40430 - Notions of Economics

Course contents

Microeconomics is the study of the actions and interactions of optimizing individuals; macroeconomics aggregates these individuals together to study big-picture issues such as inflation, unemployment, GDP, and economic growth. This course consists of a broad survey of these disciplines. It attempts to establish fundamental concepts, illuminate the subject matter of upper-level courses, and explore connections with other disciplines.

 

PART I MARKETS AND PRICES
Economics as a social science. Individual choices and their interaction: how economies work. Comparative advantage, specialization and gains from trade. The model of demand and supply in a competitive market. Market equilibrium. The concept of elasticity.  

P. Krugman, R. Wells, M. L. Olney: Introduction, Chapters, 2, 3, 5.

PART II PRODUCERS, CONSUMERS AND PERFECTLY COMPETITIVE MARKETS
Consumer surplus and the demand curve. Producer surplus and the supply curve. Surplus and gains from trade. Behind the supply curve: from the production function to cost curves. Short-run versus long-run. Defining perfect competition. Production and profits of a perfectly competitive firm. The industry supply curve. Factor markets. Income distribution.

P. Krugman, R. Wells, M. L. Olney: Chapters 6 (first part), 7, 8, 9.

PART III INTRODUCTION TO PUBLIC INTERVENTION IN MARKET ECONOMIES

Why governments control prices. Price ceilings and price floors, quotas and taxes. The revenue of an excise tax. Efficiency costs of a tax. Comparative advantage and international trade.  The political economy and the effects of trade protection: tariffs and import quotas.

P. Krugman, R. Wells, M. L. Olney: Chapters 4, 6(last section) 13.

PART IV EFFICIENCY, MARKET FAILURES AND MARKET STRUCTURES WITH PRICE-MAKING FIRMS.

Efficiency in consumption and efficiency in production. Efficiency and equity. The case of externalities and public goods.  Monopoly, profit maximization and regulation.  Price discrimination. Oligopoly, prisoners' dilemma and tacit collusion. Product differentiation and price leadership. Monopolistic competition.

P. Krugman, R. Wells, M. L. Olney: Chapters 10, 11, 12.

PART V MACROECONOMICS: THE BIG PICTURE
Introduction to macroeconomics. The business cycle and inflation. Measuring the performance of an economy: the national accounts. The macroeconomic “fundamentals”: gross domestic product, unemployment rate, price indexes, interest rates

P. Krugman, R. Wells, M. L. Olney: Chapters 14, 15.

PART VI THE “AS-AD MODEL”
Aggregate supply. Aggregate demand. The multiplier. Short-run and Long-run macroeconomic equilibrium. Policy in the face of demand and supply shocks.

P. Krugman, R. Wells, M. L. Olney: Chapters 16.

PART VII MACROECONOMIC POLICIES
Fiscal policy, the multiplier and the budget balance. Long-run implications of Fiscal policy: deficit and debt. The meaning of money and the monetary role of banks. The system and the role of the European Central Bank. Monetary policy and aggregate demand.   

P. Krugman, R. Wells, M. L. Olney: Chapters 17, 18.

PART VIII GLOBALIZATION AND LIBERALIZAION: AN ECONOMIC ANALYSIS

Globalization and poverty in developing countries. The role of multinational enterprises in workers and environment protection. The competitive threat of developing countries towards industrialized economies. Globalization and national sovereignity.

F. Bonaglia, A. Goldstein (2008)  “Globalizzazione e Sviluppo”, Ed. Il Mulino, Collana “Farsi un'idea”.

Readings/Bibliography

• P. Krugman, R. Wells, M.L. Olney (2008), L'Essenziale di Economia,  Zanichelli

• F. Bonaglia, A. Goldstein (2008)  “Globalizzazione e Sviluppo”, II ed., Il Mulino, Collana “Farsi un'idea”.

Other reference books on the same topics:

• R.H. Frank, B.S. Bernanke (2007), Principi di Economia, II ed., McGraw-Hill.
• J. Sloman (2008), Elementi di Economia, IV ed., Il Mulino

Teaching methods

Traditional lectures accompanied by a web support available at my personal site http://www2.dse.unibo.it/alvisim/Elementi

Assessment methods

The examination consists of a written test that can be supplemented by an optional oral examination. During the course semester, students have the opportunity to pass the course taking a midterm and a final exam.

Teaching tools

Tutorials. Some tutorials would be provided on the main topics.
The teaching assistant would also provide an office-service for all students. All the paper-matters (besides the info about the course) will be given in electronic format at http://www2.dse.unibo.it/alvisim/Elementi.   
Students are strongly invited to attend both classes and tutorials

Links to further information

http://www2.dse.unibo.it/alvisim/Elementi

Office hours

See the website of Matteo Alvisi