Temple University
Economics 92
Principles of
Microeconomics
Course Description
Microeconomics is
the study of the behavior of individual economic agents.
The basic concepts that every course starts with are opportunity cost and the model
of supply and demand. We will review these
two topics. Traditional courses then go on
and talk about consumer behavior and the mapping to demand curves.
In this part of the paradigm there are assumed to be many buyers and many
sellers, so many that everyone is a price taker. Strategic interaction
among economic agents is not considered. The next topic is production and costs of the
firm. Demand and the theory of the firm are
brought back together again to model price and output decisions of firms in different
market structures, usually four.
Again, except for some special cases, startegic behavior is overlooked.
Time permitting, the
traditional course ends with topics that may include international trade, market failure,
and/or welfare and general equilibrium.
The standard micro course, in overlooking strategic interaction and behavior,
misses the richest part of studying economic behavior. Also, in
intermediate microeconomic theory, Economics 201, the same topics are covered again with a
bit more abstraction.
In my version of Economics 92 will spend the bulk of our
time modeling strategic behavior. The topics of the standard principles
course become special cases or are embedded implicitly in the topics we will
cover. Further, in order to spare
you the topical repetition between 92 and 201, our course will be somewhat different.
After reviewing production possibilities frontiers and the supply-demand paradigm
we will study the strategic behavior of economic agents using mathematical games. We will begin with the simplest of all games, the
prisoner’s dilemma, and learn about its representation as either a normal form game
or an extensive form game. We will work with
games that involve simultaneous moves those that involve sequential moves. We will talk about formulating a strategy for
playing a game. We will introduce some
notions of equilibrium so that we can characterize the outcomes of games. Throughout there will be applications to
every day events in life, industry and politics.
Some scholars in the area of game
theory and strategic behavior have developed software, called GAMBIT, for solving games. This is freeware that you will need to download
and put on a computer that you commonly use.
We probably will not use any
calculus, but you should be confident of your algebra skills. We won’t review the rules of algebra. However, I will introduce you to probability. Some of you may have seen this already and you can
help your peers who have not.