We make economics decisions every day: what to buy, whether to work or play, what to study. We respond to markets all the time: prices influence our decisions, markets signal where to put effort, they direct firms to produce certain goods over others. Economics is all around us.
This course is a rigorous introduction to the microeconomic theory of markets: why we have them, how they work, what they accomplish. We will explore what outcomes they generate when they work well and what happens when they do not. We will learn why governments are important and when regulation and intervention is necessary. Examples are taken from everyday life, from goods and services that we all purchase and use. We will apply the theory to current events and policy debates through weekly exercises. These will empower you to be an educated, critical thinker who can understand, analyze and evaluate market outcomes.
Week One: Where do markets come from? We will start with understanding the constraint of scarcity that we face and the concept of opportunity cost that reflects the true cost of any decision we make.
Week Two: We will discuss how gains from specialization according to our comparative advantage allows us to use our resources efficiently. We will apply these concepts to a simple model of trade.
Week Three: We will introduce the
basic model of Supply & Demand. This will allow you to communicate with other economists
and finally understand those business pages and market updates.
Week Four: There is a lot of terminology this week. We will introduce of the concept of elasticity to discuss effects of price and income changes on market outcomes.Then we will explore the great accomplishment of markets: maximizing the size of the pie or the total benefit to society.
Week Five: What
happens when government intervenes in the market? We will analyze
price floors and ceilings, taxes and subsidies and learn how the best intentions sometimes lead to very unfortunate results.
Week Six: Introduction to firms’ decisions: understanding firms’ cost curves and the goal of profit maximization.
Week Seven: The Perfectly Competitive Market: what is it? does it exist? why is it a crucial benchmark?
Week Eight: Monopolies of various types: one price monopoly, natural monopoly, price discrimination and monopolistic competition. What market outcomes do we get in each case? How should government intervene in such cases?
Week Nine: Understanding the market for labor. Defining employment and unemployment. We will learn about the minimum wage and the concerns economist have with setting it too high. We will also learn of cases were minimum wage makes sense
Week Ten: When
markets fail: externalities and public good. We will cover the classical approach to these topics as well as introduce a few simple concepts from Game Theory to understand the Tragedy of the Commons.
Week Eleven: Poverty and inequality: how do we measure these? How do we balance our concern about poverty and inequality while allowing markets to work for the benefit of society at large?
Economics requires thinking in three “languages”: words, graph and mathematical notation. All concepts are introduced slowly and gradually, but comfort with thinking analytically will be helpful.
There are many wonderful introductory texts to Microeconomics that you could use to supplement the Coursera material. At the University of Pennsylvania I have been using Michael Parkin’s “ Principles of Microeconomics” as I find it especially rigorous and accurate. You are welcome to use any basic text or none at all.
I do recommend reading economic newspapers and popular books on the topic. My favorite is The Economist, especially the Business and the Finance and Economics sections. This course will help your fluency in understanding such material.
The class will consist of lecture
videos which are between 8 and 15 minutes long. Each video will
include integrated questions to help you assess your
There are weekly assignments. Each week there will be a 10 question multiple choice assessment. We will also have six extended assignments in the course that require applying the model, our graphs and numerical examples to analyze an example based on recent news article. Three of these assignments will be auto graded and three will be peer assessments.
There is a final exam. You will have two weeks to complete it.
Yes. Students who successfully complete the class will receive a Statement of Accomplishment signed by the instructor.