Economics 201 Course Calendar, Fall 2006

Syllabus Links by Date
Due Dates of Assignments

Note: Information listed for distant dates is a forecast, not a promise.
We may move more quickly or more slowly than expected and the calendar will be updated as necessary throughout the semester.

Go to this week's syllabus entries

I. Introduction to Economics

Monday, August 28: Introduction to Economics 201

Syllabus and course expectations. What economics is and what questions it tries to answer.

No reading or written assignments.

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Wednesday, August 30: Essential Concepts of Economics

Basic concepts of economics: decision-making, scarcity, opportunity cost.

Required reading:

• Stiglitz, Joseph E., Principles of Microeconomics or Economics, 2d ed. New York: W. W. Norton, 1997 (hereafter "Stiglitz"), Chapters 1 through 3.
• Pindyck, Robert S., and Daniel L. Rubinfeld, Microeconomics, 6th ed. Englewood Cliffs, NJ: Prentice Hall, 2004 (hereafter "Pindyck & Rubinfeld"), Chapter 1.
• Two additional short readings are required for today's case.

For more background:

• Samuelson, Paul A., and William D. Nordhaus, Economics, 13th ed. New York: McGraw-Hill, 1989 (hereafter "Samuelson"), Chapters 1 through 3. (Note: This book is now in its 16th edition, but our library has multiple copies of the 13th, so that is what we will use as a background reading.)

Assigned work:

• Case of the Day: Airline Safety Choices. This case involves two short readings and a brief research activity on the World Wide Web.

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Wednesday, August 30: Lab -- Double Oral Auction Experiment

An experiment to illustrate the interaction of supply and demand in a simple market setting.

No reading in preparation for experiment.

Assigned work: Double Oral Auction Lab Report. The instructions for the assignment are at this link. The data from the lab will be posted by Thursday morning and can be downloaded from a link on the report page. Students will work in assigned pairs to prepare the required lab report. Lab reports will be due in class on Wednesday, September 6.

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Friday, September 1: Supply and Demand Analysis

Introducing supply and demand curves as tools to model the behavior of markets. Determinants of demand and supply. Walrasian (market-clearing) equilibrium. Comparative static analysis of shifts in curves.

Required reading:

• Pindyck & Rubinfeld, Chapter 2, pp. 19-32.

For more background:

• Stiglitz, Chapter 4.
• Samuelson, Chapter 4.

Assigned work:

• Case of the Day: Markets, Scalpers, and Queues: The Economics of Event Tickets. This case involves reading several short newspaper articles and answering a few questions.
• Double Oral Auction Lab Report is due on Wednesday, September 6.

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Monday, September 4: Labor Day (no class)

Wednesday, September 6: Short-Run and Long-Run Elasticities of Supply and Demand

Concept and measurement of demand and supply elasticity. Determinants of elasticity in short run and long run. Effects of elastic and inelastic supply and demand curves.

Required reading:

• Pindyck & Rubinfeld, Chapter 2, pp. 32-57.

For more background:

• Stiglitz, Chapter 5.
• Samuelson, Chapter 18, especially pp. 421-432.

Assigned work:

• Double Oral Auction Lab Report is due today in class.

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Wednesday, September 6: Lab -- Discussion of Double Oral Auction Experiment

Discussion of first week's experiment and the issues addressed in student lab reports.

No reading required.

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II. Household Behavior and Product Demand

Friday, September 8: Math for Economics Session

Instructor is out of town at a conference. We'll make up the day during lab on the 13th.

Lily Copenagle of the Levine Quantitative Skills Center will conduct a mathematics for economics review and overview during the scheduled class time.

Monday, September 11: Modeling Household Behavior

Assumptions of rational consumer behavior. Representing preferences by utility functions and indifference maps. Budget constraints and optimal consumer behavior.

Required reading:

• Pindyck & Rubinfeld, Chapter 3.

For more background:

• Stiglitz, Chapter 8, pp. 171-79 and 191-97.
• Samuelson, Chapter 19, especially the appendix (pp. 466-471).

Assigned work:

• Case of the Day: Oil Prices and Consumer Demand. This case involves a very short reading, analysis of some data that are provided, and answering a few questions.
• Problem Set #1 is due on Wednesday, September 13. After today's class we will have covered all the course material that is relevant to this problem set.

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Wednesday, September 13 (Class session) : Consumer Responses to Income and Price Changes

How a change in income or product price affects the budget constraint. Income and substitution effects on quantity demanded. Normal and inferior goods.

Required reading:

• Pindyck & Rubinfeld, Chapter 4, pp. 101-121.

For more background:

• Stiglitz, Chapter 8, pp. 197-198.
• Samuelson, Chapter 19.

Assigned work:

• Problem Set #1 is due today in class.
• Case of the Day: Continuing discussion of Oil Prices and Consumer Demand. No additional questions are assigned to be handed in today.

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Wednesday, September 13 (Lab session): Consumer Choice and Demand

Consumer choice and the individual demand curve. Aggregation of individual demand to get market demand. Consumer surplus and gains from exchange.

Required reading:

• Pindyck & Rubinfeld, Chapter 4, pp. 122-140.

For more background:

• Stiglitz, Chapter 8, pp. 185-186 and 196-197.
• Samuelson, Chapter 19.

Assigned work:

• Problem Set #1 is due in class today.

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III. Firms, Production, and the Supply of Products

Friday, September 15: Modeling Production Technology

The firm as producer of goods and services. Using the production function to represent production technology. Marginal product and diminishing returns. Returns to scale.

Required reading:

• Pindyck & Rubinfeld, Chapter 6.

For more background:

• Stiglitz, Chapter 11, pp. 250-255.
• Samuelson, Chapter 21, pp. 499-511.

Assigned work:

• Problem Set #2 is due on Wednesday, September 20.
• Case of the Day: Costs and Production in Dairy Farming. This case will be used on September 15, 18, and 20. Do the questions and bring your answers to class rather than turning them in. The questions will be discussed in class.

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Monday, September 18: Costs and Cost Functions

Various cost concepts: total cost, variable cost, average cost, marginal cost. Relationship of cost to output and inputs in short run and long run. Cost functions and production functions.

Required reading:

• Pindyck & Rubinfeld, Chapter 7.

For more background:

• Stiglitz, Chapter 11, pp. 255-272.
• Samuelson, Chapter 21, pp.498-511 and Chapter 22, pp. 512-539.

Assigned work:

• Case of the day: Costs and Production in Dairy Farming. Questions will be discussed in class.
• Problem Set #2 is due on Wednesday, September 20.

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Wednesday, September 20: Profit Maximization under Perfect Competition

Economic and accounting profits. Profit maximization as an objective. Conditions necessary for perfect competition. Demand, marginal revenue, and cost curves for a competitive firm. Shut-down and profit-maximization rules in the short-run.

Required reading:

• Pindyck & Rubinfeld, Chapter 8, pp. 261-281.

For more background:

• Stiglitz, Chapter 12, pp. 281-299.
• Samuelson, Chapter 23, pp. 539-557.

Assigned work:

• Problem Set #2 is due in class today.
• Case of the day: Costs and Production in Dairy Farming. Questions will be discussed in class.

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Wednesday, September 20: Lab - Understanding Empirical Research in Economics

A basic, non-mathematical introduction to the use of statistical and econometric methods to estimate economic relationships and test economic hypotheses.

Required Reading:

• Pindyck and Rubinfeld, Chapter 4, pp. 136-140 and Appendix: "The Basics of Regression"

Assigned Work:

No work due in lab today.

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Friday, September 22: Competitive Equilibrium in the Short and Long Run

Entry, exit, and scale of production in long-run equilibrium.

Required reading:

• Pindyck & Rubinfeld, Chapter 8, pp. 281-294.

For more background:

• Stiglitz, Chapter 13.
• Samuelson, Chapter 23.

Assigned work:

• Case of the day: The Washington Sales Tax and the Vancouver Retail Industry. Brief reading based on a Reed senior thesis with a few questions to answer.

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Monday, September 25: Analysis of Competitive Markets

Efficiency characteristics of competitive markets. Effects of taxes and subsidies. Price ceilings and price floors.

Required reading:

• Pindyck & Rubinfeld, Chapter 9.

For more background:

• Stiglitz, Chapter 13.
• Samuelson, Chapter 18, especially pp. 432-443.

Assigned work:

• Case of the Day: Rent Controls and Gains from Exchange. This case involves a reserve reading and answering a few questions.

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Wednesday, September 27: Review and/or catch up.

No new assignments or reading today. Exam is in this afternoon's lab.

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Wednesday, September 27: Mid-Term Exam #1

Exam will be held in lab on Wednesday afternoon..

Friday, September 29: Profit Maximization under Monopoly

Why monopolies arise. Demand and marginal revenue for a monopoly. Profit maximization.

Required reading:

• Pindyck & Rubinfeld, Chapter 10.

For more background:

• Stiglitz, Chapter 14.
• Samuelson, Chapter 24, especially pp.566-575.

Assigned work:

• Case of the day: The New York City Ice Trust. Case involves a short reserve reading and a few questions to answer.

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Monday, October 2: Applications of Monopoly and Monopolistic Competition

Efficiency costs of monopoly. Antitrust laws. Price discrimination. Entry of producers of substitutes under monopolistic competition.

Required reading:

• Pindyck & Rubinfeld, Chapter 11 and Chapter 12, pp. 435-441.

For more background:

• Stiglitz, Chapter 14.
• Samuelson, Chapter 24, especially pp. 582-593.

Assigned work:

• Case of the day: Microsoft's Monopoly. A short reading discussing the antitrust case against Microsoft. No questions to hand in this time.

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Wednesday, October 4: Oligopoly and Collusion

Characteristics of oligopoly. Collusion and the prisoners' dilemma. Competition policies.

Required reading:

• Pindyck & Rubinfeld, Chapter 12, pp. 441-467.

For more background:

• Stiglitz, Chapter 15 and 16.
• Samuelson, Chapter 25, especially pp. 605-617, plus appendix to Ch. 25, pp. 629-634..

Assigned work:

• Case of the day: The Global Lysine Price-Fixing Conspiracy of 1992-95. A reading discussing a recent price-fixing case, with a few questions to answer.

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Wednesday, October 4: Lab -- Market Concentration Experiment

An experiment testing the effects of increased market concentration on prices and production.

No required reading.

No lab report will be assigned on this experiment this year.

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Friday, October 6: Game Theory and Oligopolistic Interaction

Basic concepts of game theory applied to the interaction of firms in an oligopoly.

Required reading:

• Pindyck & Rubinfeld, Chapter 13.

For more background:

• Stiglitz, Chapter 15.
• Samuelson, Chapter 25, pp. 605-629.

Assigned work:

• First Economic Naturalist Assignment is due today in class.
• Problem Set #3 is due in class on Wednesday, October 11. Partner assignments are also posted. At the end of today's class we will have covered all the material you will need to do the problem set.

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IV. Markets for Factors of Production

Monday, October 9: Demand for Factors of Production

Marginal product, marginal revenue product, and the demand for factors. Factor-market equilibrium under competition and with market power.

Required reading:

• Pindyck & Rubinfeld, Chapter 14.

For more background:

• Stiglitz, Appendix to Chapter 11 and Chapter 12, pp. 299-304.
• Samuelson, Chapter 27, pp. 656-673.

Assigned work:

• Case of the Day: The Academic Labor Market. A short reading including some data tables, with some questions to answer.
• Problem Set #3 is due in class on Wednesday, October 11.
• Selections for naturalist topics to be presented and discussed at Wednesday's lab will be made by today.

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Wednesday, October 11: Labor Markets

Supply of labor. Effects of unions. Equilibrium wages and the characteristics of workers and jobs.

Required reading: Stiglitz, Chapter 9 and 19.

Assigned work:

• Problem Set #3 is due today in class.

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Wednesday, October 11 Lab: Presentation of Naturalist Topics

Individual presentations of your own "case studies."

Assigned work:

• Read your lab's Selected Naturalist Topics.
• Present your topic or provide discussion comments and questions as assigned.

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Friday, October 13: Capital Markets

Discounting future receipts and payments. Cost of capital vs. rate of return. Markets for borrowing and lending and the equilibrium interest rate. Risk and interest rates. Institutions of the credit market: venture capitalists, banks, bonds, and stocks.

Required reading:

• Pindyck & Rubinfeld, Chapter 15.

For more background:

• Stiglitz, Chapter 6.
• Samuelson, Chapter 30, pp. 717-731.

Assigned work:

• Case of the Day: Risk and the Structure of Interest Rates. A discussion of how risk is related to the interest rates charged on bonds. A short reading but no questions to turn in this time.

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Part V: Markets, Market Failures, and Efficiency

Monday, October 16 through Friday, October 20: Fall Break

Monday, October 23: General Equilibrium

Efficiency implications of simultaneous general equilibrium in competitive product and factor markets.

Required reading:

• Pindyck & Rubinfeld, Chapter 16.

For more background:

• Stiglitz, Chapter 13.
• Samuelson, Chapter 31, pp. 741-753.

Assigned work:

• Case of the Day: Tracing the Economic Effects of Oil Prices. A short reading and a few questions.

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Wednesday, October 25: Economics of Information

Market failures that arise when information access is asymmetric across the two parties to a transaction. Problems of moral hazard and adverse selection.

Required reading:

• Pindyck & Rubinfeld, Chapter 17.

For more background:

• Stiglitz, Chapter 18.
• Samuelson, Chapter 32, especially pp. 770-777.

Assigned work:

• Case of the Day: Why Is Health Insurance So Expensive? A short reading and a few questions.

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Wednesday, October 25: Lab -- Product-Quality Experiment

An experiment testing whether the market can induce production of the most efficient quality grade of a material under different information regimes.

No reading required.

Assigned work:

• Lab Report on Product Quality Experiment is due in class on Wednesday, November 1.

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Friday, October 27: Technological Change

Motivation for research and development. How technological change affects microeconomic equilibrium. Historical patterns of technological change and how it has affected productivity of different kinds of labor and capital.

Required readimg:

• Stiglitz, Chapter 17.
• Schumpeter, Joseph A., "The Process of Creative Destruction," Chapter 7 in Capitalism, Socialism and Democracy (New York: Harper, 1942), 81-86.

Assigned work:

• Lab Report on Product Quality Experiment is due in class on Wednesday, November 1.
• Case of the day: Profiting from Innovation. A short reading and some questions for thought and discussion only; do not hand answers in.

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Monday, October 30: Externalities

Externalities and efficiency. Property rights and the Coase Theorem.

Required reading:

• Pindyck & Rubinfeld, Chapter 18, pp. 641-665.

For more background:

• Stiglitz, Chapter 21.

Assigned work:

• Case of the day: The Grand Banks Fishery. Short reading and case questions.
• Lab Report on Product Quality Experiment is due Wednesday, November 1.

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Wednesday, November 1: Public Goods and the Economic Role of Government

Definition and nature of public goods. Efficiency in the provision of public goods. Other economic roles of government.

Required reading:

• Pindyck & Rubinfeld, Chapter 18, pp. 665-671.

For more background:

• Stiglitz, Chapter 7.

Assigned work:

• Lab Report on Product Quality Experiment is due in class today.
• Optional (extra credit): Case of the day on The Funding of Pitman Park

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Wednesday, November 1: Lab -- Voluntary Contribution Experiment

An experiment testing people's willingness to contribute to public projects.

No reading required.

No lab report will be assigned.

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Friday, November 3: Income Distribution and Poverty

The income distribution implications of general equilibrium. Definitions of equity and equality. Evidence on the U.S. distributions of income, earnings, and wealth. Government policies to transfer income.

Required reading:

• Stiglitz, Chapter 22.
• Okun, Arthur M., Equality and Efficiency: The Big Tradeoff.
• Diaz-Gimenez, Javier, Vincenzo Quadrini, and Jose-Victor Rios-Rull, "Dimensions of Inequality: Facts on the U.S. Distributions of Earnings, Income, and Wealth," Federal Reserve Bank of Minneapolis Quarterly Review 21(2), Spring 1997, 3-21. (Available online at this link. Skim this paper for its main conclusions. You don't need to read the details. An update based on more recent data is available in Rodriguez, Santiago Budria, Javier Diaz-Gimenez, Vincenzo Quadrini, and Jose-Victor Rios-Rull, "Updated Facts on the U.S. Distributions of Earnings, Income, and Wealth," Federal Reserve Bank of Minneapolis, Quarterly Review 26(3), Summer 2002, 2-35.)

No assigned work other than lengthy readings.

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Monday, November 6: Mid-Term Exam #2

<<<Last Day to Drop a Class>>>

VI. Macroeconomics: Definitions and Basic Concepts

Wednesday, November 8: Introduction to Macroeconomics

Relationship of macroeconomics and microeconomics. Objectives of macroeconomic analysis. Major schools of macroeconomic thought.

Required reading:

• Mankiw, H. Gregory, Macroeconomics, 5th ed., (New York: Worth Publishers, 2003), Chapter 1 (Hereafter, "Mankiw Macro").

Assigned work:

• Case of the day: The Great Depression. A short reading and some questions.

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Wednesday, November 8: Lab -- Inflation Uncertainty Experiment

An experiment investigating the effects of certain and uncertain inflation on the credit market.

No reading required.

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Friday, November 10: Measuring Macroeconomic Variables

Gross domestic product as a measure of economic activity. Price indexes and other macroeconomic variables. Implications of measurement problems.

Required reading:

• Mankiw, H. Gregory, Principles of Macroeconomics, (Fort Worth, Texas: Dryden Press, 1997), Chapters 10 and 11 (Hereafter, "Mankiw Principles").
• Mankiw, Macro, Chapter 2.

Assigned work:

• Case of the day: Utility and Happiness in Macroeconomics. A short reading and some questions.
• Group Research Projects are to be presented in lab on Wednesday, November 15.

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Monday, November 13: Static Classical Macroeconomics

The classical macroeconomic model in a stationary equilibrium with no growth. Functional and operational definitions of money. Quantity theory of money as simple theory of money demand. Money and inflation. Seigniorage as a source of government revenue. Social costs of inflation.

Required reading:

• Mankiw, Macro, Chapters 3 and 4.

Required work:

• Case of the day: Money and Inflation in Argentina. Short reading and a few questions.
• Group Research Projects are to be presented in lab on Wednesday, November 15.

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Wednesday, November 15: Banking and the Supply of Money

The roles of the central bank, commercial banks, other financial intermediaries, and the general public in determining the money supply. Reserves and multiple deposit expansion. The money supply multiplier.

Required reading:

• Mankiw, Macro, Chapter 18, omit section 18-2.

For more background:

• Mankiw, Principles, Chapter 15, pp. 319-328.

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Wednesday, November 15: Lab -- Presentation of Group Research Projects

Student presentations of results of group research activities.

No reading required.

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Friday, November 17: Unemployment

Labor-market stocks and flows. Natural vs. cyclical unemployment. Factors that determine the natural rate of unemployment. Camparative analysis of U.S. and European unemployment experience.

Required reading:

• Mankiw, Macro, Chapter 6.
• Krugman, Paul, "Past and Prospective Causes of High Unemployment," in Reducing Unemployment: Current Issues and Policy Options, (Kansas City, MO: Federal Reserve Bank of Kansas City, 1994), pp. 49-80. (Reading available on Web, but not on reserve.)

Assigned Work:

• Second Economic Naturalist Assignment is due before Thanksgiving.

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Monday, November 20: Capital Accumulation and Economic Growth

A simplified neoclassical model of economic growth through investment and accumulation of capital.

Required reading:

• Mankiw, Macro, Chapter 7.

Assigned work:

• Case of the day: Are Income Levels Converging Internationally? A short reading and some questions to answer.
• Second Economic Naturalist Assignment is due before Thanksgiving.
• Problem Set #4 is due on Wednesday, November 29. It includes problems from Chapters 1 through 8.

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Wednesday, November 22: Population Growth, Technological Progess, and Growth

Models of sustained economic growth based on growth in population and technological innovation.

Required reading:

• Mankiw, Macro, Chapter 8.

Assigned work:

• Case of the day: A Tale of Two Cities. A short reading, but no written questions this time.
• Second Economic Naturalist Assignment is due today.
• Problem Set #4 is due on Wednesday, November 29. You have all the information you need to do this problem set following this class.

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Wednesday, November 22 Optional Experiment (details to be announced)

Friday, November 24: Thanksgiving Vacation

VII. Modeling the Macroeconomy

Monday, November 24: Expenditures, Money, and the IS/LM Model

The Keynesian-cross model of equilibrium between income and expenditures. Embedding the Keynesian cross in the IS/LM model.

Required reading:

• Mankiw, Macro, Chapters 9 and 10.

Assigned work:

• Problem Set #4 is due on Wednesday, November 29.

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Wednesday, November 29: The IS/LM Model and Aggregate Demand

Building the aggregate demand curve from the IS/LM model. Modeling economic fluctuations using IS/LM and AS/AD.

Required reading:

• Mankiw, Macro, Chapter 10 and 11.

Assigned work:

• Problem Set #4 is due in class today.

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Wednesday, November 29 Lab: Presentation of Naturalist Topics

Individual presentations of your own "case studies."

Assigned work:

• Read your lab's Selected Naturalist Topics.

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Friday, December 1: Survey of Aggregate Supply Models

A brief introduction to four alternative explanations of aggregate supply behavior.

Required reading:

• Mankiw, Macro, Chapter 13.

Assigned work:

• Problem Set #5 is due on Wednesday, December 6.

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Monday, December 4: Some Modern Business Cycle Theories

Real business cycle theory: productivity shocks as a source of business cycles. New Keynesian macroeconomics: menu costs and coordination failures.

Required reading:

• Mankiw, Macro, Chapter 19.

Assigned work:

• Case of the day: Can the IS/LM Model Explain Macroeconomic Fluctuations? Short reading and some data analysis.
• Problem Set #5 is due on Wednesday, December 6.

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Wednesday, December 6: Macroeconomic Policy

Monetary and fiscal policies as potential stabilizers of business cycles. Active vs. passive policies. Rules vs. discretion in policymaking.

Required reading:

• Mankiw, Macro, Chapter 14 and Epilogue.
• Optional: Readings from American Economic Review 87(2), May 1997 (pp. 230-243) symposium on "core of usable macroeconomics." There are five very short papers by prominent macroeconomists assessing what basic points they think the majority of macroeconomists agree on. All are available on JSTOR. Take a look at one or as many as you have the time and interest to explore.

Assigned work:

• Problem Set #5 is due today.

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Wednesday, December 6: Lab: No Formal Lab

This is actually a Friday for Reed's academic calendar (to make up for the Friday missed during Thanksgiving break). We will not have a formal lab meeting today.

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Final Exam: Wednesday, December 13, 9am-noon, Eliot 314