B01.1303.30, Fall
2015
Mondays 6:00-9:00 pm, Rm 2-70
Office Hours: MTW
(212) 998-0864
e-mail: economides@stern.nyu.edu
www: http://www.stern.nyu.edu/networks/
course page: http://www.stern.nyu.edu/networks/Micro2015M.html
Objective
The aim of this course is to teach
you the basics of how markets work. We learn how individuals make purchasing
decisions, how firms decide how much to produce, and how market structure
affects these decisions. We also learn what are the best
outcomes for the companies and society as a whole. We apply these
concepts to a wide range of market situations, including decisions under
uncertainty, insurance, markets with subsidies, markets with entry barriers,
and the EU debt crisis. We also discuss high technology markets with “network
effects,” where selling more units can make each unit more valuable.
You will need to know some math
skills, such as making diagrams of functions in two dimensions (X-Y space),
algebra calculations, and calculus. The focus of the course is not on the math,
but you need the math to grasp better and apply the concepts taught in the
class to the weekly exercises, the midterm and the final. Do not delay getting
up to speed with the math skills.
Notes and Text
My notes, at http://www.stern.nyu.edu/networks/micnotes/micnotes.pdf and distributed the first day of classes, provide you with a detailed outline of the materials that we will cover.
R. S. Pindyck and D. L. Rubinfeld, Microeconomics, Eight Edition, (Pearson, 2012). The book is not required. There is an accompanying Study Guide with additional exercises and review materials which will be useful to weak students, also not requited.
You will also be receiving occasional supplementary notes and solved exercises. Articles from the Financial Times, the NY Times, the Wall Street Journal, and the Economist will illustrate the application of our course to current events.
Coursework
There will be weekly homeworks. They will be handed in and graded. Homeworks will count for 10% of the total grade. Outlines of solutions will be distributed. Your tutor (teaching fellow), will be available to help you with the exercises. You will have a chance to discuss the weekly exercises with him and get prepared to solve them. Your tutor will hold a weekly review session right after class (starting on the second week of classes). The midterm (likely date March 30, 2015) and the final exam (May 11, 2015) will consist mainly of exercises of the same sort as the ones in the homeworks. The midterm and the final will count for 45% of the final grade each. The final exam will not be cumulative.
Outline and Reading Assignments
We will rely mainly on the microeconomics notes http://www.stern.nyu.edu/networks/micnotes/micnotes.pdf. The same materials are covered by Pindyck and Rubinfeld as outlined below, and correspond roughly to weeks.
1. Consumption Choices of the Individual. Chapter 3.
2. Individual and Market Demand. Chapter 4, except 139-143. Chapter 2, pp. 33-63.
3. Choice under Uncertainty. Chapter 5.
4. Technology of Production. Chapter 6. Production Costs. Chapter 7.
5. Profit Maximization. Competitive Market Supply. Chapter 8.
6. Supply and Demand in Competitive Markets. Chapter 9.
7. Monopoly. Chapter 10, except pp. 385-388. Price Discrimination. Chapter 11. Midterm Exam.
8. Game Theory. Strategic Choice. Chapter 13. Oligopoly. Chapter 12, pp. 451-476. Monopolistic competition. Chapter 12, pp. 451-456.
9. Pricing of Factors of Production. Labor Supply. Chapter 14. Pricing of Capital. Evaluation of Projects. Chapter 15. EU debt crisis.
10. Economic Efficiency. Chapter 16.
11. Failures of Competitive Markets. Asymmetric Information. Chapter 17.
12. Positive externalities in high technology markets. Networks.
Classroom Behavior
Class presence is required. Please come to class on time! If you come late, enter very quietly. Bring with you and display the large name tags provided by the School.