Note to anyone reading this syllabus on the URPE Web site: All of my courses have lecture notes, problems and tests, and if people want to use this material all you need to do is to ask me. Fred

*******************************************************************************

 

MICROECONOMIC ANALYSIS                   Professor F. S. Lee

(ECON 302)                                                    Office: Manheim 202D

Section VOA                                                   Office Hours:  MW 9.00 to 10.00

Winter 2003                                                                            By appt.

Office Tel.  816-235-2543

E-mail  leefs@umkc.edu

 

Lectures:  Tuesday, 9.30 – 10.45, Cockefair Hall, Rm. 104

                 Thursday, 9.30 – 10.45, Cockefair Hall, Rm. 104

 

Required Texts:  B. C. Eaton, D. F. Eaton, and D. W. Allen, Microeconomics, 5th ed.

   F. S. Lee, Introduction to Post Keynesian Economics (sent to you via e-mail)

 

Optional Texts:  C. Sackrey, G. Schneider, and J. Knoedler, Introduction to Political Economy

                           D. Dowd, Understanding Capitalism

                         

Assessment:    In-Class Exam I covers sections I & II (week 5)

In-Class Exam II covers section III & IV (week 10)

Final Exam covers section V & VI (May 5, 3.30 – 5.30)

 

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

                        C+  79% to 77%                   60%

 

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 30, 2003.

 

Problem Sets:  Problem sets will be distributed.  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.

 

                                      LECTURE AND READING OUTLINE

 

I.          Introducing Neoclassical and Heterodox Microeconomics

 

A.        Neoclassical and Heterodox Economics

 

1.         Sackrey, et. al., ch. 1.  Optional

2.         Dowd, Introduction and ch. 5.  Optional 

 

B.        Neoclassical and Heterodox Microeconomics

 

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

2.         Lee, chs. 1 and 2.

3.         Dowd, ch. 5.  Optional

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

 

B.              Consumer Demand Theory

 

            1.         Eaton, Eaton, and Allen, ch. 3, sections3.5-3.9 and ch. 4, sections 4.1-4.3.

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

 

C.        Market Demand Curve and Price Elasticity of Demand

 

1.         Eaton, Eaton, and Allen, ch. 3, pp. 101 - 106.

 

D.        The Heterodox Approach to Consumer Demand

 

            1.         Lee, Chapter 8.

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, ch. 3.

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.

 

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.         Apel, H.  1948.  “Marginal Cost Constancy and Its Implications.”  The American Economic Review 38 (December):  870 – 885.

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, ch. 4.

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

 

IV.       Supply Curve and Perfect Competition

 

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

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

                        3.         Sraffa, P.  1926.  “The Laws of Returns Under Competitive Conditions.”  The

Economic Journal 36 (December):  535 – 550.

                        4.         Jaffee, W.  1967.  “Walras’ Theory of Tatonnement:  A Critique of Recent

Intrepretations.”  Journal of Political Economy 75:  1 – 19.  Optional

                        5.         Walker, D. A.  1973.  “Edgeworth’s Theory of Recontracts.”  The Economic

Journal 83:  138 – 149.  Optional

 

 

V.        Business Enterprise, Market Structure, and Prices

 

A.        Monopoly

 

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

2.         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.         Eaton, Eaton, and Allen, ch. 16.

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 Journal63 (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. 15.

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

                        3.         Sweezy, P. M.  1939.  “Demand under Conditions of Oligopoly.”  Journal of Political Economy 46 (August):  568 – 573.

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

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

                        6.         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, Chapters 5-7, 9-10.

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, chs. 6, 7, 9, 10, and 11.

            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.

 

Hall, R. L. and Hitch, C. J.  1939.  “Price Theory and Business Behavior.”  Oxford Economic Papers 2 (May):  12 – 45.

 

Lester, R. A.  1946.  “Shortcomings of Marginal Analysis for Wage-Employment Problems.”  American Economic Review 36 (March):  63 – 82.

 

Machlup, F.  1946.  “Marginal Analysis and Empirical Research.”  American Economic Review 36 (September):  519 – 554.

 

Lee, F. S.  1984.  "The Marginalist Controversy and the Demise of Full Cost Pricing."  Journal of Economic Issues 18 (December):  1107 - 1132.

 

Lee, F. S. and Irving-Lessmann, J.  1992.  “The Fate of an Errant Hypothesis:  The Doctrine of Normal-Cost Prices.”  History of Political Economy 24.2 (Summer):  273 – 309.

 

Mongin, P.  1992.  “The Full-Cost Controversy of the 1940s and 1950s:  A Methodological Assessment.”  History of Political Economy 24.2 (Summer):  311 – 356.

 

 

 

 

 

 

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.