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2014/2015  BA-BHAAI1023U  Principles of microeconomics – a business perspective

English Title
Principles of microeconomics – a business perspective

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Course period Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor - Dr. Brad Hobbs, Florida Gulf Coast University
    Patricia Plackett - Department of Operations Management (OM)
Main academic disciplines
  • Economics, macro economics and managerial economics
Last updated on 12-02-2014
Learning objectives
At the end of the course the student should be able to:
  • Fully explain the basic concepts, models, theories and tools used in the principles of microeconomics and use them to analyze economic decisions by individuals and by firms.
  • Identify the foundational assumptions used in their own economic analysis and in the economics analysis of others.
  • Predict the effects of supply and demand changes on the direction of market price and quantity. Use the tools of consumer and producer surplus to identify the gains form exchange and the gains from the ability to manipulate price or quantity (e.g., the effects of barriers to entry, market power, monopolization, price controls, taxes, subsidies, and quotas.)
  • Articulate and explain the systematic nature of economic analysis and address likely secondary effects of particular policies and institutional frameworks.
  • Analyze economic outcomes in terms of their contribution to recognition of scarcity and efficiency.
  • Communicate, discuss, and present sound logical conclusions from their analysis of economic incentives.
Course prerequisites
It is recommended that students have successfully completed a course in basic algebra. No other prerequisites are required.
Prerequisites for registering for the exam
Number of mandatory activities: 1
Compulsory assignments (assessed approved/not approved)
Mandatory Mid-term Assignment: The assignment will be an examination similar to the Final Examination. The format will be a take-home assignment based on questions drawn from the test bank that accompanies the textbook. These questions require analytical thinking and the use of models.
4 hour written exam:
Exam ECTS 7,5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer Term
Aids allowed to bring to the exam Limited aids, see the list below and the exam plan/guidelines for further information:
  • Allowed calculators
  • Allowed dictionaries
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content and structure

Microeconomic theory is the primary foundation for all other neoclassical economic theory including most of macroeconomics. Microeconomic theory principals provide insights into the behavior of both individual and collective actors (firms) in markets. This course is the introductory course in any economics curriculum. It will provide you with an insight into how economists analyze practical problems which present themselves to policy makers in the real world. The concepts are theoretical, but we will develop a "set of tools for analysis" that you will be expected to apply. The materials in this course are used extensively in economics, financial economics, and business.
Economics is ultimately about problem-solving through critical thinking. We are asked to provide logical, well-argued, defensible answers to complex questions. To do this we must strip problems down to their essential assumptions, arguments, and then critically analyze them. We do not expect you to master problem-solving or critical thinking in this one course. We do expect that you will greatly increase your proficiency at these skills.
We emphasize applications because economic conditions and "answers" are constantly changing. What is transferable, fundamental, and constant is the method of economic analysis that we will develop. The ability to apply these tools to varying situations and to make the results clear to others is what gives value to economic analysis.
The primary focus of this course is on the development of analytical prowess or "critical thinking." The discipline of economics originated within philosophy, rhetoric, logic and mathematics and transitioned through political economy in the 19th century into modern economics. As a result, economics is a very broad social science drawing upon the interconnectedness of human action. We model human behavior within particular institutional arrangements. This course focuses on the behaviors of individuals, firms, and institutional actors. Students should be able to successfully apply time-tested, empirical models of economic behavior. 
This course has a Preliminary Assignment and a Mandatory Mid-term Assignment. For the Preliminary Assignment students will read specified pages from the textbook and a provocative article [Radford, R.A. 1945. “The Economic Organisation of a P.O.W. Camp,” Economica, 12(48): 189-201.] in order to answer several questions on each and prepare a short report for Class 3. The Mandatory Mid-term Assignment will be a take-home assignment covering course materials up to that point and will be similar to the final examination. Its format will be multiple choice and short answer. It will be posted on LEARN a week prior to its due date - the beginning of Class Meeting 5. This Mid-term Assignment is best viewed as a learning opportunity for students and they are encouraged to work with a classmate or a small team to provide the opportunity to learn from each other. The questions will be drawn from the test bank that is a supplement to the textbook.

Class Schedule

Class Topic
Class 1 Chapter 1 - The Big Ideas
Chapter 2 - The Power of Trade and Comparative Advantage
Radford, R.A. 1945. “The Economic Organisation of a P.O.W. Camp.” Economica, 12(48): 189-201.
Class 2 Chapter 3 - Supply and Demand
Chapter 4 - Equilibrium: How Supply and Demand Determine Prices
Chapter 5 - Elasticity and Its Applications
Class 3 Preliminary Assignment due
Chapter 6 - Taxes and Subsidies
Chapter 7 - The Price System: Signals, Speculation, and Prediction
Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic
Review, 35(4): 519–30.
Class 4 Chapter 8 - Price Ceilings and Floors
Chapter 9 - International Trade
Class 5 Mandatory Mid-term Assignment
Chapter 10 - Externalities: When Prices Send the Wrong Signals
Chapter 11 - Costs and Profit Maximization Under Competition
Alchian, Armen A., and Harold Demsetz. 1972. “Production, Information Costs, and Economic Organization.” American Economic Review, 62(5): 777–95
Class 6 Chapter 12 - Competition and the Invisible Hand
Chapter 13 - Monopoly
Class 7 Chapter 14 - Price Discrimination
Coase, R.A. 1974. “The Nature of the Firm.”Economica, 4(16): 386-405.
American Economic Review, 64(3): 291–303.
Class 8 Chapter 15 - Cartels, Oligopolies, and Monopolistic Competition
Chapter 16 - Competing for Monopoly: The Economics of Network Goods
Class 9 Chapter 17 - Labor Markets
Chapter 18 - Public Goods and the Tragedy of the Commons
Class 10 Chapter 19 - Political Economy and Public Choice
Chapter 20 - Economics, Ethics, and Public Policy
Class 11 Comprehensive Review
Teaching methods
The course is based upon the Socratic Method. Though lecture-based, students are expected to contribute to classes. Periodically, I will also use in-class group work focused on a specific short project such an analyzing a case or article. These sessions are designed to encourage critical thinking and to develop analytical skills. Students will be required to prepare class presentations of the assigned articles in teams of three or four. All teams will prepare for the presentation, but only one team will be chosen at random to present the article to the class. The team will have 30 minutes to present the paper to the class. Presentations should include PowerPoint slides.
Further Information
Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 3 in order to 'jump-start' the learning process.
Expected literature

Modern Principles: Microeconomics,2nd Edition, 2012.
Authors: Tyler Cowen and Alex Tabarrok
Publisher: Worth Publishers
ISBN-13: 978-1-4292-3998-1 
Required readings:
Alchian, Armen A., and Harold Demsetz. 1972. “Production, Information Costs,
and Economic Organization.” American Economic Review, 62(5): 777–95
Coase, R.A.1937. “The Nature of the Firm.”Economica, 4(16): 386-405.
Hayek, F. A.1945. “The Use of Knowledge in Society.” American Economic
Review,35(4): 519–30.

Radford, R.A. 1945. “The Economic Organisation of a P.O.W. Camp.” Economica, 12(48): 189-201.

Last updated on 12-02-2014