EC 812
MICRO ECONOMICS II
Spring 2001
GMU
ENT 176
Instructor: Professor Roger D. Congleton .
Office: 11 Carow Hall (the Center for Study of Public Choice) .
. Phone 703 993 2328
No Class Ap 19
. E-Mail congleto@gmu.edu
.
Office Hours: 2:30-4:00 Tuesdays-Wednesday, and other times by appointment
. 
Required Text:
.
. Nicholson, W. Microeconomic Theory, Seventh Edition. (1998) New York: Harcourt Brace. ISBN 0030244749
Study Guide for Midterm
Optional Texts: .
. Knight, F. H. Risk Uncertainty and Profit. (1985/1921) Midway Reprint edition, University of Chicago Press.
Extended Reading List
. Mas-Colell, A., Green, J. R., and Whinston, M. D. (1995) Microeconomic Theory. Oxford: Oxford University Press ISBN: 0195073401  .
Course Focus: .
. Microeconomics II is divided into two parts with related and complementary goals. The first part of the course focuses on the logic of the neoclassical competitive model and explores how that model can be used to explain the origins of such markets and to analyze circumstances of intense market competition.  .
Extended Reading List
 The second part explores implications of what might be called market imperfections: economies of scale, imperfect information, barriers to entry, transactions costs, innovation, regulation and so forth. The coverage is partly is topical and varies by semester. Such topics as the economics of information, normative analysis, culture, political economy, and economic dynamics may be covered. The goal of the course is to provide the student with a thorough understanding of the core neoclassical models, and appreciation of its power by exploring in some depth a few recent extensions of the neoclassical model. 
Some Useful Links

JStor
Journals
Amazon/BookRadar
Econ Department
Public Choice
Census
GMU Data Bases
. Tentative Course Outline .
Dates Topic
Readings
. I. The Economics of Competitive Markets .
18-Jan-01 1. Introduction to Economic Models
N: 1, 2, 3
MWG: 1, 2 Kn 3
. Methodological Individualism: Rational Choice as a modeling device. Scarcity and optimization. What does rational choice mean? Choosing patterns of consumption.
Appendix for
First Lecture
25-Jan-01 2. Production Alone and on Teams
N: 11, 12 
MWG: 5
. Household production, specialization, entrepreneurship, monitoring problems, production by teams .
01-Feb-01 3. Micro Foundations of Supply and Demand
N: 5, 6, 7, 13 
MWG: 3, 5 
Kn: 6
. What gets produced, how is it produced, and who produces it? Equilibrium Production, Neoclassical firms and Consumers.
Appendix for Lecture 3
08-Feb-01 4. Micro Foundation of Supply and Demand Continued
N: 21, 22, 23; MWG: 3, 5 Kn: 4
. More on the Mathematics of Supply and Demand of Inputs, Cost Functions and Consumer Choice. Slutsky and Euler equations. 
.Mathematical Appendix for Lecture 4
15-Feb-01
5. Price Determination in the Long Run
N:13, K:7
. Marshalian and Ricardian Approaches, Monopolistic, Duopolistic, and Competitive Markets. Monopolistic Competition.  .
22-Feb-01
(March 1)
6. Review for Midterm Exam    (rescheduled)
Study Guide
Selected Ans
01-Mar-01
(March 15)
MIDTERM EXAMINATION  (rescheduled because of cancelation of Feb 22 class)
08-Mar-01 SPRING BREAK
22-Mar-01 Exams Returned and Reviewed 
Suggested Paper Ideas
 
29-Mar-01 7. Introduction to Welfare Economics
Economic Efficiency, the Pareto Criteria, social welfare functions. The welfare properties of exchange (w and w/o externalities).
N: 9 
MWG: 10, 15, 16
29-Mar-01
 8. Market "Failure" and Public Policy           Appendix Monopoly, Crime, and Externalities:  Regulatory Solutions
N: 26 
MWG: 11, 12
05-Apr-01 9. Public Policy Analysis  (part II)
N: 26, 27
MWG: 21, 22
. The Commons Problem, Public Goods, Information Asymmetry: Cost Benefit Analysis: The Politics of Taxation and Regulation .
12-Apr-01 10a. Information Problems and Consumer Choice
N: 9, 10, 19
MWG: 13, 14
. Risk Aversion and Choice under Uncertainly The effects of consumer ignorance, rules of thumb, rational expectations, and transactions costs. The market for lemons, snob effects. Effects of Uncertainty on Production decisions. Signaling games: advertising and other signals as cheap talk.  .
12-Apr-01 10. The Firm: Contract and Control under Imperfect Information
N:9, 10; 
MWG: 14 Kn: 9, 10
. Knight, Schumpeter, Kirzner, and Coase. Modern conceptions of the firm. The principal agent problem: between owners and managers, between managers and employees. Incentive compatible contracts. Contracts as screening devices. Separating Equilibria. 
  STUDY GUIDE II.
19-Apr-01 4-6 page paper due on an applied micro topic .
19-Apr-01 12. Culture, the Firm, and the Efficiency of Production
(Appendix, Some Puzzles for Rational Choice Models)
N: 24
Kn: 5, 11
NO CLASS: Work on Term Papers, now due 26 Apr
 Can culture make markets work better? Is there and economic rationale for promoting a work ethic? Status seeking behavior: wasteful or not? Corporate versus national culture and the costs of monitoring. Temptation and self discipline.  .
26-Apr-01 13. Overview of the course and Review for the final
STUDY GUIDE II
03-May-01 FINAL EXAM .
.
Grades:
. Midterm Exam 35.00%
. 4-6 page Paper 25.00%
. Final Exam 40.00%
. Marginal extra credit for class participation (up to 5% bonus)