Syllabus

Amazon logo When you click the Amazon logo to the left of any citation and purchase the book (or other media) from Amazon.com, MIT OpenCourseWare will receive up to 10% of this purchase and any other purchases you make during that visit. This will not increase the cost of your purchase. Links provided are to the US Amazon site, but you can also support OCW through Amazon sites in other regions. Learn more.

For a detailed listing of topics by session see the calendar below.

Description

This introductory course teaches the fundamentals of microeconomics. Topics include consumer theory, producer theory, the behavior of firms, market equilibrium, monopoly, and the role of the government in the economy. 14.01 is a Humanities, Arts, and Social Sciences (HASS) elective and is offered both terms.

Prerequisites

Knowledge of 18.01 Calculus I is helpful. There are no other prerequisites.

Course Format

14.01 is offered in two formats. Both use the same textbook, cover the same topics and have the same requirements, including exams. 14.01 is a 3-0-9 course (3 hours of class plus 9 hours of preparation).

Format 1: Lecture-recitation

Students attend one-hour lectures on Mondays and Wednesdays. Students also attend 1 hour recitations on Fridays—these are not optional. Instructors will introduce new material at these recitations which will be part of problem sets and exams.

Format 2: Discussion Sections

Students attend three one-hour sections weekly on Monday, Wednesday, and Friday.

Selecting a Format

During the first 2 weeks of the semester, students may switch between formats. At the due date of the first homework (see below) students must submit the completed assignment at the recitation or section of their choice. This submission will automatically enroll them in that choice. Thereafter you can change only with special Faculty approval. If sessions are extremely unbalanced, the Faculty reserves the right to re-assign students.

Textbook

Amazon logo Pindyck, Robert S., and Daniel L. Rubinfeld. Microeconomics. 6th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2004. ISBN: 9788120329218.

The book is also available in digital format from CourseSmart.

Problem Sets, Exams, and Grading

The final grade in the course will be based on the following percentages:


ACTIVITIES PERCENTAGES
Homework (best 9 of 10, 3% each) 27%
Exam 1 23%
Exam 2 23%
Exam 3 23%
Class participation 4%

There will be 10 mandatory problem sets which will be individually graded and returned to the students. At the end of the term students will have the best 9 homework grades cumulated up and this will count for 27% of the final course grade. Problem sets are due on the indicated days in class. Late problem sets will not be accepted.

There will be 3 exams held throughout the term, two at night and one during the final exam period (see calendar below). Each exam will each cover roughly 1/3 of the course material, will be 1.5 hours long and will count as 23% (collectively 69%) of the grade. The remaining 4% of the grade will come from class participation.

Exams and homework will draw heavily on class/lecture material in addition to the textbook.

At the end of the semester, the faculty will report internal grades to the MIT registrar with + and - modifiers, where appropriate, and only for grades A, B, C. The faculty will be happy to regrade any problem set or exam – in entirety. Consequently it is possible for your revised grade to fall as well as rise. If you are an MIT freshman, the faculty will evaluate your performance on the first exam and first 3 problem sets and if it falls below passing, we will send out a warning to you and your advisor.

Conflicts and Makeup Exams

Conflicts must be received by the head TA at least one week prior to the exam.

Illness on the day of the exam: If you should happen to be sick the day of the exam, contact one of the Deans in Student Support Services to verify your illness and let the head TA know.

A fixed makeup exam time will be scheduled by the head TA.

Tutoring

Students are encouraged to seek help from the faculty and their assistants. An undergraduate TA will be in charge of offering tutorial help.

Recommended Citation

For any use or distribution of these materials, please cite as follows:

William Wheaton, Chia-Hui Chen, Rongzhu Ke, Monica Martinez-Bravo, Marco Migueis, Peter Schnabl, and Hongliang Zhang, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

Calendar

The calendars for the two formats are similar but not identical in terms of class meetings. They are presented separately below. The calendar for Format 2 can be found here.

Format 1: Lecture-recitation

The calendar below provides information on the course's lecture (L), and recitation (R) sessions.


SES # TOPICS KEY DATES
L1 What is economics?
R1 Supply-demand analysis
L2 Comparative statics Problem set 1 out
L3 Dynamic analysis
R2 Utility, revealed preference

Problem set 1 due

Problem set 2 out

L4 Optimization, duality
L5 Demand curves
R3 Engle curves

Problem set 2 due

Problem set 3 out

L6 Risk and uncertainty
R4 Risky behavior, examples

Problem set 3 due

Problem set 4 out

L7 Production
L8 Input use
R5 Review of chapters 1-5 Problem set 4 due
L9 Cost curves Exam 1 taken
R6 Scale and cost Problem set 5 out
L10 Profit maximization
L11 Entry and exit
R7 Competitive markets

Problem set 5 due

Problem set 6 out

L12 Examples
L13 Competitive markets (cont.)
R8 Economic "surplus"

Problem set 6 due

Problem set 7 out

L14 Efficiency of markets
L15 Market structure
R9 Review of chapters 6-9, 16 Problem set 7 due
L16 Monopoly power Exam 2 taken 1 day after Ses #L16
L17 Monopsony – regulation Problem set 8 out 2 days after Ses #L17
L18 Pricing power
L19 Pricing power (cont.)
R10 Monopoly-pricing power

Problem set 8 due

Problem set 9 out

L20 Oligopoly
L21 Monopolistic competition
L22 Competitive strategy
L23 Factor markets
R11 Factor-labor markets

Problem set 9 due

Problem set 10 out

L24 Labor-land markets
L25 Capital markets
R12 Review of chapters 10-15, 17-18 Problem set 10 due
L26 Insurance-risk markets
L27 Government Exam 3 taken 7 days after Ses #L27

Format 2: Discussion Sections

The calendar below provides information on the course's discussion (D), and question and answer (Q) sessions.


SES # TOPICS KEY DATES
D1 Overview: themes, types of markets, economic measurement, economic analysis
D2 The basics of supply and demand
D3 Elasticities of demand Problem set 1 out
D4 Price elasticity of supply; consumer preferences
D5 Deriving MRS from utility function, budget constraints, and interior solution of optimization

Problem set 1 due

Problem set 2 out

D6 Optimization, revealed preference, and deriving individual demand
D7 Substitution and income effects, individual and market demand, consumer surplus
D8 Irish potato famine, network externalities, and uncertainty

Problem set 2 due

Problem set 3 out

D9 Preference toward risk, risk premium, indifference curves, and reducing risk
D10 Insurance and production functions

Problem set 3 due

Problem set 4 out

D11 Production functions
D12 Production functions and cost of production
Q1 Review of chapters 1-5

Problem set 4 due

Exam 1 taken 5 days after Ses #Q1

Problem set 5 out 7 days after Ses #Q1

D13 Cost functions
D14 The cost of production and profit maximization
D15 Short run and long run supply

Problem set 5 due

Problem set 6 out

D16 Long run supply and the analysis of competitive markets
D17 Supply restrictions, tax, and subsidy
D18 Tax, subsidy, and general equilibrium

Problem set 6 due

Problem set 7 out

D19 Efficiency in exchange, equity and efficiency, and efficiency in production
D20 Production possibilities frontier and output market efficiency
D21 Why markets fail Problem set 7 due
Q2 Review of chapters 6-9, 16 Exam 2 taken 1 day after Ses #Q2
D22 Monopoly Problem set 8 out 2 days after Ses #D22
D23 Monopoly and monopsony
D24 Monopoly and monopsony (cont.)
D25 Pricing with market power

Problem set 8 due

Problem set 9 out

D26 Pricing and monopolistic competition
D27 Game theory and oligopoly
D28 Oligopoly
D29 Strategic games
D30 Dominant firm model and factor market

Problem set 9 due

Problem set 10 out

D31 Factor market
D32 Investment, savings, time, and capital markets
D33 Asymmetric information Problem set 10 due
D34 Externalities, market failure and government
D35 Public goods and review of chapters 10-15, 17-18 Exam 3 taken 7 days after Ses #D35