Welcome to Intermediate Microeconomics Online!
Since you are here in this course, your interest in the study of economics is greater than the average student who is only taking economics because they have to. Let me introduce you to a quote by John Maynard Keynes, an influential British Economist about what an Economist truly is.
The master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher–in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.
In other words, an Economist has to understand everything.
You were introduced to some of basic concepts in your introductory course in economics. We will expand on those in this course.
Economics thus attempts to answer some fundamental questions:
- How do we decide what to produce with our limited resources?
- How will those goods and services be produced?
- How do we ensure stable prices and full employment of our resources?
- How do we provide a rising standard of living both for ourselves and for future generations?
Economics is truly a study of human efforts and behavior to promote and conserve standards of living. This study involves an understanding of the production, exchange, distribution, and consumption of the goods and services that are possible given scarce resources and technology. The study of economics may be undertaken from a macro perspective of overall economic activity or a micro perspective of individual decision making in typical households, businesses, or governmental units. This course will focus extensively on the micro side.
Adam Smith, considered the Father of Modern Economic Thought, stated it best in his classic work, Wealth of Nations, discussing human behavior in the modern economy:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.
He furthers this thought later in his book:
Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
This is a course in microeconomics. The objective of this course is to provide a better understanding of how the different participants in the economy, individuals, businesses, and governments, interact to answer the above fundamental questions. What are the key characteristics of product, resource, and financial markets? What are the connections between how product and resource markets are structured and rational economic behavior among individual buyers and sellers in product, labor, natural resource, financial, and international markets? What are the implications of this conduct for economic efficiency and economic equity? How do firms behave in strategic situations? What are the major public policy approaches for ameliorating inefficient and/or inequitable processes and outcomes in product and resource markets?
Our study of microeconomics will involve economic description, theory, and policy analyses, which address these important and fundamental questions. Think of it as a study of market processes and outcomes . . . what they mean, how they happen, and what we can and cannot do about them! Our journey will make extensive use of definitions and marginal analysis based on rational behavior, the idea of resulting "equilibrium" in these markets, and assessment of equilibrium market outcomes involving efficiency and equity. Our investigation will necessitate the use of mathematical concepts to better understand how these forces work together. Our interaction will be based on weekly readings from the text supplemented by online learning resources and webquests reported and discussed via email and conferencing. It is a journey that requires a thorough understanding of market forces and human behavior.