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Economics 302: Microeconomic Analysis  
Winter 2005

 

Lectures:  Monday, Wednesday, Friday, 11.00 – 11.50, Haag Hall 312

 

Required Texts:   B. C. Eaton, D. F. Eaton, and D. W. Allen, Microeconomics, 6th ed.

                          F. S. Lee, Microeconomic Analysis:  Lecture Notes

Assessment:    

  • In-Class Exam I covers sections I & II, February 7, 2004

  • In-Class Exam II covers section III March 4, 2005

  • Final Exam covers section IV & V (May 3, 2005 from 1.00 – 3.00pm)

  • Each in-class exam is worth 25% and the final exam is worth 50% of your final grade. 
    The exams will consist of problems like those found in the problem sets. 
                          

                        The grading scale for the course is the following:

                        A  100% to 93%           C      76% to 73%

                        A-  92% to 90%            C-    72% to 70%

                        B+  89% to 87%            D+  69% to 67%

                        B    86% to 83%            D     66% to 60%

                        B-   82% to 80%            F     anything less than 60%

                        C+  79% to 77%                 

Extra Credit:     There are two possible extra credit assignments, each worth 10% of extra credit. 

Each assignment is a set essay of 1,000 – 1,500 words, typed.  They are due on or before April 27, 2005.

 

Problem Sets:   There are problem sets at the end of each part in Lee’s Microeconomic Analysis:  Lecture Notes. 
                        They can be turned in for 5% of extra credit.

 

Course Description:   

The course covers neoclassical microeconomic theory, including consumer behavior and demand, production and costs, perfect and imperfect competition, and oligopoly.  The course will also cover the heterodox approach to microeconomics.  The material in the course will be presented critically in that theoretical problems with demand and supply curves, equilibrium, and marginalist pricing  will be pointed out and their implications discussed.  The student will be expected to critically evaluate both the neoclassical and heterodox approach to microeconomics.  The course is concerned with theory—hence abstract reasoning and the use of economic models and mathematics will be stressed.  The level of mathematics utilized in the course will be equivalent to that covered in Math 110 and Math 160.  Math 202 and/or 210 are recommended.

Note to students: # means the link to the article through UMKC subscribing   database. Students can download articles by way of UMKC computers.  

LECTURE AND READING OUTLINE

 

 I.   Introducing Neoclassical and Heterodox Microeconomics

      A.   Economics and the Economy

  1. Lee, Part I, ch. 1.

      B.   Neoclassical and Heterodox Microeconomics

  1. Eaton, Eaton, and Allen, ch. 1.

  2. Lee, Part I, ch. 2.

      C.   Neoclassical and Heterodox Methodology

  1. Eaton, Eaton, and Allen, ch. 1.

  2. Lee, Part I, ch. 3.

  3. Wilber, C. K. and Harrison, R. S.  1978.  “The Methodological Basis of Institutional Economics:  Pattern Model, Storytelling, and Holism.”  Journal of Economic Issues 12 (March):  61 – 89.  Optional #

 

II.  Consumer Behavior and the Demand Curve

       A.   Modern Utility and Preference Theory

  1. Eaton, Eaton, and Allen, ch. 2 and ch. 3, sections 3.1-3.4.

  2. Lee, Part II, ch. 1.

  3. Hicks, J. R.  1946.  Value and Capital.  Oxford:  Clarendon Press, pp. 11 - 25.  Optional

       B. Consumer and Market Demand Theory

  1. Eaton, Eaton, and Allen, ch. 3, sections 3.5-3.9 and ch. 4, sections 4.1-4.3.

  2. Lee, Part II, ch. 2.

  3. Hicks, J. R.  1946.  Value and Capital.  Oxford:  Clarendon Press, pp. 26 – 52.  Optional

       C.   The Heterodox Approach to Consumer Demand

  1. Lee, Part II, ch. 3.

  2. Hamilton, D. B.  1987.  “Institutional Economics and Consumption.”  Journal of Economic Issues 21 (December): 1531–1554.  Optional#

  3. Lavoie, M.  1994.  “A Post Keynesian Approach to Consumer Choice.”  Journal of Post Keynesian Economics 16 (Summer): 539 – 562.  Optional#

 

 III. The Business Enterprise: Production and Costs

      A.   Neoclassical and Heterodox View of the Business Enterprise

  1. Eaton, Eaton, and Allen, ch. 19.

  2. Lee, Part III, ch. 1.

  3. Coase, R.  1937.  “The Nature of the Firm.”  Economica 4 (November):  386 – 405. Optional#

      B.   Neoclassical Theory of Production 

  1. Eaton, Eaton, and Allen, ch. 6, sections 6.1 and 6.4 and ch. 7, sections 7.1 – 7.3.

  2. Lee, Part III, ch. 2.

      C.   Neoclassical Theory of Costs

  1. Eaton, Eaton, and Allen, ch. 6, sections 6.3 and 6.5 and ch. 7, sections 7.4 – 7.9.

  2. Lee, Part III, ch. 3.

  3. Eiteman, W. J. and Guthrie, G. E.  1952.  “The Shape of the Average Cost Curve.”  The American Economic Review 42 (December):  832 – 838.#

  4. Yordon, W. J.  1970.  “The Short-Run Cost Function in Manufacturing.”  Quarterly Review of Economics and Statistics 10:  55 – 67.  Optional

       D.   The Heterodox Approach to Production and Costs

  1. Lee, Part III, ch. 4.

  2. Dean, J.  1976.  Statistical Cost Estimation.  Bloomington:  Indiana University Press, pp. 3 – 35.  Optional

 

IV.  Perfect Competition, Supply Curve, and Distribution

      A.   Supply Curve and Perfect Competition

  1. Eaton, Eaton, and Allen, ch. 8 and ch. 9, section 9.1.

  2. Lee, Part IV, ch. 1.

  3. Brumberg, R. E.  1953.  "Ceteris Paribus for Supply Curves."  The Economic Journal 63 (June):  462 - 467.#

  4. Sraffa, P.  1926.  “The Laws of Returns Under Competitive Conditions.”  The Economic Journal 36 (December):  535 – 550.#

  5. Jaffee, W.  1967.  “Walras’ Theory of Tatonnement:  A Critique of Recent Intrepretations.”  Journal of Political Economy 75:  1 – 19. Optional#

  6. Walker, D. A.  1973.  “Edgeworth’s Theory of Recontracts.”  The Economic Journal 83:  138 – 149.  Optional#

       B.   Perfect Competition and Distribution

  1. Eaton, Eaton, and Allen, ch. 11, sections 11.1 – 11.7.

  2. Lee, Part IV, ch. 2.

 

V.   Business Enterprise, Market Structure, and Prices

      A.   Monopoly

  1. Eaton, Eaton, and Allen, ch. 10, section 10.1 – 10.5. 

  2. Lee, Part V, ch. 1.

  3. Lerner, A. P.  1934.  “The Concept of Monopoly and the Measurement of Monopoly Power.”  Review of Economic Studies 1 (June):  157 –175.  Optional #

      B.   Monopolistic Competition

  1. Lee, Part V, ch. 2.

  2. Robinson, J.  1932.  “Imperfect Competition and Falling Supply Price.”   The Economic Journal 42 (December):  544 – 554.#

  3. Robinson, J.  1953.  “’Imperfect Competition’ Revisited.”  The Economic Journal 63 (September):  579 – 593.#

  4. Harrod, R. F.  1934.  “Doctrines of Imperfect Competition.”  Quarterly Journal of Economics 48.3 (May):  442 – 470. #

  5. Reinwald, T. P.  1977.  “The Gensis of Chamberlinian Monopolistic Competition Theory.”  History of Political Economy 9:  522 – 534.  Optional

      C.   Oligopoly

  1. Eaton, Eaton, and Allen, ch. 16.

  2. Lee, Part V, ch. 3.

  3. Hall, R. L. and Hitch, C. J.  1939.  "Price Theory and Business Behaviour."  Oxford Economic Papers 2 (May):  12 - 45. Optional#

  4. Sweezy, P. M.  1939.  “Demand under Conditions of Oligopoly.”  Journal of Political Economy 47 (August):  568 – 573. #

  5. Markham, J. W.  1951.  “The Nature and Significance of Price Leadership.”  The American Economic Review 41 (December): 891 – 905.#

  6. Machlup. F.  1967.  “Theories of the Firm:  Marginalist, Behavioral, Managerial.”  The American Economic Review 57 (March):  1 – 33.  Optional#

  7. Scitovsky, T.  1943.  “A Note on Profit Maximization and its Implications.”  Review of Economic Studies 11 (Winter):  57 – 60. Optional #

      D.   The Heterodox Approach to Pricing

  1. Lee, Part V, ch. 4.

  2. Lanzillotti, R. F.  1958.  “Pricing Objectives in Large Companies.”  American Economic Review 48 (December):  921 – 940.#

  3. Blinder, A. S.  1991.  “Why are Prices Sticky?”  American Economic Review 81 (May):  89 – 96.#

  4. Hall, S., Walsh, M. and Yates, A.  2000.  “Are UK Companies’ Prices Sticky?”  Oxford Economic Papers 52.3 (July): 425 – 446.  Optional

     E.   The Heterodox Approach to Market Governance

  1. Lee, Part V, ch. 5.

  2. Robinson, R.  1961.  “The Economics of Disequilibrium Price,” Quarterly Journal of Economics 75 (May):  199 – 233.#

  3. Howe, M.  1972-73.  “A Study of Trade Association Price Fixing,”  Journal of Industrial Economics 21:  236 – 256.  Optional #

 

All of the articles for required readings can be found on JSTOR that can be found at:  http://www/jstor.org/cgi-bin/jstor/listjournal.  Once you have entered it, click on economics to get the appropriate journal and article.  JSTOR can be accessed from any place on campus.  The optional readings can all be found in the Library.

EXTRA CREDIT ASSIGNMENTS

 

1.   Set Essay Question:  What is the Marginalist Controversy about?

Read the following articles (as well as any others you find useful) and answer the above essay question.  Your answer must be 1,000 - 1,500 words and typed.  If quotes are used then they must referenced appropriately.

 

2.   Set Essay Question:  What is Piero Sraffa’s criticism of the neoclassical supply curve under long period competitive conditions?

Read the following articles (as well as any others you find useful) and answer the above essay question.  Your answer must be 1,000 – 1,500 words and typed.  If quotes are used then they must referenced appropriately.

  •  Sraffa, P.  1926.  “The Laws of Returns Under Competitive Conditions.”  The Economic Journal 36 (December):  535 – 550.#

  •  Panico, C.  1991.  “Some Notes on Marshallian Supply Functions.”  The Economic Journal 101 (May):  557 – 569.#

  •  Prendergast, R.  1992.  “Increasing Returns and Competitive Equilibrium—the content and development of Marshall’s theory.”   Cambridge Journal of Economics 16 (December):  447 – 462.

  •  Maneschi, A.  1986.  “A Comparative Evaluation of Sraffa’s `The Laws of Returns under Competitive Conditions,’ and its Italian Precursor.”  Cambridge Journal of Economics 10 (March):  1 – 12.

  •  Mongiovi, G.  1996.  “Sraffa’s Critique of Marshall:  a reassessment.”  Cambridge Journal of Economics 20 (March):  207 – 224.

IMPORTANT NOTES

 

1.   Policy for Making Up In-Class Exams:  Make ups for in-class exams will be given only to those individuals who have a valid excuse--that is one that I will accept.

2.   Final Exam:  Students who miss the final exam due to illness or to a University-sanctioned event must call me at my office prior to the exam--otherwise, the exam score will be a zero.  If you are too sick to take the final exam, I require a copy of the receipt from your doctor's visit (dated the day of the final exam).  If you miss the final exam, I reserve the right to increase the level of difficulty of the make-up final exam, given that you would have had extra time to study for the exam.  Thus, I do not recommend missing the final exam.

 3.   Incompletes:  An incomplete can only be obtained if the student has attended the lectures and has taken all but the final exam.

 4.   Policy for Dropping the Course:  See UMKC Bulletin.

 5.   Economics is a lot like math--today's topic builds on yesterday's topic.  Please ask questions as they arise--if you are confused about today's topic, chances are you will be even more confused about tomorrow's topic.  Get your questions answered on a weekly basis.  Do not let your confusion build until the day before the exam.

 
 

Department of Economics, 211 Haag Hall, University of Missouri-Kansas City 5100 Rockhill Road, Kansas City, Missouri 64110 U.S.A
 Phone: (816) 235-1314 Fax: (816) 235-2834, E-mail: economics@umkc.edu