Donald A. Coffin

Introduction to Microeconomics
Fall, 2000
E103, Section G735
11:30 AM - 12:45 PM, TTh

Contact Information:
Donald A. Coffin
Office: 402 Lindenwood Hall
Phone:   219-980-6913
FAX:      219-980-6916
E-Mail:  don@iunbus1.iun.indiana.edu
Office     1:30 - 4:30 TTh
 Hours:   1:00 - 4:00 W
                and by appointment

Text:        Roy J. Ruffin and Paul R. Gregory, Principles of Microeconomics, Sixth Edition 
                (Addison-Wesley: 1997).

                Jeffrey Parker, Study Guide to Accompany Principles of Economics, Sixth 
                Edition (Addison-Wesley: 1997).

Course:    Microeconomics deals with the decisions made by buyers and sellers in markets.  
                We all have experience as buyers, which we use every time we go to a store or 
                make a purchase.  And we all have experience as sellers--after all, when we go to 
                work, we are selling our time, skills, and effort to our employers.  We can use this 
                experience as a basis for developing an understanding of the underlying principles 
                at work in market economies.

                One of those principles is that when buyers and sellers voluntarily agree to a 
                purchase (sale), they are both made better off--the buyer gets something (the 
                product or service purchased) s/he values more than the money used to make the 
                purchase and the seller gets something (the purchase price) s/he values more than 
                the product or service sold.

                Another principle is that buyers and sellers evaluate their alternatives in making 
                decisions.  In economics, we refer to these alternatives as opportunity costs and 
                frequently use relative prices to measure them.  (The relative price of something 
                is the money price of that product or service divided by the money price of an 
                alternative product or service.  For example, if the average hardcover novel sells 
                for $25 and the average mass-market paperback novel sells for $6, the price of a 
                hardcover novel relative to the price of a paperback novel is $25/$6, or 4.167 
                paperback novels per hardcover novel.)  In evaluating these alternatives, buyers 
                and sellers try to make themselves as well off as they can--that is, they try to 
                choose the alternative that they believe is best for them.

                What we do in microeconomics is to develop a framework within which we can 
                analyze the decisions made by buyers and sellers.  Using this framework, we can 
                then try to understand and explain these decisions and, under some 
                circumstances, try to predict how buyers and sellers will react to changes in the 
                circumstances that affect their decisions.  Here's an example:  Suppose the State 
                of Indiana temporarily reduces the tax on gasoline by $0.10 per gallon.  Would we 
                expect the price of gasoline to fall by $0.10 per gallon, more than $0.10 per gallon, 
                or less than $0.10 per gallon?  Here's another:  Suppose the price of unskilled 
                labor rises (because, for example, Congress enacts an increase in the minimum 
                wage).  What would we expect to happen to employment of unskilled labor AND 
                to employment of more-skilled labor?  And another:  Suppose a city enacts rent 
                controls--it places (upper) limits on apartment rents.  What would we expect to 
                happen to the amount of rental housing available?  What would we expect to 
                happen to the likelihood that people in this city will be homeowners instead of 
                apartment renters?

                The framework we will develop is the theory of demand, the theory of supply, and 
                the theory of markets.  Demand deals with the behavior of buyers--what affects 
                their decisions, and why, and to what extent?  How will buyer behavior change 
                when something important changes?  How does behavior in one market affect 
                behavior in other markets?  Supply deals with the behavior of sellers, for which 
                we can ask similar questions.  The theory of markets puts demand and supply 
                together and helps us see how the behavior of buyers and the behavior of sellers 
                interact.  It is in the theory of markets that we will see how prices--and outputs of 
                goods and services--can be determined.

                By the end of this course, you should be able to analyze changes in demand and in 
                supply and determine the effects of those changes on the prices and outputs of 
                goods and services in the markets affected.

Grade:    Your grade will be determined by  your performance on a set of three tests 
                and on a set of 11 homework assignments.

                1.     Tests.  I will give three tests during the semester.  The schedule for these 
                        tests is as follows:

                                Test 1:        October 3
                                Test 2:        October 31
                                Test 3:         December 14

                        These tests will be essay/problem tests and will cover the new material.  
                        However, since the material in this course builds on what has gone before, 
                        the tests are implicitly comprehensive.  Each test will be worth 100 
                        points.  There will be 300 possible test points.

                        In general, I prefer not to give make-up tests.  However, I recognize that 
                        emergencies may occur, and I will give make-up tests if you follow this 
                        procedure:

                                A.    Notify me as soon as you know you will miss the test.  In general, 
                                        this will be before the test.
                                B.    Have an acceptable reason for missing the test.  I am the judge of 
                                        what constitutes an acceptable reason.  I may ask for 
                                        documentation.
                                C.    Schedule a make-up test as soon as possible following the original 
                                        test date.  Within a week is best.

                2. Homework Assignments.  I will distribute 11 homework assignments during the 
                    semester.  Each assignment will deal with the material covered during the 
                    preceding week.  (These assignments will also be available through 
                    OnCourse.)  Assignments will be due at the beginning of the next class.  In 
                    preparing your answer to be turned in, treat it as you would a report to your 
                    supervisor in a work situation--it should be neatly prepared (legible, no 
                    crossing-out, no torn paper, etc.); you should make sure that the process you 
                    used to answer the questions in the assignment is clear (e.g., show your work); 
                    you should use complete sentences and avoid grammatical errors and 
                    misspelled words in responding to the issues.  I will not accept assignments 
                    turned in late.  Each assignment is worth a maximum of 25 points.  I will 
                    distribute 11 assignments and I will count your 8 best answers; there will be a 
                    total of 200 possible Problem points.  (Problems will be accessible through 
                    OnCourse and may be downloaded from the OnCourse site.)

                This yields a total of 500 possible points.  I expect the following grade scale
                to apply:

                    A: 85% + (425 - 500 points)
                    B: 75% - <85% (375 - 424 points)
                    C: 60% - <75% (300 - 374 points)
                    D: 50% - <60% (250 - 299 points)

                I do not, in general, give "plus" or "minus" grades.  I do not give "extra credit"
                assignments.

Division of Business and Economics Course Load Policy:
The following policy has been adopted by the Faculty in the Division of Business and Economics:

Students should expect to devote at least nine hours per week to each three-semester-hour course--generally three hours in class and six hours for homework, term papers, and other assignments. Some courses require more hours, and in some cases, the effort may be concentrated during certain portions of the semester.

Faculty will not consider the number of hours that a student works--either on a full-time or part-time basis--in developing curricula. Faculty will not accept outside employment as an excuse for inadequate performance or for late or non-completion of assignments. Students who feel that they must devote many hours to outside employment should take fewer courses.

Course Schedule:

Study Tips:

How should you study for this course?  Remember that your grade will be determined by how well you answer questions--on the Problems and on the Tests.  This means that studying for the course means preparing yourself to answer questions.  You might want to think about the following steps as ways to prepare yourself for answering questions:

(1) Come to class regularly.  By coming to class, you will have the opportunity to hear a discussion of the more difficult issues dealt with in the text.  You will have an opportunity to ask questions and to hear the questions other people ask.  This will help you with the material.

(2) Read the text.  Reading textbooks is not like reading a novel for pleasure.  It involves more concentration and more work.  I would suggest that you plan to read each chapter in the textbook three times.  The first time, read it quickly, without underlining or making notes.  Then try to answer some questions about the material [see (3) below].  Re-read the chapter more slowly, underlining key points (or taking notes on them).  Learn to underline sparingly; if you underline virtually everything, then you have not isolated the key issues.  Once again, answer some questions about the material.  Finally, read through the chapter once more, quickly, concentrating on the material you highlighted your second time through it.

(3) Practice answering questions.  One way to learn how to answer questions is to practice.  You have several sources of questions on which to answer--the review questions in the text, the questions in the study guide.  I would recommend that you use all of these as practice questions.  (If this is not enough, I can provide you with some additional sources.)  Using them means writing your answers down, rather than simply thinking about the questions.  It's harder to fool yourself into thinking you have the right answer once you've written down something which is not quite correct.  You will also find the essay-problem questions helpful in preparing to complete the homework assignments.

(4) Form a study group.  Many people learn better when they can work with others, rather than working alone.  A study group, composed of people who get along and are willing to work together, may assist you in learning the material.  The group should be large enough so that you can interact adequately and serve as resources for each other, but small enough so that you can really get some work done.  Four or five people would seem to be a good size.  If you form a study group, you should plan to work together at least once a week, if you want to get the greatest benefit.

(5) Ask questions.  You can't afford to let material which is unclear build up--you will have to do a homework assignment or take a quiz too soon.  So if you have questions, ask them--before class, in class, after class, during my office hours, call me, or e-mail me.

(6) Don't get behind.  We will be covering a great deal of material, fairly quickly.  Since each section of the material does build on what has gone before, failure to keep up will mean that much of what we are doing does not make sense.  If you make the effort, however, you should do well in the course.

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