Introductory Microeconomics, Michaelmas Term 2014

Tutor

Dr. Brian A'Hearn

Tutorial Groups

Th 2:30 - Coote, Glennon, Kovandova
Th 3:30 - Fairweather, Harrison, Ku
Fr 2:00 - Hamilton, Lyonette, Novotny
Fr 3:00 - McShane, Timmons, Wragg
Fr 4:00 - Gergs, Mohsen, Watson

Location: my room, Staircase I

Classes

M 2:00, Allen & Overy Room (New Buildings)*
T 9:30, Allen 7 Overy Room**

*The Monday class will meet at 9:30 in Week 1 to accommodate SBS induction events.
** Both classes will meet in the Mary Hyde Eccles Room in Week 7 (at their usual times), as the A&O Room is unavailable.
*** An ad hoc arrangement will need to be made for Week 3 as I will be away from Oxford M-W.

Schedule overview

WeekTopicClassTutorials
1Intromathssummer essay
2Supply & demandecon. essay
3*Firms: cost minimisationmathsecon. probs.
4Firms: perfect competition and monopolyecon.essay
5Firms: imperfect competitionmathsecon. probs.
6Individual choice: utility maximisationecon.essay
7Utility maximisation, cont.mathsecon. probs.
8Market failureecon.essay

(click week number to jump to detailed information)

* The schedule in Week 3 will be disrupted by my absence M-W.

Teaching

Lectures

The Economics Department puts on a series of lectures that you must attend (MT 11-12, Examination Schools). Additionally, they run a series of lectures in Elementary Mathematical Methods (Th 2, F 11, Manor Road Building), which you should attend if you have not done AS-level maths.

Examinations

The Department also 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 autonomy about how and what they teach. With only a small number of brief sessions together we cannot possibly cover all the material from the lectures. (That is particularly true for microeconomics, since we will cover it in 8 weeks, while the lectures go for 10.) You do need to know this material, but you will be learning it on your own. The point cannot be emphasised too much that your studies here will be mostly self-directed and independent.

Part of my job is to help prepare you for the prelims exam. But my real goal is to help you become good economists. I do not teach with one eye always 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 don't give them for tutorial and class work. (Collections are different.) I want your focus to be on asking questions 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 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

I will ask you to write four essays this term. These should not exceed 2000 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 my mailbox, via the porters). Do not copy text from your sources without attribution: this 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 convincing argument, not in the sense of ornamentation. 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.

Maths

One of our tasks this term is to ensure a basic standard of mathematical competence. To this end, we will devote our classes in odd weeks to working problems from the Department's Maths Workbook. You will prepare written solutions to assigned problems, which we will discuss and go over together in the class. Ideally, I do very little talking in these classes; I expect you to be doing the work and teaching each other. You will sit a basic maths competence test in January, which is marked on a pass-fail basis. Should you fail, we will arrange some remedial work to bring you up to the requisite standard.

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.

You will also need the Economics Department's Maths Workbook. This can be downloaded from the Department's intranet / WebLearn site. From the Department homepage, choose intranet from one of the top menu items, then information for students, then undergraduate, then courses, then elementary mathematical methods, then maths workbook. (At least that worked in 2013.)


Week by week schedule

Week 1: Introduction

Our tutorial discussions this week will focus on your vacation essays about The Darwin Economy.

Classes will be devoted to working problems from Chs. 1-3 of the Maths Workbook. Bring to class and submit written solutions to the following problems:

Ch1: 1, 4, 6, 8, 10, 13
Ch2: 1, 3, 4, 8
Ch3: quick questions 1, 3, 5, 7; longer question 1

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

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

Week 2: Supply and Demand

For this week's tutorial, please write an essay on the following question. "Is targeting suppliers in a 'war on drugs' good public policy?" For more advice on essays, see the notes above.

Please prepare written answers to the questions here and submit them at your class meeting, where we will discuss them.

Readings: currently no new readings for this week. Note however that books of a more basic level than those I have listed for the course may be very good on basic supply and demand analysis, and are worth consulting.


Week 3: Cost Minimisation

Class: please read Chapters 4 and 5 of the Maths Workbook and prepare written answers to the following questions.

Ch. 4: 2, 3, Longer question 2
Ch. 5: 2, 4, Longer questions 1, 2

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

Please prepare written answers to the questions here and submit them at your tutorial meeting, where we will discuss them.


Week 4: Perfect competition and perfect monopoly

Essay: Please assess the following claim. "The deadweight loss associated with monopoly is counted in human lives, when it comes to pharmaceuticals. Patents in this industry must be abolished."

Class: please prepare written answers to the problems here and submit them at your class meeting.

Readings:

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

Week 5: Imperfect competition

Class: Please read Chapters chapters 6 and 7 of the Maths Workbook and prepare written answers to the following questions:

Ch. 6: 3, 6, 9; longer questions 1, 2
Ch. 7: 1, 5, 6; longer question 1

Tutorials this week will cover monopoly in greater detail (e.g. price discrimination), along with models of oligopoly. Please prepare written solutions to the problems you will find here and bring them to your tutorial.

Readings:

MKR: Chs. 14-15 - More on price making firms; Oligopoly and strategic behaviour
F: Ch. 13 - Imperfect competition
V: Ch. 25, 27 - Monopoly behaviour; Oligopoly
P: Chs. 12, 14 - Pricing and advertising; Oligopoly


Week 6: Individual choice - utility maximisation

Essay: "Does behavioural economics constitute a fundamental challenge to how economists think about human behaviour?" This topic is perhaps a bit premature; do your best. You may concentrate on the evidence produced by experimental economics if you wish. For purposes of this essay you can lump behavioural and experimental economics together. Try to include specific examples of findings from this literature, if possible linking them to concepts in the traditional approach about which you will be reading this week.

Class: please prepare written answers to the problems here and submit them at your class meeting.

Readings:

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

Week 7: utility maximisation, cont.

Class: Please read Chapters 8 and 9 of the Maths Workbook and prepare answers to the following questions:

Ch. 8: 4, 5, 6
Ch. 9: 4; longer q'n 3

Tutorials: please prepare written solutions to the problems you will find here and bring them to your tutorial.

Readings:

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


Week 8: 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.

Class: please prepare answers to the problems you will find here and bring them to your tutorial.

Readings:

MKR: Ch. 18 (review 13)
F: Chs. 16-17 (review 12)
V: Chs. 34, 36 (review 25)
P: Ch. 16 (review 12)
"Review" chapters have material on price discrimination relevant for the problem set.