PRINCIPLES OF
MICROECONOMICS
Course Description
Herman Sahni
Department of Economics
Northern Illinois University
Spring 2013
Course: ECON 260
Section: 02
Office: DU 470
Lecture: DU 280
Class time: M 6:00pm-8:40pm
Off Hours: T 10:00am-11:45am
Email: [email protected]
Prerequisites: None
This branch of economics deals with the behavior of
individuals in making decisions using limited resources.
At NIU, this will be your first undergraduate economics
course. For some, this probably will be the only economics
course taken, but it will provide a solid foundation that
lasts throughout the educational process and subsequent
careers. For others, it will form the basis for subsequent
study in economics, finance, business, or related fields.
This course begins with an introduction to supply and
demand and how interaction of these decisions will determine prices. We then turn our attention to the firm’s
choices under different market structures: perfect competition, monopoly, oligopoly, and market failures. By the
end of the course, you will be able to understand and solve
basic microeconomic problems and use these techniques
to think about real economy policies.
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Principles of Microeconomics
Course Goal
My goal is for you to,
1. think rigorously on their own about how consumers and producers make choices and the implications of these choices;
2. understand when markets work well, the possible solutions when markets don’t work well, and the
role that government plays in regulating markets;
3. think like economists, understanding the real issues discussed in news, their complexities, and
economists’ recommendations; and
4. relate the economic concepts to their own decision making in daily activities.
This course satisfies 3 credits under the Progressive Learning in Undergraduate Studies (PLUS) General
Educational program requirements (Gen Ed.).
Textbooks
Required:
Principles of Microeconomics, N. Gregory Mankiw, 6th Ed. with Aplia
Aplia is an online portal that significantly elevates thinking by increasing student effort and engagement.
Homework is assigned and must be submitted via Aplia. Hence, buying Aplia access is a must, and
buying it along with the book as a bundle is cheaper than buying individually. There are three options
available in order to purchase the bundle: (i) Paperback book with Aplia, (ii) Loose-leaf book with Aplia,
or (iii) Aplia with free e-book. Details on Aplia are provided at the end of this syllabus. Announcements,
selected lecture handouts, practice problem sets, sample exam questions and other materials of interest
will be posted on BlackBoard. Make sure you check BlackBoard frequently!
Important dates
1. Exam #1 on M ONDAY, F EBRUARY 25 TH , 2013
2. Exam #2 on M ONDAY, A PRIL 1 ST, 2013
3. Final Exam on M ONDAY, M AY 6 TH , 2013
Exams will be offered on the scheduled day. Please resolve any time conflicts now!
H. Sahni
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Course Requirements
Exams, quizzes, and Aplia assignments together amount to 300 points.
A. Two Exams during the term (60 points each)
= 120 points
B. Final Exam
= 100 points
C. Quizzes
= 30 points
D. Assignments
= 50 points
Exams: All exams should be taken as scheduled. If you are unable to take the exams when scheduled,
you can request a make-up exam prior to the date of the exam. A make-up will only be allowed for
approved absences. If you miss exams #1 or #2, then I will use the average of your final exam and the
make-up exam as your score for the missed exam. As an illustration, in case you missed your exam
#1, and if you earned 80% in the make-up exam and 60% in the final exam at the end of the semester,
then the score for missed exam #1 will be, 0.5 × 80% + 0.5 × 60% = 70%. Since the final exam schedule
is determined by the university, please check for conflicts with other courses that you are enrolled in.
If there is a conflict, you can request a make-up exam for the final exam. The other exception where a
make-up exam will be approved is for documented personal illness or family emergency.
Quizzes: 8 quizzes will be given. Expect a quiz every class either in the beginning or at the end of the
class. T HERE WILL NO OFFICIAL ANNOUNCEMENT FOR QUIZ DATES . There will be no make up for missed
quizzes. A maximum of two quizzes can be missed without any points reduction.
Assignments: Each Tuesday the homework assignment for that week will appear on Aplia and will be
expected to be completed by the due date set (usually Monday of the following week). The lowest two
assignments scores will be dropped. All assignments are equally weighted.
Grading
The grading scale is based on the total possible points available for the course.
Percentage
90% and above
80%−89%
70%−79%
60%−69%
59% and below
Points scored
≥ 270
240 − 269
210 − 239
180 − 209
≤ 179
Grade
A
B
C
D
F
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Principles of Microeconomics
The final distribution of grades may be adjusted to reflect an appropriate distribution. Any change to
the distribution will only be made in the student’s favor. Do not ask for extra credit assignments at the
end of semester in order to pass the course. I will not give a passing grade simply because you need it.
Approved Absence
The following conditions must be met if family emergency, sickness or injury causes you to miss an
exam: (1) You notify me before the exam via email, and (2) you provide satisfactory evidence in writing.
Classroom Conduct and Attendance
You are expected to turn mobile phones, iPods, and other electronic devices off before the class. Laptops and Tablets are allowed if they are solely used for course related purposes and without distracting
others; otherwise they are not permitted. Come to the class in a timely fashion, and if you must leave
early notify me, sit near the door, and exit quietly. While attendance is not mandatory, success in this
class will not be possible without attending lecture regularly. Quizzes will serve to assess who is attending regularly. Further, attendance and active participation may contribute to decisions about grades that
are on the border between letter grades.
Disability accommodations
visit http://niu.edu/disability/ for more details
If you have any disability that requires accommodation, please let me know early in the semester so
that your learning needs may be appropriately met. You will need to provide documentation of your
disability to the Disability Resource Center (formerly Center for Access-Ability Resources), located on
the 4th floor of the University Health Service, 753-1303.
H. Sahni
5
Email Policy
1. Allow 2 business days for me to respond to email messages. For a more prompt reply, meet me
before or after class or during office hours in person. Check the syllabus to make sure if your query
is already answered before emailing me.
2. You will receive prompt responses to your emails, but only if the subject line indicates the course
number (“Econ 260”). Also make sure to follow proper business etiquette while emailing me. It
is important to learn such etiquette, especially because you will all soon be applying for jobs. Although I try to keep up with the modern day vernacular of short-hand typing commonly used in
text messages, avoid the texting-language like “i need 2 c u” in an email.
3. I will send messages to your student email address. Check it! If you fail to do this, you may not
receive information. If you have a personal email id that you prefer, make sure you get emails
forwarded from your student email address.
4. All course materials (lecture handouts, sample exams, etc.) will be made available in Blackboard
throughout the semester. Announcements of the same will also be posted in Blackboard, and automatically, an email will be sent to your student email address.
Academic Integrity
http://www.niu.edu/communitystandards/Student_Code_of_Conduct/NIUSCC_FINAL.pdf
Academic or non-academic misconducts will not be tolerated in this course. Misconduct includes,
but is not limited to, the following: (i) cheating during examinations; (ii) misrepresented work and plagiarism; and (iii) use of materialistic aides (graphing calculators, textbooks, class or prepared notes,
smart phones or any other internet interface etc.) that are not sanctioned during examinations. Any
violation of the code of conduct will be punished according to the guidelines set by the University.
How to do well in this course:
1. E CONOMICS IS NOT A SUBJECT THAT CAN SIMPLY BE MEMORIZED. If you try to memorize everything
that was said in class, there is no guarantee that you will do well in this course. The application, interpretation and evaluation of concepts and models are fundamental to learning economics, where
memorization plays a small role. Hence, the course is designed to test your understanding of these
economic concepts.
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Principles of Microeconomics
2. ATTEND CLASS REGULARLY. The lecture and class activities will emphasize the important concepts,
and you can develop a set of notes from which to study. Further, all topics in this course are closely
related to each other, so missing a class will impact your understanding of the material taught in
subsequent classes. Hence, if you chose to be absent, you are responsible for getting notes from
someone in class, not from me.
3. R EAD THE ASSIGNED MATERIALS BEFORE CLASS AND READ AGAIN AFTER CLASS . Reading the material
before the class will enable you think about the complexity in the concepts and ask questions in
class. The Blackboard provides a detailed course outline, hence you will know the topics discussed
in each class ahead of time. Additionally, reading after the class will substantially help in retention.
4. P UT EFFORT INTO HOMEWORK ASSIGNMENTS . Practicing economic skills via assigned problems will
aid your preparation for exams.
5. A SK QUESTIONS IN CLASS , ESPECIALLY IF YOU DON ’ T UNDERSTAND SOMETHING . Remember, all
questions have merit and value. It is very possible that some of your classmates also have the same
question.
6. TALK TO ME IF MATERIAL CONFUSES YOU . Some concepts can be tricky, so please don’t wait until the
exams to seek help.
7. D ON ’ T PROCRASTINATE ! Consistent effort is needed to do well in this course.
Course Summary and Outline
We will cover a total of 15 chapters from the prescribed text, Principles of Microeconomics, N. Gregory
Mankiw 6th edition. The chapters are organized in three independent units.
Unit 1: Introduction to Economics and Public Policy
Unit 1 begins with the introductory concepts of the economics discipline. The main focus of this unit is
to understand the behavior of consumers and firms, and how their interactions determine product pricing (equilibrium). The first step deals with the factors that affect the demand and supply curve, which
determines the equilibrium. Second, how the demand and supply shocks will change the equilibrium.
Finally, how the elasticity concept will capture the magnitude of change in the equilibrium.
After our understanding of how prices are determined, we turn our focus to the role of government
in the market. Why do governments intervene (through price control or tax), and when do these actions
cause inefficiency? To understand, we will introduce the concepts of welfare (producer surplus and
consumer surplus) and analyze their impact on consumers and firms.
H. Sahni
7
Unit 2: Product market structure comparisons
Here, we start by figuring out where the supply curve comes from. Supply curve is the result of firms following a single objective: maximizing profits. Here, we will learn how different market structures impact
the firm’s profits. The four types of market structures are perfect competition, monopoly, monopolistic competition, and oligopoly. To understand how different market structures impact the welfare of
consumers, we will also conduct welfare analysis.
Unit 3: Market Failure and Public Policy
In this unit, we will study externality and public goods. An externality is a cost or benefit imposed on
an individual who did not choose to incur that cost or benefit. A classic example is pollution. In such
cases, we will learn various ways on how this externality cost can be reduced. Public goods are the exact
opposite to private goods (goods that we studied so far). We begin with understanding the characteristics
of a good that makes it private or public. Examples of public goods include fresh air and knowledge.
Since there are no incentives for firms to produce public goods, we will learn how the government can
provide such goods. Apart from public goods, we will also learn about two other types of goods, club and
common resources.
Weekly Schedule:
Week
Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
January 14
January 21
January 28
February 4
February 11
February 18
February 25
March 4
March 11
March 18
March 25
April 1
April 8
April 15
April 22
April 29
May 6
Chapter
Content
1, 2 & 3
Introduction; Trade gains
Dr. MLK Day, No class
Supply and demand
Elasticities; Price controls
Price controls; Welfare economics
Tax; International Trade
Midterm exam 1
Production costs; Perfect competition
Spring break, No class
Perfect competition
Monopoly; Oligopoly
Midterm exam 2
Oligopoly
Externalities
Public goods
In-class review for final exam
Final exam
4
5&6
6&7
8&9
13 & 14
14
15 & 17
17
10
11
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Principles of Microeconomics
For Fun: The Economist’s Pride
Almost everything can be reasoned with economics. Are you a person with such an economic reasoning? Or, are you just looking for cool conversation starters? There are many books that can help you
improve . . . . Try Naked Economics: Undressing the Dismal Science by Charles Wheelan and Freakonomics by Steven Levitt and Stephen Dubner. Or, here is my favorite The Economic Naturalist by Robert
H. Frank.
The Economic Naturalist shows how simple economic principles help answer such diverse questions
as these:
1. Why does a $500 tuxedo rent for $90 a day while a $20,000 car rents for only $40?
2. The blind can’t drive! Then, why do the keypad buttons of drive-up cash machines have Braille
dots?
3. We consume more chicken than whales. Why are whales, but not chickens, in danger of extinction?
4. Why is there a light in your refrigerator but not in your freezer?
5. Why are newspapers sold in vending machines that allow customers to take more units than what
they paid for? The same is not true for soft drinks, why?
6. Why are brown eggs more expensive than white ones, even though the two types taste the same and
have identical nutritional value?
7. Why do 24-hour/365-day convenience stores have locks on their doors?
H. Sahni
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How to access your Aplia course
ECON 260, Principles Micro Mankiw 6e, Spring 2013
Instructor: Herman Sahni
Start Date: 01/14/2013
Course Key: GX5Q-ZE7N-AXAD
Registration
Aplia is part of CengageBrain, which allows you to sign in to a single site to access your Cengage materials
and courses.
1. Connect to http://login.cengagebrain.com/
2. If you already have an account, sign in. From your Dashboard, enter your course key (GX5QZE7N-AXAD) in the box provided, and click the Register button. If you don’t have an account, click
the Create a New Account button, and enter your course key when prompted: GX5Q-ZE7N-AXAD.
Continue to follow the on-screen instructions.
Payment
Online: Purchase access to your course (including the digital textbook) from the CengageBrain website.
Bookstore: Purchase access to Aplia from your bookstore. Check with the bookstore to find out what
they offer for your course.
After paying, you will have the option to purchase a physical book at a discounted price. If you choose
to pay later, you can use Aplia without paying until 11:59 PM on 02/03/2013.