About this course: All goods and services are subject to scarcity at some level. Scarcity means that society must develop some allocation mechanism – rules to determine who gets what. Over recorded history, these allocation rules were usually command based – the king or the emperor would decide. In contemporary times, most countries have turned to market based allocation systems. In markets, prices act as rationing devices, encouraging or discouraging production and encouraging or discouraging consumption in such a way as to find an equilibrium allocation of resources. We will construct demand curves to capture consumer behavior and supply curves to capture producer behavior. The resulting equilibrium price “rations” the scarce commodity. Markets are frequent targets of government intervention. This intervention can be direct control of prices or it could be indirect price pressure through the imposition of taxes or subsidies. Both forms of intervention are impacted by elasticity of demand. After this course, you will be able to: • Describe consumer behavior as captured by the demand curve. • Describe producer behavior as captured by the supply curve. • Explain equilibrium in a market. • Explain the impact of taxes and price controls on market equilibrium. • Explain elasticity of demand. • Describe cost theory and how firms optimize given the constraints of their own costs and an exogenously given price. This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.
Created by: University of Illinois at Urbana-Champaign
Taught by: Larry DeBrock, Dean Emeritus and Professor of Finance and Professor of Economics
University of Illinois, Urbana-Champaign College of Business Department of Business Administration
| Basic Info | Course 1 of 7 in the Managerial Economics and Business Analysis Specialization |
| Commitment | 4 weeks, 3-5 hours/week |
| Language | English |
| How To Pass | Pass all graded assignments to complete the course. |
| User Ratings |
Complete this course to work toward:
Managerial Economics and Business Analysis Specialization
This course is part of the 7-course Managerial Economics and Business Analysis Specialization from University of Illinois at Urbana-Champaign
Master of Business Administration (iMBA)
This course is part of the fully-online 18 courses plus three capstone projects degree program
Syllabus
WEEK 1
Course Orientation
You will become familiar with the course, your classmates, and our learning environment. The orientation will also help you obtain the technical skills required for the course.
1 video, 5 readings, 1 practice quiz
- Video: Welcome to Firm Level Economics: Consumer and Producer Behavior!
- Reading: Syllabus
- Reading: About the Discussion Forums
- Reading: Glossary
- Practice Quiz: Orientation Quiz
- Reading: Updating Your Profile
- Discussion Prompt: Getting to Know Your Classmates
- Reading: Social Media
Module 1: Scarcity, Allocation, and Markets
The fundamental problem of scarcity challenges us to think about an allocation mechanism to determine what is produced and who consumes it. We will discuss scarcity and allocation mechanisms. In this course, we will focus on markets and prices as the solution to this resource allocation problem.
7 videos, 3 readings, 2 practice quizzes
- Reading: Module 1 Overview
- Reading: Module 1 Readings
- Video: 1-1.1. Scarcity and its Implications
- Video: 1-1.2. Opportunity Costs
- Video: 1-1.3. Demand Curves
- Practice Quiz: Lesson 1-1 Practice Quiz
- Video: 1-2.1. More on the Demand Curve
- Video: 1-2.2. Movements Along vs. Shifts in the Demand Curve
- Video: 1-2.3. Constructing the Supply Curve
- Video: 1-2.4. Movements to New Equilibrium
- Practice Quiz: Lesson 1-2 Practice Quiz
- Reading: Module 1 Peer Review Explanation
Graded: Module 1 Peer Review Assignment
Graded: Module 1 Quiz
WEEK 2
Module 2: Government Intervention in Markets
Markets are frequent targets of governments. This module will introduce government policy intervention into the market. This intervention can be direct control of prices or it could be indirect price pressure through the imposition of taxes or subsidies. Both forms of intervention are impacted by elasticity.
10 videos, 3 readings, 3 practice quizzes
- Reading: Module 2 Overview
- Reading: Module 2 Readings
- Video: 2-1.1. Setting Dairy Prices
- Video: 2-1.2. Government Intervention
- Video: 2-1.3. Direct Price Controls: Price Floors
- Video: 2-1.4. Direct Price Controls: Price Ceilings
- Practice Quiz: Lesson 2-1 Practice Quiz
- Video: 2-2.1. The Price You Pay at the Pump
- Video: 2-2.2. Excise Taxes
- Video: 2-2.3. The Incidence of Taxation
- Practice Quiz: Lesson 2-2 Practice Quiz
- Video: 2-3.1. Higher Tuition Yet More College Applications
- Video: 2-3.2. Responsiveness of Quantity Demanded and Elasticity
- Video: 2-3.3. Elasticity Along a Linear Demand
- Practice Quiz: Lesson 2-3 Practice Quiz
- Reading: Module 2 Peer Review Explanation
Graded: Module 2 Peer Review Assignment
Graded: Module 2 Quiz
WEEK 3
Module 3: Firms, Production, and Costs
This module will introduce cost theory. Firms are interested in producing profits, which are the residuals when costs are subtracted from revenue. Earlier modules constructed demand curves. They give us an idea of how many units of product we can sell at different prices; this would be firm revenue. We will work to understand inputs, production, and costs.
9 videos, 3 readings, 2 practice quizzes
- Reading: Module 3 Overview
- Reading: Module 3 Readings
- Video: 3-1.1. An Economist's Production Function
- Video: 3-1.2. Types of Firms
- Video: 3-1.3. Behavior Rule
- Video: 3-1.4. Behavior Rule – Part 2
- Video: 3-1.5. Law of Diminishing Marginal Returns
- Practice Quiz: Lesson 3-1 Practice Quiz
- Video: 3-2.1. Cost Curves
- Video: 3-2.2. Derive Short Run Total Cost Family of Curves
- Video: 3-2.3. Derive Short Run Average Cost Family of Curves
- Video: 3-2.4. Derive and Depict Short Run Marginal Costs
- Practice Quiz: Lesson 3-2 Practice Quiz
- Reading: Module 3 Peer Review Explanation
Graded: Module 3 Peer Review Assignment
Graded: Module 3 Quiz
WEEK 4
Module 4: Firm Behavior
The firm goal of profit maximization requires an understanding of costs and revenues. In this module, we will see how a firm optimally responds to a given market price by finding the profit maximizing output. The level of profits at this maximum profit point will help determine short run equilibrium.
7 videos, 3 readings, 2 practice quizzes
- Reading: Module 4 Overview
- Reading: Module 4 Readings
- Video: 4-1.1. Firm Optimization Behavior
- Video: 4-1.2. Maximizing Profit
- Video: 4-1.3 Maximizing Profit Graphically
- Practice Quiz: Lesson 4-1 Practice Quiz
- Video: 4-2.1. Showing Points on a Graph
- Video: 4-2.2. Profits After Total Cost Changes
- Video: 4-2.3. Short Run Shutdown Decisions
- Video: 4-2.4. Graphing Shutdown Conditions
- Practice Quiz: Lesson 4-2 Practice Quiz
- Reading: Module 4 Peer Review Explanation
Graded: Module 4 Peer Review Assignment
Graded: Module 4 Quiz
FAQs
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Pricing
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| Access to course materials | Available |
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Ratings and Reviews
Great class and great Professor!
Great Course
A good introduction for many basic concepts on demand and supply. Nice teacher.
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I took Micro Econ over 20 years ago. It was hard and boring. I barely passed the class. I just took Larry DeBrock's class and fell in love with the area. I had no idea that micro economics could be so interesting! It also helps that Larry DeBrock is an award winning lecturer at University of Illinois and past Dean of the ?business School. He takes the topic and breaks it down into easy-to-understand basics. I really enjoyed this class.