Microeconomics

Course Goals
The objective of this course is to present the students with the tools used in microeconomic theory, and show them the new insights that can be developed when these tools are applied to everyday problems and situations. Students are expected to develop economic intuition by applying concepts of economic theory to the diverse events that surround them.

This course will be taught entirely in English due to the importance of training students for their insertion into a globalized world where English has increasingly become a ‘common tongue’. Developing English skills has the potential to open students the door to new opportunities, cultures, knowledge, and exciting international experiences.

Readings
1. [VZ] Vial, B. & Zurita, F. Microeconom´ıa, Ediciones UC, 2011.
2. [V] Varian, H., Microeconomic Analysis, W. W. Norton & Company, 3rd Edition, 1992.
3. [F] Frank, R., Microeconom´ıa y Conducta, Mc Graw Hill, 5ta Edici´on, 2005.
4. [N] Nicholson, W. & Snyder C., Microeconomic Theory: Basic Principles and Extensions, South-Western, Cengage Learning, 11th Edition, 2012.
5. [M] Mankiw, G., Principles of Microeconomics, 4th Edition, 2007.

4. Grading

4.1 Quizzes - 30%
Three quizzes will be carried out during the semester. The grade of each quiz has the same weight and their average grade C “ pC1 ` C2 ` C3q{3 will have a weight of 30% in the final grade.

4.2 Tests - 70%
The main aim of the tests is to assess whether the students have developed a range of skills that enable them to understand the economic concepts, and their applications, that have been discussed during the lectures and assistantships. Students will most likely be asked to apply their skills and knowledge to hypothetical situations and/or to current national events, so students are highly encouraged to read the newspaper. The average grade of the tests I “ pI1 ` I2 ` I3q{3 will have a weight of 70% in the final course grade.

Although the tests are common to all sections in Santiago and Vi˜na, each teacher will elaborate 25% of the test of their section, focusing on the discussions held in class. Class participation can be rewarded with extra points in this section of the test. Therefore, it is recommended that students attend classes, and take the tests in the section in which they have been enrolled.

5. Honor Code During examinations (quizzes and tests) students must leave all their belongings, including their cell phones, under the whiteboard. Those failing to comply with this rule will be suspected of cheating. Any violation of the Honor Code will imply immediate failure of the course. In order to regulate the behavior during the semester, it is understood that the Honor Code is known by the students and the faculty.

6. Missing examinations
1. Justifications: If students miss any examination — quiz or test — they must provide a documented justification (illness, personal problem, etc.) that needs to be authorized by the Undergraduate Secretariat (SAP) within a maximum period of 48 hours after the problem has ended. The professor can not accept justifications made by other means. If the justification is denied, the evaluation grade will be 1.0, with no right to re-take the test. If the absence is accepted by SAP, it will be regarded as justified. 

2. Justified Absence: The grade of any examination with a justified absence will be retrieved on the day of Test 3. The statement related to this specific examination will be attached to Test 3 and its content will depend on the quiz or test that the student is recovering. This annex will only be given to students that are recovering a grade and will be given additional time to solve it. However, this extra statement may recover a maximum of one test or two quizzes. Anyone who has further justified absences will be subject to a recuperative interrogation at the end of the semester, whose format will be defined by the course professors.

7. Request for second reviews
In all examinations taken by the students, they will be rewarded with an additional base score for the sole reason of taking the test. This means that if the student does not show up for the examination, or is present but delivers a blank (completely unanswered) test, he or she will not be entitled to this benefit. The value of the additional score will be announced by email when the grades are published. The procedure to ask for second reviews is as follows:

1. After the grades and the corresponding evaluation guidelines are published, the teaching assistant will deliver the graded tests to all students during the assistantship.
2. A request for a second review can only be made up to one week after the tests have been delivered, by submitting the re-assessment form, available on the website, to the teaching assistant coordinator. Those who request for a second review must provide reasons why they consider that the grading was not appropriate.
3. Tests written totally or partially with pencil, that use liquid corrector, as well as those requests submitted without the re-assessment form, will not be entitled to ask for a second review.
4. Those who request a second review renounce the additional base score given for taking the test.
5. The teaching assistant coordinator will provide a response to each student’s request, which can be positive or negative.
6. If the student is not satisfied with the answer of the teaching assistant coordinator, he/she can request that the professor reviews the case. For this, the teaching assistant coordinator will deliver the re-assessment form and the students’s written arguments to the professor. 7. The professor will revise the test in its entirety, including both the question(s) submitted for review and the rest of the test. As a consequence, the student may improve the grade in some questions, but get a lower one in others. Keep in mind that this may result in an overall drop in the grade of the test under revision.

8. Learning Goals
‹: In italics the contents that will be reviewed according to time availability.

Part I: Producer. 1

. Producer Theory.

• The technology.
• Cost Minimization – How to produce?
• Cost Curves.
• Profit Maximization – How much to produce?
• Supply.

Part II: Consumer.

2. Consumer Theory.

• Preferences, Choices and Utility.
• Utility Maximization.
• Application: (i) Labor Markets, (ii) Intertemporal Consumption.
• Changes to the Budget Constraint.

Part III: Markets.

3. The Exchange Paradigm: Markets and Prices.

• Aggregation, Demand and Market Supply.
• Competitive Equilibrium.
• Firm Entry and Long-Run Equilibrium.
• Welfare Analysis and Efficiency. i. Maximum and Minimum Price. ii. Taxes and Subsidies. iii. Application: International Trade.

Part IV: Market Failures.

4. Market Power and Inefficient Prices.

• Monopoly and Monopsony.

5. Externalities.

• Public Solutions. i. Pigouvian Subsidies and Taxes. ii. Arrow Missing Markets.
• Private Solutions. i. The Coase Theorem.

Public Goods

• Taxonomy
• The Tragedy of the Commons.