FALL 2016: SYLLABUS FOR INTERMEDIATE MICROECONOMICS

Baruch College, Department of Economics and Finance

Professor: June Ellenoff ONeill
Phone: 646-312-3540
Office: 10-243 Vertical Campus
e-mail: June.oneill@Baruch.cuny.edu
Office hours: Tuesday: 10:30 AM to 12:00 OR by appointment (phone or email)if these times pose a conflict
What is this course about? Microeconomics is the study of how a market
economy works. It involves learning theoretical principles. But to be useful
theory must be applicable to actual situations in the world around us. So we
will address topics such as: What will happen if a government regulation sets
a price that is much higher than the market equilibrium price ( a situation
that confronted Japan when it set the price of rice very high). Why does
Disneyland charge a high admission price for families but charges nothing for
individual rides and does not restrict their number. Why has the price of oil
dropped sharply recently?
The analysis learned in microeconomics will give you the background needed
to understand the many economic problems and policy issues that appear
daily in the news.
Text: Microeconomics, Eighth Edition by R.S. Pindyck and D. Rubinfeld
(Pearson Prentice Hall).
Blackboard: I post readings, practice questions, problem sets and other
information regularly on the blackboard. So CHECK REGULARLY in the
Assignment and Course Documents sections of the class blackboard. (I put
self-tests for each chapter in the Assignment section along with occasional
problems. Most other material is in Course Documents. ) See the Information
section for information on upcoming quizzes and major exams.
NOTE: Grading. Your final grade for the course will be based on a weighted
average of the various exams given. The average is computed as follows; the
Midterm gets a weight of 30%, the Final Exam gets a weight of 40%, and an
average of your quiz grades gets a weight of 30%. Four short quizzes will be
given during the termtwo before the midterm and two after the midterm.
Your quiz average is the average of the highest three out of the four given.
Participation in class discussion will be taken into account when I make up
the final grade for the term. By participation I do not mean simply attending,
which you are required to do. I mean asking and answering relevant
questions in class or bringing in material from the news related to the
course.
Quiz 1 will cover chapters 1 and 2
1

Quiz 2 will cover chapters 3 and 4.

The midterm will focus on chapters 6, 7 and 8 although it will include
concepts that you will have learned in chapters 1-4. It will take the entire
class time that day.
Quiz 3 will cover chapter 9
Quiz 4 will cover chapter 10
The dates of the quizzes will be given in class and posted on the blackboard.
Detailed information on the midterm and the final and their dates will be
given well in advance.
NO MAKEUP EXAMS WILL BE GIVEN!!!
POLICIES
I take attendance as required by school policy. But to do well in economics
requires that you do more than simply show up. To learn and retain the
material you should keep up with the courseread the text in advance of the
class so that you will be able to ask questions about material that you do not
understand. I post power point slides on the blackboard for each chapter but
they are bare bones summaries and are not a substitute for reading the text
and working out problems. I also assign problems that are not graded but will
be discussed in class. In advance of each quiz or exam I will post many
questions and the test will be based mostly on those questions.
.
Obviously cheating on exams of any kind will not be tolerated.
COURSE OUTLINE
INTRODUCTION
Ch. 1: Preliminaries.
Real and nominal prices: how to adjust prices of goods and services for
inflation.
Basic issues about markets
The difference between positive and normative analysis;
Ch. 2: Basics of Supply and Demand
1. Demand curves and supply curves
2. Market equilibrium and factors leading to price changes.
3. Price elasticity of demand and supply; Income elasticity
4. Effects of government intervention such as price ceilings and price floors.
CONSUMER BEHAVIOR AND MARKET DEMAND
Ch. 3. Consumer Behavior
1The budget constraint: depicting what a consumer can afford given his/her income and
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the prices of goods in the market.(Section 3.2 in the text)

2.Consumer preferences: depicting preferences with indifference curves (substitutes,
complements, the marginal rate of substitution) (3.1)
3. Consumer choice: Maximizing utility given a fixed budget. (3.3)
4. Application to cost of living indexes (3.6)
Ch. 4. Individual and Market Demand (4.1-4-4) (Omit sections 4.5 and 4.6
and appendix)
1. Deriving the individual demand curve
2.The effect of a change in income (normal and inferior goods, Engel curves)
3. Decomposition of demand into income and substitution effects.
4. From individual to market demand.
6. Elasticity again (point vs. arc elasticity)
7. Applications of consumer demand analysis: e.g., gasoline tax and rebate;
THE THEORY OF THE FIRM (How a firm makes cost-minimizing production
decisions)
Ch. 6. Production (6.1-6.4)
1.Technological constraints: the production function
2. Production with one variable input (the short run). Be sure you understand total, average
and marginal products and how they relate to each other; diminishing returns and labor
productivity
3. Labor productivity and its relation to wages and the standard of living.
4. Production with two variable inputs: Isoquants, diminishing marginal rate of technical
substitution (MRTS); returns to scale.
Ch. 7: The Cost of Production (7.1-7.4) (exclude 7.5-7.7 and Appendix)
1.Economic costs versus opportunity costs; sunk costs, fixed costs, variable costs
2.Cost in the short run marginal and average cost, diminishing returns
3.Cost in the long run choosing the cost-minimizing combination of inputs for given
levels of output given the substitutability of the inputs and their relative costs.
4.Long run versus short run production
PROFIT MAXIMIZATION AND COMPETITIVE SUPPLY (chapter 8)
1.Characteristics of competitive markets
2.Profit maximization by a competitive firm
3.Choosing output in the short run
4.When will a firm shut down?
5.The short run supply curve of a competitive firm and the market supply curve of the
industry.
6. Long-run profit maximization
Long run competitive equilibrium zero economic profit and the role of free entry
and exit.
Economic rent
Producer surplus in the long-run.
7. The industrys long-run supply curve
Constant, increasing and decreasing cost industries

ANALYSIS OF COMPETITIVE MARKETS (chapter 9)

We use the concepts of consumer and producer surplus to evaluate the gains and losses from
various government policies.
Examples: Evaluating the welfare effects of the ban on sale of human organs for
transplantation (the case of human kidneys.)
Welfare effects of price minimums (eg. Airline prices, the minimum wage); price
maximums (rent control)
Welfare effects of price supports and of import quotas and tariffs; taxes and the
incidence of taxes.
IMPERFECT MARKET STRUCTURES
Monopoly (Ch. 10)
Cartels, Monopolistic Competition (from Chapter 12)
Pricing Strategies with Market Power (Chapter 11)
Why do some firms charge different prices to different individuals and how doe this
affect their profits?
Why does Disneyland charge an entrance fee but does not charge for the rides? And
more.