Economics 351x:
Professor Anthony M. Marino
Department of Finance and
Business
Economics, Marshall School of Business
Course Information
Textbook:
The recommended textbook for our class is Microeconomics for Business (Fourth
Custom Edition for USC). The text contains 15 chapters from the book
Microeconomics by Pindyck and Rubinfeld, 9th edition, and 3 chapters
from the book Microeconomics by Hubbard and O’Brien, 6th edition.
Earlier editions of this custom book would be fine for use in the course. Also,
earlier editions of the Pindyck and Rubinfeld book would also be fine for use in
the course.
I provide book chapter type lecture notes in the form of online pdf files.
The text is expensive, so that those who would like to save money might consider
buying an older edition of Pindyck and Rubinfeld online.
The three chapters from Hubbard can be skipped, as they cover background
material which is discussed in my lecture notes.
The lecture notes for the course will be available on my web page in pdf form (password protected). Below you will find links to each of the lecture notes in the list of topics. You can download the entire manuscript complete with a mathematical appendix here Microeconomics for Business Decisions Marino 2019.pdf
Grading Scheme, Contact Information, and Web Page Address:
1. Your grade will be based on the following scheme:
SE1 = 25, SE2 = 22, SE3 = 20, FE = 33.
For this case, the sum of your 4 scores is 100. If we drop
the lowest of the three section exams and weigh the final at 60 (= 35 + 25)
points, your score is
25 + 22 + (33/35) 60 = 25 + 22 + 56.6 = 103.6.
Because 103.6
> 100, your point total for the course is 103.6.
2. Office Hours: Tuesday and Thursday 2-3:30 pm.
814 Hoffman Hall
(213) 740-6525
(213) 740-6650 FAX
e-mail:
amarino@usc.edu
web page:
http://faculty.marshall.usc.edu/Anthony-Marino/ or
http://faculty.marshall.usc.edu/Anthony-Marino/main.html
(the second version has no frames)
Topics and Readings
Lecture 1. Introduction: Principles of Business Economics
1.1 Economic models
1.2 The Market System
1.3 Supply and Demand Analysis: The Firm and Markets
Lecture 2. A Mathematics Review: Marginal Functions, Average Functions, Elasticity, and Notes on Optimization LN 2.
2.1 Introduction
2.2 The Basic Problem
2.3 The Marginal or Derivative Function and Optimization
2.4 The Average Function
2.5 Elasticity
Lecture 3. Consumer Behavior Theory: The Foundation for Demand, the Firm’s
Revenue and Marketing
3.1 Choice and Utility
3.2 The Budget Constraint
3.3 The Consumer’s Equilibrium and Derivation of Individual Demand with
Applications to (i) Subsidizing Employee Housing, (ii) Nonlinear pricing and
Business Revenue Enhancement, and (iii) The Effects of Business Taxes on
Consumers
3.4 Market Demand for Goods and Services
3.5 Price and Income Elasticities of Demand and Implications for the Firm’s
Revenue
3.6 The Law of Demand
3.7 Intertemporal Consumption Choice: Saving, Borrowing and Financing
Lecture 4. Two topics in Consumer Theory as Applied to Business
4.1 Consumer Surplus: A Proxy for Consumer Utility
4.2 Forecasting Demand for a Firm’s Product
4.3 Using Regression Estimates to Make Predictions for the Firm
Lecture 5. Choice under Uncertainty LN 5.
5.1 Introduction
5.2 A Model of Choice with Uncertainty: The Notion of Risk Aversion in Finance
Lecture
6. Production and the Link to the Firm’s Cost Function: An Operations Management
Problem
6.1 Introduction
6.2 The Production Function
6.3 Average Product, Marginal Product and Input Elasticity
6.4 Isoquants and the MRTS
6.5 The Link between Production and Cost
Appendix on Labor Productivity
Lecture
7. Short-run and Long-run Costs for the Firm
7.1 Introduction
7.2 Short-run Cost
7.3 Average and Marginal Costs
7.4 Long-run Costs
7.5 Real World Examples from the Business World
8.1 Introduction
8.2 Short-run Profit Maximization
8.3 Long-run Profit Maximization
8.4 Competitive Input Demand
8.5 Social Welfare with Perfect Competition and the Effects of Government
Controls on a Competitive Market
Lecture
9. Pure Monopoly and the Firm’s Decision Making
9.1 Introduction
9.2 The Monopolist’s Profit Maximizing Equilibrium
9.3 The Deadweight Loss of Monopoly and Price Regulation
9.4 Monopsony, Labor Unions and Government Regulation in Monopsony
Lecture
10. A Business Firm’s Pricing Strategy with Monopoly Power
10.1 Introduction
10.2 General Price Discrimination:
Perfect Price Discrimination, Second Degree Price Discrimination, Third Degree
Price Discrimination, Intertemporal Price Discrimination, Two Part Tariffs,
Bundling and Tying
Lecture
11. Monopolistic Competition, Oligopoly and the Firm’s Decision Making
11.1 Introduction
11.2 Monopolistic Competition
11.3 Oligopoly
Lecture 12. Business Applications of Game Theory
12.1 Introduction
12.2 Dominant Strategy Equilibrium
12.3 Nash Equilibrium
12.4 Strategic Moves
12.5 Auctions
Lecture 13. Asymmetric Information in Markets for Commodities and Within Firms
13.1 Introduction
13.2 Asymmetric Information in Markets
13.3 The Principal-Agent Problem within Organizations: An Introduction to Human
Resource Decisions
13.4 Remarks on Information Economics
Lecture 14. Externalities, Public Goods and Government’s Interface with Business
14.1 Introduction
14.2 Externalities
14.3 Pollution Abatement
14.4 Externalities and Property Rights
14.5 Private versus Public Provision of Public Goods
Tentative Schedule
|
Session |
Date
|
Topic |
Book Chapters |
Marino Lecture
Notes |
|
1 T |
8/27 |
Methodology, The Market System, Supply and Demand |
Ch1,4
|
LN1 |
|
2 Th |
8/29 |
Supply and Demand and Math Review |
Ch1,4
|
LN1, LN2 |
|
3 T |
9/3 |
Math Review, Demand |
Ch5 |
LN2, LN3 |
|
4 Th |
9/5 |
Demand |
Ch5,
Ch6 |
LN3 |
|
5 T |
9/10 |
Demand |
Ch6 |
LN3 |
|
6 Th |
9/12 |
Consumer Theory Topics |
Ch6 |
LN4 |
|
7 T |
9/17 |
Consumer Theory Topics, Uncertainty |
Ch6, Ch7 |
LN4, LN5 |
|
8 Th |
9/19 |
Section Exam 1****** |
|
|
|
9 T |
9/24 |
Uncertainty, Production |
Ch7, Ch8
|
LN5, LN6 |
|
10 Th |
9/26 |
Production, Cost |
Ch8, Ch9 |
LN6, LN7 |
|
11 T |
10/1 |
Cost |
Ch9 |
LN7 |
|
12 Th |
10/3 |
Perfect Competition |
Ch10 |
LN8 |
|
13 T |
10/8 |
Perfect Competition |
Ch10,Ch11,Ch16
|
LN8 |
|
14 Th |
10/10 |
Perfect Competition |
Ch11
|
LN8 |
|
15 T |
10/15 |
Section Exam 2****** |
|
|
|
16 Th |
10/17 |
Monopoly |
Ch12
|
LN9 |
|
17 T |
10/22 |
Monopoly |
Ch12
|
LN9 |
|
18 Th |
10/24 |
Monopsony and Pricing |
Ch12,Ch13,Ch16
|
LN9, LN10 |
|
19 T |
10/29 |
Pricing |
Ch13
|
LN10 |
|
20 Th |
10/31 |
Oligopoly |
Ch14
|
LN11 |
|
21 T |
11/5 |
Oligopoly |
Ch14
|
LN11 |
|
22 Th |
11/7 |
Oligopoly |
Ch14
|
LN11 |
|
23 T |
11/12 |
Games and
Competitive Strategy |
Ch15 |
LN12 |
|
24 Th |
11/14 |
Section
Exam 3****** |
|
|
|
25 T |
11/19 |
Games and
Competitive Strategy, Auctions |
Ch15 |
LN12 |
|
26 Th |
11/21 |
Auctions, Asymmetric
Information |
Ch15, Ch17 |
LN12, LN13 |
|
27 T |
11/26 |
Asymmetric
Information, Externalities and Public Goods |
Ch17, Ch 18 |
LN13, LN14 |
|
28 T |
12/3 |
Externalities and
Public Goods |
Ch18 |
LN14 |
|
29 Th |
12/5 |
Review ****** |
****** |
****** |
Course Description.
The main goal of this course is to show how microeconomic
models can be used to guide business decisions. This is a course designed for
business majors, with key departures from standard introductory microeconomics
courses. We will study the behavior of consumers and firms, and their
implications for demand, supply and market equilibrium. We will analyze
competitive markets, market failures, and the role of government. To reflect
rising concentration in markets we will spend some time on the implications of
market power on firm pricing decisions and profits. The course also introduces
basic principles of game theory and competitive strategy.
This course is designed to prepare students for future business courses,
including finance, marketing, and strategy. The models, methods, and case
studies have been selected with a focus on business relevant applications. For
example, the economics of consumer choice underlies much of modern marketing
strategy, including pricing, segmentation and advertising. The theory of the
firm contributes to a sound understanding of cost accounting as well as
production decisions. Economic analysis of intertemporal decisions and behavior
in a risky environment form the foundation of finance. Finally, the study of
market failure and industrial structure is necessary for an understanding of
government's role in a market economy and the political environment for
business.
More generally, this course provides a rigorous foundation
for the study of decision making problems within firms. The student who
successfully completes this course should be able to apply microeconomic
analysis to issues of real world interest within the firm.
Slides
Practice Exams