Subject guide micro - Lecture notes 1 PDF

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ECON10004 Introductory Microeconomics SUBJECT GUIDE

Semester 1, 2021

Prepared by: Nahid Khan, Alexandru Nichifor, and Laura Panza.

Department of Economics Faculty of Business and Economics

Contents CONTENTS

2

SUBJECT OUTLINE

3

ACADEMIC STAFF

4

PRESCRIBED TEXTS

4

LECTURES AND TUTORIALS

5

ASSESSMENTS

7

SUBJECT RESOURCES (+ HOW AND WHO TO CONTACT FOR WHAT?)

9

OUR EXPECTATIONS AND HOW TO STUDY FOR THIS SUBJECT?

10

ACADEMIC INTEGRITY

11

UNIVERSITY SERVICES

12

POLICY

13

SUBJECT PRIZE

14

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Subject Outline Introduction On behalf of Laura, Nahid, Alex, and our wonderful tutors, welcome to Introductory Microeconomics and to the University of Melbourne! It’s a very unusual year, as we all know, and we hope that, whether you are abroad or in Melbourne, you settled well. Regarding how we plan to tackle the semester, we are well aware of the many difficulties that you may face (from being potentially stuck abroad in a different time-zone, to patchy internet connections, to unpredictable and sudden changes of rules and regulations around coronavirus, and so on) and we are doing everything we can to adapt the delivery of our course in ways that take into account and mitigate as much as possible all of those difficulties (e.g., we will open up tutorials at hours that we would normally not have them available, all the lectures will be recorded, and we will more generally remain as flexible as we can and work continuously to adapt together with you). Overview and aims The subject is an introduction to theoretical microeconomics. Roughly speaking, most of our understanding will be guided by models that can be constructed from a set of underpinning economic assumptions, which will usually have a simple mathematical representation. The first part of the class will be focused on understanding how markets work; then, in the second part, we will shift attention towards studying how individual market participants, such as individual firms or consumers, can make optimal decisions. The first part will introduce classical models, that rely on stronger more idealized economic assumptions, but which have the benefit of being mathematically simpler, as well as intuitive to understand. The second part will start by looking at how we could relax some of the earlier assumptions underpinning our models, as well as expand our toolkit by adding newer powerful models that could be used for studying strategic interactions, or for taking individually optimal decisions. Overall, we aim for a balance between economic intuition and mathematical rigour, and we hope that you will find this subject exciting and intellectually stimulating! LMS homepage For the subject homepage, please go to https://canvas.lms.unimelb.edu.au/courses/107750, or alternatively go on the LMS intranet website at https://lms.unimelb.edu.au/canvas, and from there, select Introductory Microeconomics ECON10004_2021_SM1. Learning outcomes and eligibility requirements To view the subject objectives and the generic skills you will develop through successful completion of this subject, please see: https://handbook.unimelb.edu.au/2021/subjects/econ10004.

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To view the eligibility and requirements, including prerequisites, corequisites, recommended background knowledge and core participation requirements, please see: https://handbook.unimelb.edu.au/2021/subjects/econ10004/eligibility-and-requirements

Academic Staff Lecturers Alexandru Nichifor [email protected] Room 449, FBE building http://www.nichifor.net

Laura Panza [email protected] Room 447, FBE building https://sites.google.com/site/lpanzaeconhist/

Tutorial coordinator Nahid Khan [email protected] Room 336, FBE building https://fbe.unimelb.edu.au/our-people/staff/economics/nahid-khan For the contact details of all the tutors involved, please see the subject homepage on LMS.

Prescribed Texts Textbook “Principles of Microeconomics", 8th Asia-Pacific Edition, by Joshua Gans, Stephen King, Martin Byford, and N. Gregory Mankiw (GKBM, for short) Additional case studies and applications “Microeconomics: Case Studies and Applications," 4th edition, by Jeff Borland (JB, for short) Do versions matter and where to find the prescribed texts? The most recent versions for GKBM and JB are listed, but any edition can be used. Some copies of these texts are available on reserve at the Giblin Eunson Library. Hard copies can be purchased from the bookstore that is located on campus. Electronic and hard copies can also be purchased online, either individually or as a bundle: https://au.cengage.com/c/isbn/9780170290814/. The publisher advised to use the discount code “STUDYSMART” to get 10% off the price, and that overseas students should also visit https://learn.cengage.com/os.

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Lectures and Tutorials The subject runs over 12-weeks, from 1-March and to 30-May, interrupted by one 2—11 April vacation week. Each week, there are two lectures and one tutorial. Most of the lectures will follow the textbook, while most tutorials will be focused on problem solving. The case studies and applications are an excellent additional resource for real-life examples. Lectures We aim to make recorded lectures available online via LMS on Tuesday and Thursday each week, and to also separately upload any slides used for the lectures. Week

Start Date

Tentative Schedule: Topic // Lecturer

1

01 Mar

Subject Overview // Alex Introduction to Microeconomics // Alex

1, 2, 3

1.2, 1.5

2

08 Mar

Supply and Demand // Laura Market Equilibrium and Comparative Statics // Laura

4

2.1 2.3, 2.5

3

15 Mar

Elasticities // Laura Welfare in Markets (Consumer/Producer Surplus) // Laura

5 7

2.4 2.6, 2.7

4

22 Mar

Government Intervention // Laura International Trade // Laura

6, 8 9

2.9 3.2, 3.4

5

29 Mar

Market Failures: Externalities, Public Goods, // Laura Common Resources, Asymmetric Information // Laura

10 11

4.1 4.3, 4.4

05 Apr

Vacation Week

-

-

6

12 Apr

Cost of Production, Technology, and Scale // Laura Firms in Competitive Markets: Entry/Exit Decisions // Laura

13 14

5.1, 5.2

7

19 Apr

Firms in Competitive Markets: Short & Long Run Supply // Laura Market Power and Monopolies // Alex

14 15

5.9, 5.5

8

26 Apr

Monopolies and Price Discrimination // Alex

15,16,18

5.10 5.11

9

03 May

Introduction to Game Theory // Alex

-

10

10 May

Oligopoly and Game Theory // Alex

17

11

17 May

Theory of Consumer Choice // Alex

22

12

24 May

Time allowing Market Design and/or //Alex Revision and Exam Review // Alex

-

5

GKBM

JB

Chapter

Case No.

The lectures will mostly follow GKBM. On a few selected topics, we may go beyond the coverage offered by the GKBM; in such situations, the lectures will be self-contained and/or additional reading material will be provided as an online hand-out. Tutorials Enrolment There will be weekly tutorials starting from the first week of classes. You must enrol in a tutorial group; to do, please use the University Timetable (SWS): https://sws.unimelb.edu.au/2021/Reports/Calendar.aspx If you have any issues related to tutorial enrolment, please lodge a request via the following link: https://students.unimelb.edu.au/your-course/manage-your-course/classtimetable/timetable-help/timetabling-assistance-form Any further enquiries related to enrolment assistance should be taken to STOP1. Note that once you enrol in a tutorial group, you can change until 14th March provided the class you want to change to is not full. After 14th March you will need to lodge an application via the above link with documented reasons. If there is any other query about tutorial, please contact Nahid Khan on [email protected] Tutors cannot authorize a transfer from one tutorial group to another, not even among their own tutorial groups. Tutors may only allow you to attend their tutorial if you are not enrolled in it when, because of illness or other serious hardship, you have missed your allocated tutorial in that particular week. In such a situation, as a one-off, a tutor may allow you to attend their tutorial (for that week only, and on no subsequent occasion during the semester), and you should ask the tutor to send an attendance confirmation email to your regular tutor, and ask that you are included in the CC. Pre-tutorial assignment quizzes Prior to each week’s tutorial (from weeks 2 to 12) you are required to complete a pre-tutorial quiz of 10 multiple choice questions. The pre-tutorial questions will cover material from the previous week’s lectures (e.g., the questions for week-2 will relate to material covered in lectures in week-1) and will help prepare you for your next week’s tutorial. Tutorials Tutorials will start from Monday 1-March. Starting on Friday 5-March in week-1, each Fri we will post the tasks for the next week’s tutorial on LMS. Generally, these tasks will be problem‐ type questions. Depending on the nature of the task and on how much time is available, you will work either in small groups with your colleagues (e.g., your tutor may divide you in small groups, assign you in Zoom break-out rooms where you will work out solutions to the problems, with the tutor hopping from one room to another, and then the tutor will bring everyone back together and review solutions), or your tutor may show you how to solve problems (e.g., for new problems that are particularly challenging, we may ask your tutor to actively solve the problems for you). For selected questions, more or less detailed solutions will be posted on LMS the week after the one with in which the tutorial takes place.

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Review Sessions To help students prepare for assessment tasks (including past exam questions), starting from week 2, there will be on campus face to face review sessions every fortnight. (Note: All activities on-campus are subject to Government and University Covid policies and regulations, which may change at short notice; please make sure to double check all announcements before coming to campus). The on-campus time and venue details are below, and these sessions will also be made available in Lecture Capture afterwards. T01/37 T01/65

Thursday Thursday

03:15PM 11:00AM

PAR-The Spot-B01 (Copland Theatre) PAR-The Spot-B01 (Copland Theatre)

Assessments Overview Your assessment for this subject comprises the following:

Assessment Task

Due

Weight

Pre-tutorial assignments/quizzes

Each week, by Sun at midnight

5%

Tutorial participation

Each week

5%

Assignment 1

Thu 01—Apr by 4pm

15%

Assignment 2

Fri 14—May by 4pm

15%

End of semester exam

During the exam period

60%

Hurdle requirement: To pass this subject students must pass the end of semester examination

Time: 2h envisaged, subject to changes to accommodate for online variations

Note: Late assignments will not be accepted. There will be no extension given for any assessment tasks. If you cannot do any assessment task by the strict due deadline, you may be able to apply for special consideration; please see the following link for more details: https://students.unimelb.edu.au/your-course/manage-your-course/exams-assessments-andresults/special-consideration/unexpected-circumstances

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Details Pre-tutorial assignment quizzes (5%) Quizzes will be made available on the weekly LMS module on Thursday afternoon and must be completed by midnight on Sunday prior to the week of tutorials to which they relate. For example, for week 2, the pre-tutorial quiz will be made available on Thu 4-March; and must be completed by midnight on Sun 7-March. You have two attempts to do each week’s quiz, and unlimited time on each of those attempts. If you miss doing a quiz by the cut-off time, there will be no extension available. You will receive the correct answers to each multiple‐ choice question after you attempt it. Out of total 11 pre-tutorial quizzes, only your best 9 will be counted towards the 5% mark. Tutorial participation (5%) At the end of semester your tutor will assign you a mark out of 10 for tutorial participation. Your grade for participation will depend on: frequency of participation in discussion; relevance and logic of comments in discussion; evidence of active listening to other students’ contributions. In addition, your tutorial attendance record will affect your mark in the following way. If you have attended at least 7 tutorials during the semester, your final mark for this exercise will be equal to the tutor’s original mark. If you have attended less than 7 tutorials during the semester, your final mark for this exercise will be equal to the tutor’s original mark minus 1 for each tutorial less than 7 that you attended. Note that to receive a mark for tutorial participation and attendance, you must have a valid tutorial enrolment (please see the “Tutorial / Enrolment” subsection above). Assignments 1 and 2 (15% each) There are two individual assignments, up to 1000 words each, tentatively scheduled for: -

Assignment 1, Thu 01—Apr (to be submitted by 4pm), and

-

Assignment 2, Fri 14—May (to be submitted by 4pm).

In each assignment, you will be required to use economic concepts to answer questions on material that relates to the topics taught up to that point. Assignment submission is completed using the LMS Assignment Submission link for all written assignments. Please refer to the Turnitin section of the LMS website for detailed submission instructions if needed (http://go.unimelb.edu.au/zax6). To learn how to correctly cite and reference major pieces of evidence that you use in your work, please refer to “Academic Integrity / Referencing” subsection in this document. Any material beyond the 1000 words limit will be ignored/discarded from evaluation. Please note that you are required to keep a copy of your assignment after it has been submitted as you must be able to produce a copy of your assignment at the request of teaching staff at any time after the submission due date. 8

End of Semester Exam (60%) More details about the exact format of the final exam will be provided later in the semester. Successful completion of the subject requires a pass (50%) in the final examination. Note that meeting the hurdle requirement does not guarantee a pass in the subject; it simply means you are eligible to pass if you perform sufficiently well in your other assessments. Meeting deadlines and penalties for late submissions Late submissions will not be accepted. There is a no‐extension policy for this subject; if you are significantly affected by illness or other serious circumstances during the semester, you may be eligible to apply for Special Consideration (please see the “Policy / Special Consideration” subsection at the end of this document).

Subject Resources (+ How and Who to Contact for What?) Consultation hours There are designated consultation times when you will be able to consult with a tutor on an individual basis about questions or problems you have with the subject material or about assessment exercises. A list of available consultation times and locations is on LMS. LMS discussion board (DB) The DB provides an opportunity to raise questions about content from lectures and tutorials; and about assessment exercises. The DB is monitored and moderated by teaching staff who provide assistance where necessary. Assistance is most likely to be provided where staff can see that a genuine attempt has been made to understand the subject material or to tasks or problems. A good DB query shows that you consulted your lectures and their associated chapters in the textbook for any definitions and explanations (possibly be referencing them), or maybe shows that you attempted to resolve a tutorial problem yourself; then, it describes clearly and as succinctly as possible what is the exact aspect which you do not understand. The DB also functions as a repository, with all previously asked questions (as well as their answers, if any) remaining publicly available. Before posting a new DB query, please check whether your question has been previously asked, as questions and answers that are already available for viewing will not be readdressed. When posting on the DB please be sure to maintain a respectful tone to the other students and staff with whom you are interacting.

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Email Protocol We encourage you to raise any substantive questions during tutorials, and/or during normal consultation hours. An additional possibility for asking questions that are of interest for all students is via the DB. Email should be mostly reserved for cases outside of those described above, and should be sent to: •

your tutor, for anything tutorial related that cannot be raised via the DB;

•

your coordinator, Nahid Khan, for any logistic, administrative, or any type of more personal issues (though before emailing Nahid, please check if a more appropriate type of support is not listed under the “University Services” or “Policy” sections); and

•

to Laura and/or Alex, in the remaining cases not already covered above.

As we are only able to respond to student emails coming from a University email address (e.g., [email protected]), please always make sure to use one. 1 We would be grateful if you could please use “IM-10004: Issue or Question” in the title and try to be clear and concise. Note that questions received over email that are deemed to be relevant may be answered via the DB, so that everyone can benefit from seeing their answer. While academic staff endeavor to address queries received via email, please note that – similar to the DB—an email should not be a substitute or a shortcut around doing the required individual study, and that we may not always be able to answer emails asking for e.g. definitions or explanations already covered in lectures and tutorials, or that are available in the book.

Our Expectations and How to Study for This Subject? View the Lectures Lectures will give you a broad understanding of each topic and where it fits into the subject. You should also read the relevant pages of the textbook (and the case study readings are an excellent additional resource as well).

You may first have to activate your University email address before you can send or receive emails; to do so, please go at http://accounts.unimelb.edu.au/. Emails from nonUniversity email addresses (such as Google, Yahoo, Hotmail, or even business email addresses) may be filtered out by the University’s spam filter and we may not receive them. All correspondence relating to this subject will only be sent to your University email address.

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Individual Work Individual work is essential. While the amount of effort require...