ECN2802G, PRINCIPLES OF MICROECONOMICS

Dr. ALI R. MOSHTAGH

amoshtagh@eiu.edu

2371 COLEMAN HALL

(217) 581 - 2916

OFFICE HOURS:

COURSE DESCRIPTION: An exploration of consumer behavior, of how firms decide upon profit maximizing price and output rates under various market conditions, and of the labor and capital markets.

COURSE OUTLINE:

A. INTRODUCTION AND REVIEW OF BASIC CONCEPTS

• What is Economics?
• The Economic Way of Thinking
• Macroeconomics Vs. Microeconomics
• Working with Equations,Graphs, and Table
• Production Possibilities Frontiers (PPF)
• Comparative Advantage
• Economic Growth

B. THE PRICE SYSTEM

• The Law of Demand
• The Law of Supply
• Market Equilibrium
• Price Controls

C. ELASTICITY

• Price Elasticity of Demand
• Determinants of Price Elasticity of Demand
• Using Price Elasticity of Demand
• Income Elasticity of Demand
• Cross-Price Elasticity of Demand
• Price Elasticity of Supply
• Determinants of Price Elasticity of Supply

D. INTRODUCTION TO MICROECONOMICS

• Demand: The Benefit Side of the Market
• Consumption Theories
• Assignment One
• Consumer Surplus
• Supply: The Cost Side of the Market
• Competitive Markets
• Profit Maximization
• Costs of Production
• Producer Surplus
• Exam Two, Part One

E. EFFICIENCY AND EXCHANGE

• Market Equilibrium and Efficiency
• The Cost of Preventing Price Adjustments
• Taxes and Efficiency

F. MARKET STRUCTURES

• Perfect Competition
• Imperfect Competition
• Sources of Market Power
• Economies of Scale
• Profit Maximization Under Monopoly
• Price Discrimination
• Natural Monopoly

G. THE THEORY OF GAMES

• Nash Equilibrium
• The Prisoner's Dilemma
• The Ultimate Bargaining GameCredible Threat and Promises
• Commitment Problems

H. EXTERNALITIES AND PROPERTY RIGHTS

• External Costs and Benefits
• Externalities and Resource Allocation
• The Coase Theorem
• Property Rights
• Positional Externalities

I. THE ECONOMICS OF INFORMATION

• The Optimal Amount of Information
• Asymmetric Information
• Disappearing Political Discourse

J. LABOR MARKETS, POVERTY, AND INCOME DISTRIBUTION

• The Economic Value of Work
• The Equilibrium Wage and Employment Levels
• Differences in Earnings
• Is Income Inequality a Moral Problem?
• Methods of Income Distribution

K. THE ENVIRONMENT, HEALTH, AND SAFETY

• The Economics of Health Care Delivery
• Using Price Incentives in Environmental Regulation
• Workplace Safety Regulation
• Public Health and Security

L. PUBLIC GOODS AND TAX POLICY

• Government Provision of Public Goods
• The Optimal Quantity of a Public Good
• Functions of Government
• Sources of Inefficiency in the Political Process
• What Should We Tax?

M. INTERNATIONAL ECONOMICS

• Why Do Nations Trade?
• Foreign Exchange Markets
• The Law of Comparative Advantage
• Assignments
• Free Trade vs. Protectionism

METHODS OF EVALUATION:

3 Examinations @ 100 Points Each: 300 Points

In-Class Assignments: 20 points

Final Exam: 100 points

Total 420 Points

TEXTBOOK: Robert H. Frank and Ben S. Bernanke, Principles of Economics, Second Edition, The McGraw-Hill Companies, New York, N.Y., 2004.

YOU MUST BRING YOUR BOOKS TO CLASS!

NOTE 1: No exam grades will be eliminated. No exams will be made up unless arrangements have been made PRIOR TO THE SCHEDULED EXAM DATE. Messages left on my voice mail will not be considered as proper arrangements. Missed assignments will NOT be made up.

NOTE 2: If you have a documented disability and wish to receive academic accommodations, please contact the Coordinator of the Office of Disability Services (581-6583) as soon as possible.