Fundamentals in Economics

In the Fundamentals of Economics course, we develop models of how households make consumption decisions and then aggregate those results to the market level. We then turn to the supply side of markets, engaging in a detailed investigation of how firms make production decisions. Next, we combine demand and supply to understand how prices of goods are determined in perfectly and imperfectly competitive markets. The course will take a closer look at economic notions of efficiency, and the ever-present tradeoff between efficiency and equity. We will also take time to consider fundamentals of utility, game theory, and market failures – such as externalities (e.g. air pollution). This is important for understanding how demand and supply is derived for various goods and services and how changes in our environment (man-made or natural), can impact the magnitude and distribution of well-being.

In addition to understanding analytical models in Microeconomics, we will turn to Fundamentals of Macroeconomics. This is the study of the economy, focusing on large-scale economic variables such as national income, overall output, unemployment, inflation, and economic growth. It examines how aggregate demand and supply interact to determine the performance of an economy, and how fiscal and monetary policies influence these dynamics. Studying macroeconomics is vital for making sense of real-world issues like financial crises, inflationary pressures, and global trade dynamics. Topics in macroeconomics that will be covered include measuring the national income and cost of living, unemployment, the open-economy model, and the trade-offs between inflation and unemployment.

The aim of this course is to learn how to think like an economist. The course will offer a lens on how individuals and firms take decisions to maximize their utility and profits subject to constraints. It will develop the tools of modern economic theory and discuss their applications, including in government policies such as taxation and international trade, perfect competition, monopoly, externalities and fundamentals of macroeconomics. Students will become familiar with real world dilemmas and tradeoffs faced by individuals, firms and governments, as well providing a rational way of understanding the consequences of decisions made by consumers, producers and policy makers.

After completion of this course, students will be able to:

• Apply economics theory to real-world organizational problems and challenges
• Understand policy instruments and the basic economic rationale behind them
• Discuss nature of markets in firms and various issues to resolve market failures
• Examine contemporary economics issues from a rational lens

Students will build and solve mathematical models and analytical frameworks of social behaviour that incorporate:

• Understand Utility Maximization in Consumer theory
• Evaluate Profit Maximization by Firms
• Analyze nature of competition and externalities in markets
• Apply learnings to understand impact of policies and evaluate how preferences, budget constraints on the demand-side interact with cost functions on the supply side
• Evaluate and understand Relationship between GDP, unemployment and inflation in macroeconomics.

Principles of Economics by Gregory Mankiw, Eighth Edition, Cengage Learning

Reading: All reading should be completed before the class in which it will be covered.  The text provides opportunities for “active reading” – applications, self-quizzes, review questions – and it is strongly recommended that you take advantage of these.

Problem Sets: For the first half of the course, there will be one problem set every alternate week starting in Week 2.   Problem sets will be handed out and/or posted online at least one week ahead of time. In-class quizzes will be held starting in Week 2 that will cover material that will be taught that week. We will drop the lowest two scores in quizzes and in problem sets for each students. This “leave out two” policy will not allow for any further exceptions around emergencies related to health, home-visits, or other reasons. Please do not ask for any exceptions to policy unless you are likely to miss out on classes for several weeks and have obtained prior permission from Dean, Student Affairs.

Exams: There will be a final exam in Week 17 that will have an MCQ as well as a free-response component.

Grades: Assigned work will count as follows:

Grading Rubric

Attendance in lectures – 5%

Attendance & participation in tutorials - 5%,

Weekly class quizzes (drop lowest 2) - 20%,

Problem sets (drop lowest 2) - 20%,

Midterms - 15% X 2

Final exam - 20%.

In each tutorial, to obtain participation credit you should show your attempt of the quiz and free response questions on the sheet provided.

To effectively participate in the course, it is critical that each member of the team read the course assignments and participate in class discussions and simulations and in group work. To participate in class more fully, you should comment on specific issues raised in the class readings; illustrating specific issues from the readings with examples from your personal experience; raising questions not covered in the readings; comparing or contrasting ideas of various theorists from the readings; or supporting or debating the insight or conclusions of a classmate (or the instructor!) by referencing concepts, experiences or logical reasoning.  You should take part in opinion polls, in-class quizzes, class discussions, tutorial discussions.

To enhance focus, participation, and retention during classroom sessions, the use of electronic devices, including laptops, tablets, and smartphones, is not allowed. Students are encouraged to prioritize handwritten notes over digital devices.

Situations involving academic integrity are governed by the UG Academic Policy. The instructor shall report the case to the Academic Integrity Committee which will prescribe the appropriate corrective action.

• E-mail is the best way to contact the Professor.
• In Person: Prof Singh and Prof Chopra will be available in their office during his office hours (TBD). For meeting times outside of office hours, please request an appointment via the Professors’ email.
• To make a phone or in-person appointment with the course’s lead Teaching Fellow.
• The TA will also be holding weekly tutorial sessions that will review the concepts taught in class and conduct additional mandatory problem-solving sessions.