Introductory Microeconomics, Michaelmas Term 2017

Tutors

Brian A'Hearn
Kilian Rieder

Tutorials

Brian's groups meet in his room, Staircase 1.1
Fr 2:00 - Carton, Goh
Fr 3:00 - Hindhaugh, Lee
Fr 4:00 - McLintock, Smith

Kilian's groups
Fr -
Fr -
Fr -

Classes


Nick Horsewood will be leading the classes.
Location:

Schedule overview

WeekTopic
1Intro
2More supply & demand; trade
3Firms: cost minimisation
4Firms: perfect competition and monopoly
5Individual choice: utility maximisation
6Utility maximisation, cont.
7Market failure
8Market failure: imperfect information, moral hazard

click week number to jump to detailed information

Teaching

Lectures

The Economics Department puts on a series of lectures that you must attend. These take place in Examination Schools on Mondays and Tuesdays at 11:00 every week (also Wednesdays at 11:00 in Weeks 1, 2, 3, and 5). The Department also offers a series of lectures and/or classes in Elementary Mathematical Methods, targeted at those who have not done AS-level maths or the equivalent. Contact me if you think you require this extra tuition.

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 are 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 ordinarily follow the Department's syllabus, but not slavishly; tutors have almost complete autonomy about how and what they teach.

With only a small number of sessions together, we cannot possibly cover all the material from the lectures. The point cannot be emphasised too much that your studies at Oxford will be mostly self-directed and independent.

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 we won't give them for tutorial and class work. (Collections are different.) We want your focus to be on asking questions, articulating answers, and learning economics, not on earning marks. The main sort of feedback you will get is in our discussions in tutorials and classes, so use them wisely, and actively.

Tutorials will be an opportunity for in-depth discussions of work that you have prepared: sometimes essays, sometimes shorter questions and problems. You should be doing most of the talking in a tutorial. A colleague of mine 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.

We will also have weekly classes with 8-10 people. In even weeks, these will be devoted to economics. In odd weeks we'll do maths (see below). Sometimes we will discuss problems or questions that you have been assigned. Sometimes we will have a more free ranging discussion about economic issues.

Essays

You will be asked to write essays in most weeks. These should not exceed 1500 words in length, should have a bibliography listing any sources used, and should be submitted by 12:00 on Wednesdays (both by e-mail and in paper format to your tutor's mailbox, via the porters). 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. (And this sort of thing is picked up by the software we use to check.) The essays are about both substance and style - style in the sense of crafting a persuasive argument, not in the sense of 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 (or working papers) or policy reports.

Problem sets

Each week you will also be set an economics problem set. Unlike the essays, problem sets need not be submitted in advance; bring your written solutions to your tutorial. Please attach a cover sheet on which you indicate any problems you have had difficulty with.

Separately, for the four maths classes, you will be set additional problems. Expect these problems to be drawn from the Department's Maths Workbook, which you can download from the WebLearn site, but this is up to the tutor, Prof. Horsewood. The material should be simple, just revision for most of you, with the likely exception of constrained optimisation, which you will do towards the end. There may be a basic maths competence test in January, which would be marked on a pass-fail basis. In the event someone were to fail, we would arrange some remedial work.

Textbooks

There is no single textbook that we will march through, chapter by chapter. There are a number of good 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 lecturer, 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

Week 1: Introduction

Essay topic:

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

Here are two 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.

Problems for this week here.

You should read at least one (preferably more) of the following for this week.

MKR: Ch. 1
F: Chs. 1, 2
V: Ch. 1
P: Chs. 1, 2

Week 2: More supply and Demand; trade

Essay topic:

From an economic point of view, the legalisation of Uber in a given city represents a Pareto improvement. Discuss.

In your reading for this essay, you will probably want to consult the literature on (and textbook discussions of) the historic regulated cab industry. Much has been written about the case of New York City, for example.


Problems for this week here.

Readings: No new readings for this week. You may want to look for a brief, introductory level treatment of comparative advantage and trade. You can find this in P, Ch. 10, and V, Ch. 32, but I can't especially recommend these selections. Intro level textbooks are actually better on this. Check the index of Krugman and Wells, or Mankiw, or Frank and Bernanke, among others.


Week 3: Cost Minimisation

Tutorials this week will be about building blocks of modelling firm behaviour: production functions, cost minimisation, optimal choice of inputs, and profit maximisation under perfect competition.

There is no essay assignment this week.

Problems for this week here.

Choose from among the following readings.

MKR: Chs. 8, 9, 10 (Sect. 2 only)
F: Chs. 9, 10
V: Chs. 18, 20, 21
P: Chs. 6, 7

Week 4: Perfect competition and perfect monopoly

Essay topic: Is basic game theory useful to understand the current state of Brexit negotiations and anticipate their likely outcome?

Problems for this week here.

Readings:

MKR: Chs.10-11, 13
F: Chs. 11-12
V: Chs. 22-24
P: Chs. 8-9, 11


Week 5: Individual choice - utility maximisation

Essay: Should OPEC - the Organisation of Petroleum Exporting Countries - be judged a success or a failure a half-century after its founding? In light of global warming and related concerns, what should we hope for in terms of OPEC's future?

Problems for this week here.

Readings:

MKR: Chs. 2-3
F: Chs. 3-4
V: Chs. 2-6
P: Ch. 3


Week 6: utility maximisation, cont.

Essay: no essay this week.

Problems for this week here.

Readings:

MKR: Chs. 4-5
F: Chs. 5, 14
V: Chs. 7-10
P: Chs. 4-5


Week 7: Market failure

Essay: Why do Americans work so much more than Europeans? This title is taken from a paper by (Nobel Prize winner) Ed Prescott, which could be one place to start your reading.

Problems for this week here.

Readings:

MKR: Ch.
F: Chs.
V: Chs. 24, 25, 27
P: Chs. 11-13


Week 8: Market failure: imperfect information, moral hazard

Essay: "What is the moral hazard problem created when a lender of last resort stands ready to help banks in a financial crisis? What can be done to mitigate this problem?"

No problems this week.

Readings:

MKR:
F:
V: Chs. 33, 36
P: Chs. 18-20