Economics 101: Principles of Economics Davidson College Fall 2002

Syllabus

Instructor: Mark C. Foley	Office: Chambers 202
Class hours: 11^30-12^20am, MWF 2^30-3^45pm Tuesday	Office hours: 9-10 MWF, 1-2 T and by appointment
Location: Grey 100 (Tuesdays in Ch. 316)	Phone: 894-2248 (home 878-6137)
URL: http://www.davidson.edu/economics/foley	Email: mafoley@davidson.edu

Course Description

Modern economics is the study of how households, individuals, firms, governments, and other types of human society choose to allocate and manage resources in a world of scarcity. The central focus of this introductory course is how and why markets (one important mechanism for allocating scarce resources) work, why they may fail to work, and the implications for social policy of both their successes and failures.

Thinking like an economist also involves identifying and evaluating tradeoffs in the context of constraints, distinguishing positive from normative analysis, and tracing behavioral implications of change while abstracting from aspects of reality. It, moreover, involves describing redistributive implications of change, amassing data to evaluate economic events, and testing hypotheses about how consumers and producers make choices and how the economy works. Finally, thinking like an economist involves examining many problems through a filter of efficiency – coping with limited resources.

Thinking like an economist requires creative skills, too. Identifying economic issues and problems, framing them in ways other people do not see, devising novel policy proposals for dealing with problems, analyzing both the intended and unintended effects of policies, devising innovative methods to estimate the magnitude of these effects – all are as central to the discipline, as is the development of logically coherent theories.[1]

Course Requirements & Policies

There are three lectures each week. Approximately every other week, we will be using the extra class period on Tuesdays for class exercises and discussion, student presentations, or lectures. There will be regular problem sets and quizzes, two short presentations, two data assignments, three take-home, closed-book reviews, and a cumulative, student-scheduled final exam. Exam questions will be drawn from the lectures, text, problem sets, quizzes, and assigned readings (i.e., everything). The reviews will be handed out on September 25, October 30, and December 4. The problem sets will not be given numerical grades based on the correctness of your answers. Rather, you will receive full credit as long as you make, in my opinion, a legitimate attempt to answer each question. Diligent completion of the problem sets will greatly improve your performance on the exams. The lowest quiz grade will be dropped. There are no make-up quizzes. There will be separate handouts with details on the data assignments.

If a student is unable to take an examination or turn in a scheduled assignment, it is the student’s responsibility to contact the instructor prior to the scheduled completion date. Late work will be penalized 10% per day. Students who miss an assignment and fail to make prior, alternative arrangements will receive a grade of zero for the assignment. This includes quizzes, for which there are no make-ups. The following weights will be applied in determining your final grade:

Final Grade = max { (.12*QP + .08*PS + .15* DA + .15*R_j + 0.20*F),

(.12*QP + .08*PS + .15* DA + .083*R_j + 0.40*F)}

where QP = Quizzes & Presentations, PS = Problem Sets, DA = Data Assignments, R_j = Review j, jÎ{1,2,3}, and F = Final. I will automatically use your highest average in determining final grades.

I encourage you to work together in small groups on the problem sets, but I require that you acknowledge those from whom you have received assistance. A simple note at the end of your problem set identifying the persons with whom you consulted will be fine. Remember, the goal is to develop your critical thinking and analytical abilities as well as to understand economic principles and how they relate to the world we live in. So by all means ask questions of me and your classmates!

My office hours are as indicated above. However, I operate on an “open-door” policy and encourage you to stop by anytime during the day.

Attendance is not required. Students are responsible for all work from all class meetings. We will work under the default attendance policy in the Davidson Catalog of Announcements (page 63), namely, missing more than one-fourth of the course meetings results in a failing grade.

You should have an email address and be able to access the class website (www.davidson.edu/academic/economics/foley/principles/index.html) via the internet. I will sign you up for the class distribution list, which will be used for class announcements and discussion. My Powerpoint^ã presentations will be made available on the website. They are designed to aid in your comprehension of the material, not to serve as a substitute for taking notes or attending class.

The Honor Code is a valuable and venerable tradition at Davidson and applies to all work. For this class, group study is encouraged, particularly in preparation for quizzes and reviews as well as on the problem sets, and shall not be an honor code violation. The data assignment essays are to be your own work and while I urge you to discuss the economic issues with your classmates and friends, the final papers are to be original writing with appropriate citations. See me if you have any questions.

Prerequisites

None.

Text

Principles of Economics, by N. Gregory Mankiw, 2nd edition, is required and available at the bookstore. The Study Guide by David R. Hakes is optional. In addition there is a companion website provided by the publisher at www.harcourtcollege.com/econ/mankiw.

Course Outline

Topic	Week of	Reading
Economics and Economic Reasoning	Aug 26	Chapters 1 and 2
Microeconomics
Supply and Demand A. Opportunity Costs and the Gains from Trade B. Market Supply and Demand, and Elasticity C. Price Controls and Taxes D. Marginal Analysis and Consumer Choice	Aug 26 Sept 2 Sept 9	Chapter 3 Chapters 4 and 5 Chapter 6 Chapter 21
Welfare Economics A. Markets, Efficiency, and Welfare B. Welfare Analysis of Taxes, Tariffs and Transfers	Sept 16	Chapter 7 Chapters 8 and 9
Firm Behavior in a Competitive Market A. Production, Inputs and Costs B. Firm behavior in the short run C. Entry, Exit and long run equilibrium	Sept 23 Sept 30	Chapter 13 Chapter 14 Chapter 14
Property Rights and Market Failures A. Property Rights, Public Goods and Externalities	Oct 7	Chapters 10 and 11
Market Power and Regulation A. Monopoly B. Oligopoly, Strategic Behavior, and Game Theory	Oct 14 Oct 21	Chapter 15 Chapter 16
Factor Markets A. The Labor Market  B. Poverty, Inequality and Discrimination  C. Time and Risk and Information	Oct 28	Chapter 18 Chapter 19 Chapter 20
Macroeconomics
The Real Economy in the Long-run A. Macro and Economic Growth  B. Economic Growth & Convergence C. Savings, Investment and the Financial System	Nov 4 Nov 11	Chapters 22 and 23 Chapter 24 Chapter 25
Money, Banking and Prices A. Banking and the Federal Reserve B. Money Supply and Demand		Chapter 27 Chapter 28
Open Economies	Nov 18	Chapters 29 and 30
Macroeconomic Fluctuations and Stabilization A. Aggregate Demand, Aggregate Supply and Macro Equilibrium B. Aggregate Demand Management C. Inflation and Unemployment D. Current Issues in Macroeconomics	Nov 25 Dec 2	Chapter 31 Chapter 32 Chapters 26 and 33 Chapter 34

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[1] The preceding two paragraphs are from “The Economics Major: Can and Should We Do Better than a B-?” by J. J. Siegfried, et al., American Economic Review, May 1991, p. 21.