201-2008-syllabus[1] - 1 Syllabus Introduction to...

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Syllabus Introduction to Microeconomics Ec 201 Spring, 2008 Michigan State University L. Martin This course is a basic introduction to principles of microeconomics, and it comprises six parts. An introductory part sets out the basic concepts and tools of economics, including scarcity, opportunity sets, opportunity cost, and rational choice. Next, we move on to the study of property rights and markets. We examine the gains from trade, international trade policy, the efficiency of markets, and problems with government interventions. In this part we introduce the concept of general equilibrium and use it to gain an understanding of the workings of stock markets. The third part sets out a model of household decision-making that gives us a better understanding of the demand for products and the supply of labor and savings. We use this model to discuss the possibilities of improving public policy, specifically, tax reform, Social Security and Welfare reform. Part IV introduces the idea of market failure, where private markets do a poor job when left alone. We explore some environmental problems and learn about some relatively simple solutions offered by economists. We look at pollution, resource exhaustion, global environmental problems, congestion and the problem of so-called open access resources, sometimes referred to as the tragedy of the commons. Market structure, which is the organization of one side of the market, forms the fifth part. We begin with the competitive model, where private markets operate efficiently. Although it is an idealization, this model is essential for understanding broadly defined issues, such as the pattern of trade, the distribution of income, tax incidence, stock markets and growth. It also provides the benchmark for evaluating the more common cases of imperfect competition.
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