Professor Kinnaman Department of Economics ECON 103, Spring 2001 Bucknell University

ECONOMIC PRINCIPLES

General Information: Time: MWF 2:00-2:52 or MWF 3:00-3:52 and W 4:00-6:00 or 7:00-9:00 Office hours: Monday, Tuesday, Wednesday and Thursday 4:00-5:00 p.m. Office location: Coleman 169 Office phone: 577-3465 email: kinnaman@bucknell.edu

Course Content: This course will introduce you to the fascinating subject of economics! You will learn about markets and how they work, about recessions and unemployment, about inflation and exchange rates, and about many other interesting economic topics. You will also be exposed to the theories that allow economists to make sense of each of these concepts.

A good understanding of economic history is essential for a thorough appreciating of the economic theories presented in this course. We will cover several historical periods, beginning with ancient periods and moving forward to feudalism, the industrial revolution, the Great Depression, and finally "the golden age of capitalism".

You will also be introduced to the "economic way of thinking" - a theory of the behavior of individuals. Most economists believe that individuals pursue actions they think will yield them the greatest happiness. This theory of individual choice does not assume that people are selfish, or materialistic, or shortsighted, or irresponsible, or interested exclusively in money. Some individuals, for example, may derive enormous satisfaction from helping others. Many economists apply the "economic way of thinking" to understand the decisions made by consumers, firms, governments, as well as other organizations. This application suggests that all social phenomena emerge from the choices individuals make in response to the expected benefits and costs to themselves.

Prerequisites: None.

Attendance: You will be penalized 1% point of your total grade for each unexplained absence. Required Texts: Heilbroner, Robert, The Worldly Philosophers, New York: Simon &Schuster.

Marshall Jevons (1985), The Fatal Equilibrium, New York: Ballantine Books.

Schiller, Bradley R. (1996), Essentials of Economics, Second Edition, New York: McGraw Hill.

Assignments and Grading: Grades will be based on two midterm exams on September 27th (25%) and November 1st (25%), a series of ten homework assignments (20%), and a non-cumulative final exam (30%). The midterm exams will be given at 7:00 PM in a room to be announced.

Homework One of the most constructive features of courses like this in the past has been homework. Homework reinforces your knowledge of the course by putting it to immediate use, it helps keep everybody up with the readings, it gives you examples of the kinds of questions I am likely to ask on exams, and it gives me useful feedback from you. Ten homework assignments will count for 20% of your final grade.

Late homework is accepted. However, the cost to you of choosing to submit homework late is 10 percentage points each day. COURSE

SCHEDULE

Section 1: An Introduction

Jan. 17: Course Introduction (H: Introduction)

Jan. 19: The Pre-Market Economy: Tradition and Command (H: Ch. ii, pp. 18-21)

Section 2: Economic History and History of Economic Thought

Jan. 22: The Emergence of a Market Society (H: Ch. ii, pp. 21-41)

Jan. 24: Adam Smith on Market Economies (H: Ch. iii)

Jan. 26: Malthus and Ricardo on the Future of Market Economies (H: Ch. iv)

Jan. 29: The Industrial Revolution and Utopia (H: Ch. v)

Jan. 31: Karl Marx on the Future of Industrial Economies (H: Ch. vi)

Feb. 2: Economics after the Indusrial Revolution (H: Ch. vii)

Section 3: Microeconomic Theory - Market Principles

Feb. 5: The Production Possibilities Frontier (S: Ch. 1)

Feb. 7: An Overview of Supply and Demand (S: Ch. 3, pages 57-71)

Feb. 9: Market Equilibrium (S: Ch. 3, pages 71-76)

Feb. 12: Disequilibrium Pricing (S: Ch: 3, pages 76-81)

Feb. 14: A Closer Look at Consumer Demand (S: Ch. 4)

Feb. 16: A Closer Look at Supply Decisions (S: Ch. 5)

Feb. 19: Thorstein Veblen on Conventional Economic Thought (H: Ch. viii)

Feb. 21: REVIEW SESSION Feb. 21: EXAM #1 (7:00 - 9:00 PM, room TBA)

Section 4: Microeconomic Theory - A Theory of the Firm

Feb. 23: Output Decisions with Perfect Competition (S: Ch. 6, pages 127-138)

Feb. 26: Societal Outcomes with Perfect Competition (S: Ch. 6, pages 138-147)

Feb. 28: Output Decisions under Monopoly (S: Ch. 7, pages 151-157)

Mar. 2: Societal Outcomes under Monopoly (S: Ch. 7, pp. 157-167)

Mar. 5: Promoting Competition (S: Ch. 9, pp. 206-208)

Section 5: Microeconomic Theory - Further Topics

Mar. 7: The Labor Market (S: Chapter 8)

Mar. 9: The Labor Market (S: Chapter 8)

Mar. 12: SPRING BREAK Mar. 14: SPRING BREAK Mar. 16: SPRING BREAK

Mar. 19: Public Goods (S: Ch. 9, pages 193-198)

Mar. 21: Externalities (S: Ch. 9, pages 198-206)

Mar. 23: Managing Externalities

Mar. 26: Managing Externalities

Mar. 28: REVIEW SESSION Mar. 28: EXAM #2 (7:00 - 9:00 PM, room TBA)

Section 6: Macroeconomics and The Growth of the Public Sector

Mar. 30: Macroeconomic Accounting: GDP (S: Ch. 2: pp. 33-42, Ch. 10: pp. 215-220)

Apr. 2: Macro Accounting: Unemployment and Inflation (S: Ch. 10: pages 220-235)

Apr. 4: Classical Economics and the Macro Economy

Apr. 6: The Great Depression (H Ch. ix, pp. 249-254)

Apr. 9: John Keynes on the Macroeconomy (H: Ch. ix, pp. 254-287)

Apr. 11: A Model of the Macro Economy (S: Ch. 11)

Apr. 13: A Model of the Macro Economy (S: Ch. 11)

Apr. 16: Fiscal Policy (S: Ch. 12)

Apr. 18: The Money Supply (S: Ch. 13)

Apr. 20: The Money Supply (S: Ch. 13)

Apr. 23: Monetary Policy and the Federal Reserve (S: Ch. 14)

Apr. 25: Monetary Policy and the Federal Reserve (S: Ch. 14)

Apr. 27: The Global Economy (S: Ch. 17)

Apr. 30: The Global Economy (S: Ch. 17)

FILM SCHEDULE

Jan. 24: "Greed, with John Stossel" Jan. 31: "Free Trade Slaves" Feb. 7: "A History of Social Classes" Feb. 14: "Affluenza" Feb. 21: Exam 1 Feb. 28: Ralph Nader (7:30 p.m., Weis Center): Mar. 7: "Taken For A Ride" Mar. 14: SPRING BREAK Mar. 21: "Greening Business" Mar. 28: Exam #2 Apr. 4: "A History of Work" Apr. 11: "Living on the Edge" Apr. 18: "The Big One" Apr. 25: "Beating the Bottom Line"