Introduction
Microeconomics, 11.203, is designed to give you grounding in basic microeconomics - how markets function, how we should think about allocating scarce resources, what profit maximization means in different kinds of markets, how technology reshapes all of this, etc. We will also begin to think about activities that markets don't directly capture - the value of a historic preservation district or the costs imposed by pollution, a subject that will continue in 11.202.
We are ultimately concerned with living standards - both the average standard of living (which reflects economic efficiency) and the distribution of living standards. As such, we will begin with a brief discussion of the U.S. Income distribution that will serve as an occasional reference point for other topics in the course - e.g. the relative demand for various kinds of goods, the impact of computers on the demand for college graduates. As the course proceeds, we will examine economic issues including what went wrong in California's electricity deregulation and the role of badly designed incentives in the Enron collapse. If the course does its job, you will acquire a first sense of when economic analysis can be useful in planning and development problems. You will also be better able to read the daily newspaper.
Housekeeping
Schedule: Under the new MCP curriculum, this is a modular course with the last formal lecture and of two-hour duration. Lectures are two days a week and for one and half hour.
In addition to lectures, Ari, Jon and Jiawen will conduct weekly one-hour review sections to help to absorb the lectures, review problems that arise in the homework, etc. Section attendance is optional (as it is for lectures), but you should initially attend section to see if you find it useful. Skipping section until a week before the first exam is an invitation to crash and burn.
We will also offer a weekly tutoring section for students with weak mathematics backgrounds. Students who haven't recently worked with algebra often can't see the economics behind the graphs and equations. Because they are nervous about asking "dumb" questions, the first few weeks of the course are wasted. The tutoring section is designed to help all students get off to a strong start. Students who scored low on the math diagnostic test should try it out as should anyone else who feels shaky about math.
Web Site: You will use the web site to download problem sets and a limited number of readings. In addition, the site contains a link to a set of visual teaching tools developed over the summer by Myoung-Gu Kang, a DUSP ph.d student, designed to help your understanding of the relationship between a problem's verbal statement and its graphical representation.
Grading: Grading for the course will be based graded weekly:
Problem sets (10%), two examinations during the term (20% and 30% respectively), and the final (40%).
You may want to form a study group to discuss problem sets. The big danger in study groups is thinking you understand an idea because you understand someone else's solution to a problem. In practice, constructing your own solution to a problem can be much more difficult. To minimize this confusion, you should make a serious attempt to work the problems on your own before you meet with your group to get a sense of what you do and don't understand.
Reading: Our textbook is Walter Nicholson, Intermediate Micronomics and its Applications. 8'th Edition, (Harcourt). For help beyond the textbook, check the Coop or other bookstores for one of the several paperback "college outline" volumes on price theory or intermediate microeconomics.
