Business Microeconomics Syllabus



Business Microeconomics 2 CreditsBU.930.633.XX[NOTE: Each section must have a separate syllabus.][Day & Time / ex: Monday, 6pm-9pm][Start & End Dates / ex: 8/20/18–10/15/18][Semester / ex: Fall 2018][Location / ex: Washington, DC]Instructor[Full Name]Contact Information[Email Address][Phone Number, ###- ###-#### (Optional)]Office Hours[Specify the day and time of the 2 hours that will be dedicated to office hours each week. For evening classes, faculty may wish to hold their office hours by phone or email. While faculty are permitted to state “and by appointment,” office hours should not be held exclusively by appointment.]Required Texts & Learning MaterialsInstructor’s lecture slides (to be posted on Blackboard; required)Textbook (required): Pindyck, R. S., & Rubinfeld, D. L. (2018). Microeconomics (9th ed.). Harlow, England: Pearson. Study Guide is optional.Additional readings and materials will be posted on Blackboard; the instructor will specify which of these materials will be required.Course DescriptionThis is a foundational microeconomics course with emphasis on the application of economic principles and methodologies to private and managerial decision problems. Major topics include consumer choice and market demand, costs and profit maximization, market structures (competition, monopoly, and oligopoly), short- and long-run output/price decisions, and strategic interactions (game theory).Prerequisite(s)None Learning ObjectivesBy the end of this course, students will be able to: Understand the determinants and characteristics of consumer-level and market-level demand, and of firm-level and market-level supply.Understand the concepts of perfect competition and market equilibrium, and the implications of imperfect competition for firm decisions and market outcomes.Use tools from microeconomics to understand and predict the short-run and long-run effects of demand and supply shocks on market dynamics and market equilibrium.Understand consumer and firm decision making in situations that involve risk and imperfect information.Adapt managerial strategies to different industry and informational structures, and strategic scenarios.Recognize the effects of market power on pricing of products and services and hiring in the labor market, and implications for firm profits, consumer surplus, worker welfare, and overall welfare.Use tools from microeconomics to understand and predict the effects of government regulations on business and general welfare.To view the complete list of the Carey Business School’s general learning goals and objectives, visit the Carey website.AttendanceStudents are responsible for all topics and concepts specifically covered during the class sessions. Therefore, students should make every effort to attend all scheduled class sessions. You should be aware that failure to attend class might impact your ability to achieve the objectives of the course. Absence from class will also affect your participation score. When you miss a class session, you are responsible for obtaining class handouts and information given out during your absence. Even if you miss class, you must turn in your assignments on time unless otherwise previously arranged with the instructor. Classroom ProtocolClassroom behavior expectations and policies: Students are expected to arrive to class on time and stay for the full duration of the lecture. While in class, students should turn off their cell phones. Laptop computers are allowed (strictly for course-related uses) but their use is not recommended. Recent empirical evidence convincingly demonstrated that students using pencil and paper to take notes perform better than students using laptops (see ).AssignmentsAssignmentLearning ObjectivesWeight(A)Weight(B)2 Homework Team Assignments1–67.5% each (15% total)7.5% each (15% total)1 Midterm1–630%0%1 Final Exam1–645%75%Participation1–610%10%Total100%100%Midterm and FinalThere will be one in-class Midterm exam in week 4. The Midterm will be one hour long and will include topics covered in class in the previous weeks. There will be an in-class 3-hour Final exam in week 8. The exam is cumulative, in that it will include all topics covered in class in the course. The tests will be a blend of multiple-choice and short-answer questions (quantitative and qualitative). The format of the tests (both Midterm and Final) will be closed book, closed-notes. However, you may bring a one-page, double-sided formula sheet. You may use a hand-held calculator (provided by the Instructor). NOTE: The grading formulas above imply that if you perform better on the Final than you did on the Midterm, the Midterm grade will not count toward your class grade. Thus, the Midterm is effectively optional, but I strongly recommend that you take it. There is *no* makeup for the Midterm. A make-up Final exam will be given only in case of valid and documented excuses. See the class schedule below for important dates and deadlines.Homework AssignmentsStudents will be given two team assignments. Teams of 3-4 students will be formed in week 1. The assignments are due at the beginning of class in weeks 3 and 6, respectively. Each team will submit one answer, and each team member will receive the same score. The names of the team members must be clearly indicated on the front page of the assignment. Individual members of each team are expected to completely understand and agree with the answers submitted. Teams that fail to submit their assignment by the deadline will receive zero points.ParticipationStudents will receive points according to their attendance and class participation in each lecture: 0 points for no attendance; 1 point for attendance and no class participation; and 2 points for class participation that fosters discussion and understanding of other students. Your overall citizenship in class will also be taken into account for assessing your participation score. GradingThe grade of A is reserved for those who demonstrate extraordinarily excellent performance as determined by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+, B, and B- are awarded for good performance. The grades of C+, C, and C- are awarded for adequate but substandard performance.?The grades of D+, D, and D- are not awarded at the graduate level (undergraduate only). The grade of F indicates the student’s failure to satisfactorily complete the course work.Please note that for Core and Foundation courses, a maximum of 25% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.3. For Elective courses, a maximum of 35% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.4. (For classes with 15 students or fewer, the class GPA cap is waived.)Tentative Course CalendarInstructors reserve the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.More details about the topics covered as well as readings (required and optional) for each topic are reported in the next section. WeekDateTopicDue1Consumer and Market Demand2Costs, Supply, and Profit Maximization3Competitive Market AnalysisHW 1 due4Decision Making with Risk and UncertaintyMidterm5Strategy, and Game Theory Fundamentals(No class on November 21 – Thanksgiving)6Pricing and Hiring with Market PowerHW2 due7Government Regulation of Economic Activity8Final ExamList of Course Topics and Readings (*) indicates required readingsMicroeconomics PreliminariesTopics:Scarcity, Opportunity cost, and Trade-OffsRationality (or lack thereof)Decision-making “at the margin”The role of theory and “models”Readings:(*) Lecture Slides: “Preliminaries”(*) Pindyck-Rubinfeld, Chapter 1(*) "The Dismal Science? Hardly!" By Robert D. McTeer, Jr. The Wall Street Journal, June 4, 2003. and Market DemandTopics:Decision making on the marginIndividual demand curveMarket demand curveConsumer surplusDemand determinantsDemand elasticityDemand elasticity and revenue maximizationReadings:(*) Lecture Slides: “Demand”(*) Pindyck-Rubinfeld, Chapter 2.1, 2.4, 2.5 (sections on demand) (*) Pindyck-Rubinfeld, Chapter 4“Does Lowering the Price of Broadband Increase its Use?” Catherine Rampell. Economix Blog New York Times, May 22, 2009. Indiana Jones of Economics: Raiders of the Lost Arc Elasticity, Part 1. Steven D. Levitt and Robert Jensen. Freakonomics blog, May 5, 2008. Indiana Jones of Economics: Raiders of the Lost Arc Elasticity, Part 2. Steven D. Levitt and Robert Jensen. Freakonomics blog, May 6, 2008.“Driven by Electric-Vehicle Demand, Firms Focus on Cobalt”. Scott Patterson. Wall Street Journal, Jan. 29, 2018. “Why is Turkey Cheaper when Demand is Higher?”. Catherine Rampell, New York Times, 11/13/2013. “Demand for Batteries is Shrinking, Yet Prices Keep on Going and Going…Up.” Sharon Terlep?and?Nicole Friedman, The Wall Street Journal, 4/16/2018. Wants Cheaper e-Books. But Should it Get to Enforce Prices? Farhaad Manjoo, New York Times, 8/1/2014. , Supply, and Profit MaximizationTopics:Cost conceptsRelationships between cost curvesShort-run (operating horizon) and long-run (investment/planning horizon)Economies of scale; economies of scope; learning economiesProfit maximization for a firm facing a downward sloping demand curvePerfect competitionProfit maximization for firms in perfectly competitive marketsIndividual and market supply curvesElasticity of supplyReadings:(*) Lecture slides: “Supply” (*) Pindyck-Rubinfeld, Chapter 7 (except 7.3)(*) Pindyck-Rubinfeld, Chapter 8 (*) Pindyck-Rubinfeld, Chapter 2.1, 2.4, 2.5 (sections on supply) “Munger on the Nature of the Firm”. Russ Roberts and Michael Munger. Econtalk Podcast, Jan. 14, 2008. “Shops and Condos Crowding Out Gas Stations.” Alison Gregor. The New York Times, Jul. 4, 2007. “An Actual Internet Success Story”. Richard Rayner. The New York Times Magazine, Sept. 16, 2002. “New Laptops, Made to be Manhandled.” Kevin J. O'Brien. The New York Times, Mar. 23, 2005."Diesel Prices Are Bringing Some Trucks to a Standstill". Elizabeth Douglass. The Los Angeles Times, Mar. 15, 2004. "Is the U.S. Shale Boom Hitting a Bottleneck?". Alison Sider and Bradley Olson. The Wall Street Journal, April 18, 2018. "GM's Volt: The ugly math of low sales, high costs". Bernie Woodall, Paul Lienert, Ben Klayman. Reuters, Sept. 10, 2012. Market AnalysisTopics:Market equilibrium in the short run and the long runHow prices allocate resources, and the efficiency of competitive marketsMarket dynamics in response to “shocks” (demand shocks, supply shocks, technological innovations)Application: Tax incidence analysisMarkets without prices: the case of kidneys for transplantationReadings:(*) Lecture slides: “Perfect Competition and Market Analysis” (*) Pindyck-Rubinfeld, Chapter 2.2, 2.3(*) Pindyck-Rubinfeld, Chapter 9.1, 9.2, 9.6 “Why Demand and Supply are Hard to Measure”. Justin Wolfers. Freakonomics Blog, May 27, 2009."Shrimponomics." Steven D. Levitt. Freakonomics Blog. August 30, 2007."Too Much Caffeine? Coffee Shops Face a Shakeout". Julie Jargon. Wall Street Journal, Dec. 18, 2017. That Robots Are Winning the Race for American Jobs. Claire Cain Miller. The Upshot, March 28, 2017. technology enable workers or replace them? A long-read Q&A with Daron Acemoglu. James Pethokoukis, AEIdeas, October 2, 2017. "What’s wrong with price gouging?" By Jeff Jacoby. The Boston Globe, May 4, 2010. “Rodney Brooks on Artificial Intelligence”. Russ Roberts and Rodney Brooks. Econtalk Podcast, Sept. 24, 2018. "Markets without money? Tales from Kidney Exchange in the US". By John Brake. The NYU Economics Review, Nov. 21, 2017. “Why the Trump Tax Cuts Are Awesome/Terrible (Part 1)”. Freakonomics podcast, by Stephen J. Dubner. April 11, 2018. “Why the Trump Tax Cuts Are Awesome/Terrible (Part 2)”. Freakonomics podcast, by Stephen J. Dubner. April 18, 2018. Making with Risk and UncertaintyTopics:Individual choice and attitudes toward riskAsymmetric information, adverse selection, and moral hazardMarket equilibrium with riskReadings:(*) Lecture slides: “Risk and Uncertainty” (*) Pindyck-Rubinfeld, Chapter 5(*) Pindyck-Rubinfeld, Chapter 17 "Why Your Extra-Safe Car Costs More to Insure". By Christina Rogers and Leslie Scism. The Wall Street Journal, April 3, 2017. HYPERLINK "" "Why Health Care Policy Is So Hard." Gregory Mankiw. The Upshot, New York Times, July 28 2017. "Beyond supply and demand: The reasons for increased health care costs". Douglas Clement. FedGazette, May 2002. HYPERLINK "" "Occupational licensing blunts competition and boosts inequality". The Economist, Feb 17, 2018.“Pindyck on Climate Change”. Russ Roberts and Robert Pindyck. Econtalk Podcast, Aug. 5, 2013.“The Creative Destruction of Medicine”. Russ Roberts and Eric Topol. Econtalk Podcast, Apr. 1, 2013. “The Power of Patients in the Digital World”. Russ Roberts and Eric Topol. Econtalk Podcast, May 11, 2015. and Game Theory FundamentalsTopics:Monopoly, Oligopoly; MonopsonyBasics of Game TheoryNash equilibriumSimultaneous games and sequential gamesPrisoner’s dilemma; coordination gamesRepeated interactions; commitment, credible threats and promisesReadings: (*) Lecture slides: “Strategy and Game Theory” (*) Pindyck-Rubinfeld, Chapter 10.1, 10.2, 10.3(*) Pindyck-Rubinfeld, Chapter 12(*) Pindyck-Rubinfeld, Chapter 13 “How Game Theory Helped Improve New York City’s High School Application Process." Tracy Tullis. New York Times, Dec. 5, 2014. HYPERLINK "" "The NFL's $1 Billion Game of Chicken". Matthew Futterman. Wall Street Journal, Feb. 17, 2011.“Hey, PC, Who Taught You to Fight Back?”. David Laonard. New York Times, Aug.29, 2009.“Using Game Theory to Predict the Euro’s Future”. Paul Taylor. New York Times, July 23, 2012. "Lessons From Game Theory: What Keeps Kasich in the Race?" Kevin Quealy. The New York Times, Feb. 24, 2016. HYPERLINK "" "Trade Wars Can Be a Game of Chicken. Sometimes, Literally." Eduardo Porter. New York Times, March 13, 2018. HYPERLINK "" game theory inherent in Brexit. Gavin Jackson. Financial Times, Oct. 18 2016.“Jane Austen, Game Theorist”. Stephen J. Dubner. Freakonomics Radio Podcast, July 4, 2013. the trail of Hernán Cortés. A journey into a past most Mexicans would rather forget. The Economist,` Dec. 17 2014. HYPERLINK "" and Hiring with Market PowerTopics:MonopolyPrice Discrimination (first-, second-, and third-degree)Monopsony and the Labor MarketReadings:(*) Lecture slides: “Pricing and Hiring with Market Power” (*) Pindyck-Rubinfeld, Chapter 10.1, 10,2, 10.3, 10.4, 10.5(*) Pindyck-Rubinfeld, Chapter 11Pindyck-Rubinfeld, Chapter 19"Taking a Private Jet Could Be More Affordable Than You Think", By Shivani Vora. The New York Times, Jan. 24, 2018. HYPERLINK "" "As Conservation Cuts Electricity Use, Utilities Turn to Fees". By Rebecca Smith. the Wall Street Journal, October 20, 2015. ’s Tiered Pricing Is a Hurdle, but a Fair One. Robert H. Frank. The New York Times, Oct. 27, 2017.“Oyster Launches Netflix For Books.” Steven Bertoni. Forbes, Sep 5, 2013. “Why the Post Office Gives Amazon Special Delivery". By Josh Sandbulte. The Wall Street Journal, July 13, 2017. “What is ‘drip pricing’ and how does it affect consumers?” Christopher Elliott. The Washington Post, Sept. 23, 2018. "Why Is the Live-Event Ticket Market So Screwed Up?" Stephen J. Dubner. Freakonomics podcast, December 6, 2017. “Ticket Scalping and Opportunity Cost”. Russ Roberts and Michael Munger. Econtalk Podcast, April 10, 2006. "A marketer’s guide to behavioral economics". Ned Welch. McKinsey Quarterly, February 2010."Some Economics of Pay What You Want Pricing". Alex Tabarrok. Marginal Revolution Blog. March 7, 2012. "Interview with Tyler Cowen, pay-as-you-wish restaurants". Tyler Cowen. Marginal Revolution Blog. June 23, 2010. and more companies have monopoly power over workers’ wages. That’s killing the economy. Suresh Naidu, Eric Posner, and Glen Weyl. Vox, April 6, 2018. Regulation of Economic ActivityTopics:Market failure and the role of governmentPrice ControlsAntitrust lawsExternalitiesPublic GoodsMoral repugnance and forbidden tradesReadings:(*) Lecture slides “Government Intervention”(*) Pindyck-Rubinfeld, Chapter 9.3, 9.4 (*) Pindyck-Rubinfeld, Chapter 10.4, 10.7 Reviewing the tenets of free trade. Gregory Mankiw. New York Times, Feb. 18, 2018. “The Economics of Paternalism”. Russ Roberts and Ed Glaeser. Econtalk Podcast, Sept. 18, 2006. "How Farm Aid Became a Fixture". Jacob Bunge. Wall Street Journal, July 26, 2018. "Turning freelancers for firms like Uber into employees would not necessarily improve their lot". The Economist, Sep 19th 2015. "Kidney Beans Piled to the Rafters: Tariffs Are Biting in Farm Country". Jesse Newman. The Wall Street Journal, Aug. 2, 2018. "Wall Street Tells Frackers to Stop Counting Barrels, Start Making Profits". Bradley Olson and Lynn Cook. Wall Street journal, Dec. 13, 2017. Perverse Effects of Rent Regulation. Adam Davidson, New York Times Magazine, July 23 2013. ’s Antitrust Antagonist Has a Breakthrough Idea. David Streitfeld. The New York Times. Sept. 7, 2018. Part 1: “The Establishment” , Capitalisn’t, podcast by Kate Waldman and Luigi Zingales. Antitrust Part 2: “The Populists” , Capitalisn’t, podcast by Kate Waldman and Luigi Zingales.Antitrust Part 3: “The Europeans” , Capitalisn’t, podcast by Kate Waldman and Luigi Zingales.“Econ Debate: A Market for Human Organs?” By Wall Street Journal, Nov 13, 2007. "Proposed Fed Regulations Threaten Startup". By Sarah Fisher. The Hoya, September 30, 2016. Business School Policies and General InformationBlackboard SiteA Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at . Support for Blackboard is available at 1-866-669-6138.Disability Support ServicesAll students with disabilities who require accommodations for this course should contact Disability Support Services at their earliest convenience to discuss their specific needs. If you have a documented disability, you must be registered with Disability Support Services (carey.disability@jhu.edu or 410-234-9243) to receive accommodations. For more information, please visit the Disability Support Services webpage.Academic Ethics PolicyCarey expects graduates to be innovative business leaders and exemplary global citizens. The Carey community believes that honesty, integrity, and community responsibility are qualities inherent in an exemplary citizen. The objective of the Academic Ethics Policy (AEP) is to create an environment of trust and respect among all members of the Carey academic community and hold Carey students accountable to the highest standards of academic integrity and excellence.It is the responsibility of every Carey student, faculty member, and staff member to familiarize themselves with the AEP and its procedures. Failure to become acquainted with this information will not excuse any student, faculty, or staff from the responsibility to abide by the AEP. Please contact the Student Services office if you have any questions. For the full policy, please visit the Academic Ethics Policy webpage.Student Conduct CodeThe fundamental purpose of the Johns Hopkins University’s regulation of student conduct is to promote and to protect the health, safety, welfare, property, and rights of all members of the University community as well as to promote the orderly operation of the University and to safeguard its property and facilities. As members of the University community, students accept certain responsibilities which support the educational mission and create an environment in which all students are afforded the same opportunity to succeed academically. Please contact the Student Services office if you have any questions. For the full policy, please visit the Student Conduct Code webpage.Student Success CenterThe Student Success Center offers free online and in-person one-on-one and group coaching in writing, presenting, and quantitative courses. For more information on these services and others, or to book an appointment, please visit the Student Success Center website.Other Important Policies and ServicesStudents are encouraged to consult the Student Handbook and Academic Catalog and Student Services and Resources for information regarding other policies and services.Copyright StatementUnless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only.?The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Academic Ethics Policy. ................
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