbook and lecture. I am expecting you to go beyond that.

As an alternative you could write on "Why do men work so much more than women?" There are three margins on which men work more: greater labour force participation; more full-time relative to part-time work; and more hours per week in FT employment. A possible starting point, which focusses on a different question but has a lot of relevant material, is Blau and Kahn, "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, vol. 55, no. 3 (2017).

You may submit a detailed essay plan, including a bibliography, if you like.

Problems for this week here.

Readings:

CORE Units 3-4
MKR: Chs. 4-5
F: Ch. 5
V: Chs. 8-10
P: Chs. 4-5

As we are slightly ahead of the lectures, you might want to check out last year's lecture slides, accessible via the Canvas pages for the course.

Essay topic:

No essay this week

Problems for this week here.

Readings:

CORE Units 6, 8
MKR: Chs. 8-10
F: Ch. 9-11
V: Chs. 18-21
P: Chs. 6-8
On the labour discipline model of the CORE text, you may also find useful information in MKR ch. 17 or P ch. 19.

Essay topic:

No essay this week.

Problems for this week here.

Readings:

CORE Units 6, 7
MKR: Ch. 13
F: Ch. 12
V: Ch. 24/5
P: Ch. 11
* One question on the problem set asks about monopsony. This topic is treated in MKR ch. 14, F ch.14, V ch. 26, P ch. 15.

Essay topic:

No essay this week

Problems for this week here.

Readings:

CORE Unit 12
MKR: Ch. 18
F: Ch. *
V: Ch. 33, 35
P: Ch. 17

* "Externalities, Property Rights, and the Coase Theorem" chapter number varies by edition.

Essay: Pick one of the following two topics.

a. Why is discounting of the future so important for determining environmental policy today, and what rate of discount should we apply?

("There is a 'problem' with discounting the distant-future payoffs of projects or activities, ... To think about the distant future in terms of standard discounting is to have an uneasy intuitive feeling that something is wrong, somewhere." Weitzman, 1998.)

b. How could a carbon tax solve the problem of global warming? (And why don't we have one?)

In January of 2019 the Wall Street Journal published a letter signed by many prominent economists advocating a carbon tax. This generated a fair bit of coverage in the media, which would be an accessible way into the discussion.

No problems for this week.

Readings:

CORE Unit 20
MKR:
F:
V:
P: