BUS 102 Introduction to Microeconomics
Unit Information
0.1Introduction
Welcome to LBE 100 Microeconomics. You may be taking this unit as part of an Economics major or minor, or as one of the required units for professional recognition in Accounting, or to support your major in Finance, Marketing, Management, or because you recognise that some knowledge of economics is essential these days for understanding key issues in business, politics and society, whatever career you pursue. In each case, we hope you will enjoy the unit, as well as finding it useful. We will be using the unit to introduce you to the economic way of thinking and analysing problems. Obviously, we will only be able to tackle some of the many aspects of economics in this unit, but the economic way of thinking and approaching issues is a skill you will find useful in a variety of settings. We firmly believe that a knowledge of the basics of economics is important for successful participation in business life, and would strongly encourage you to explore the possibility of also including some Macroeconomics in your degree.
Economic issues play a very important part in all of our lives, as citizens, as consumers, and as employees or employers. Understanding economic terminology and being able to use economic principles, concepts and tools can assist all of us to make more effective decisions in our personal and professional life.
The aim of this subject is to introduce you to some of the key issues, concepts and theories in Microeconomics, and to encourage and assist you to apply the concepts and tools in a variety of contexts. The key to success in the subject lies in regular and consistent effort on your part to learn, understand and apply the concepts. Such effort will also lead to maximum long-term ability to utilise these tools and principles in your everyday life.
To help you achieve success in the subject, a specific work program has been devised for each week of the semester. You will need to work consistently throughout the semester at the various tasks specified in the work program. The program includes several short assessment tasks which are designed both to assist your learning and understanding and to provide feedback about how you are coping with the unit and the areas with which you should be seeking help. The main components of the learning program - lectures, tutorials, drop-ins, textbook and online resources - are introduced in the next few paragraphs.
Lectures
| There are one hour of lectures per week. These lectures will not attempt to cover every aspect of the topic, but will provide:| 0 an overview of the week’s topic;
1 a guide to reading and other resources on the topic, and to the economic terminology involved; 2 detailed guidance and instruction on the more difficult / technical parts of the topic; 3 some discussion of the topic;
4 applications of the topic and demonstration of examples; 5 occasionally, the lecture may include screening and discussion of video resources. *
* Lectures will be much more useful if you prepare for them in advance. You should at least consult the relevant topic section of this Learning Guide before coming to the lecture. It is desirable that you also skim quickly through the relevant section of the textbook before the lecture. *
* Outline lecture powerpoint slides are available on the Unit website. Printed copies of these free you from copious note taking in the lecture. Rather, you will be able to annotate these slides, and concentrate in the lecture on understanding and applications. *
* Tutorial Workshops
*
* | * You are required to attend a two hour tutorial/workshop each week. Tutorial groups will work on appropriate pre-set problems and exercises and allow an opportunity for individual concerns, interests and issues to be raised and attended to. The set problems and questions are to be attempted prior to the tutorial, so you will know from your attempts at them the areas where you need help. Please use the opportunity provided by the tutorial to raise matters arising from the week’s work that are of particular interest to you, to clarify issues which are not clear and to relate the material more directly to the real world. Workshop problems will be attempted during tutorials. * Note also that assessment tasks will be undertaken in tutorials in weeks 5, 7 and 10, and detailed feedback on the formal assessment tasks will also be provided in the tutorials. * | *
* Drop-ins
*
*
* | * Provision may be made for “drop-in” sessions during the semester. These are not compulsory, but are available for you to seek extra assistance and support (from staff and from peers) if you are having difficulties. The drop-ins will deal with your specific concerns.| *
*
*
* In Your Own Time
*
* | * Each week, you will be expected (in your own time) to: * | 6 complete the set reading and other tasks specified in the Learning Guide; 7 ensure you have copies of the powerpoint lecture outline slides; 8 attempt the set questions and exercises from the textbook and Learning Guide; 9 add to your file of newspaper clippings relating to real world microeconomic issues; 10 prepare for the next class, noting any areas where you require further clarification.
Note that in addition to the three hours of class time, you should expect to spend approximately another six or seven hours working on your microeconomics outside class. It is in your interest to make this work as effective and enjoyable as possible!
Prescribed Text
| The textbook chosen for this subject is:Hubbard G., Garnett A., Lewis P. & O’Brien P., 2011, 2nd Edition, Microeconomics, Pearson Education Australia.Books are available from the Swinburne bookshop.The Microeconomics text can also be packaged with Macroeconomics. The Microeconomics text would suffice, but the full package is much better value for students intending to pursue further studies in Economics.Using the textWhen reading the text, try to do so actively, asking questions of yourself and the text, and checking that these questions are being answered. One way to do this is to look carefully at the topic’s learning objectives (shown in this Learning Guide) and the text headings and summary before commencing your reading. As you work through each textbook section, make notes and jot down questions that come to mind as you read, and, where you have difficulty, check the explanation given in one of the other references listed in the Learning Guide Topic Bibliography.|
Using this approach means your reading will be intentional, guided and therefore more enjoyable, effective and efficient. This makes good economic sense!
After you have read the text, attempt the Tutorial Questions set in this Learning Guide (including the Multiple Choice Questions from Appendix Two and the end of chapter questions from the textbook). Make a note of any problems you wish to have discussed in the tutorial.
Online Resources
The unit website contains powerpoint lecture outlines which should be printed off to facilitate lecture note taking. | Further assistance is available via both the LBE100 unit website. There are interactive self assessment activities and links to other resources which can assist your learning. The unit website will be regularly updated during the semester and will include notices about assessment details. It can also be used to facilitate communication with your peers. NOTE: The publishers of your textbook have an online resource “myeconlab”. This contains a variety of practice exercises and resources that some students may find interesting. However, access to this website requires the purchase of a new copy of the textbook to obtain an access code which is only valid for a semester.Using “myeconlab” is not required for this Unit.|
Peer Support
| Remember, too, that a very effective way of improving your understanding is to share your ideas and problems with other students, in the class tutorials, via the web, and in your informal interactions. |
Access to Staff
| You are encouraged to consult members of the teaching panel about your individual problems and progress - and about new understandings and successes! Please don’t wait for small problems to become large before contacting us for assistance. Remember that you can contact us by telephone (including Voicemail) or Email as well as by seeing us in person. If you are using Voicemail, please leave your name and phone number clearly so we can get back to you as soon as possible. If you are using email, please specify LBE100 as the subject of the email.|
We hope you enjoy this unit and find it helpful, both now and for the future.
This enjoyment and usefulness will both be considerably enhanced if you consistently try to apply the material we are studying to events occurring in the Australian (and global) economy. Keep a news file of relevant items and discuss them with your family, friends and peers.
0.2Unit Overview
Economics starts with the premise that “wants” (things that individuals and societies would like to have) are unlimited, whilst “resources” (the means of satisfying those wants) are limited. As a result, choices have to be made, and choosing always involves foregoing some other alternative. Thus, the cost of choosing to do or to have something is the benefit foregone by not being able to do or to have the best alternative that is not chosen. This benefit foregone is called “opportunity cost”.
Economics is therefore a science of making wise choices - of trying to ensure that the resources are used in such a way that the maximum benefit is obtained from them, and that scarce resources are not wasted or misused.
There are two broad areas in which economics then tries to apply this concept of choice - Macroeconomics (concerned with the economy as a whole, and concentrating on “big picture” issues such as the overall level of unemployment, prices, growth) and Microeconomics which focuses on smaller parts of the economy, such as the price and quantity of a particular good or service.
As the unit title indicates, we will be concerned with Microeconomics.
We start with an overview of the problem of scarcity, and the consequent need to make choices. This first module also enables us to illustrate and apply some of the basic tools of economics and the economic way of thinking.
We then look in detail at the way in which a market economy attempts to solve the economic problem, by allocating resources efficiently to the production of a wide range of goods and services. In exploring the operation of markets, we use the powerful and versatile tools of supply and demand analysis. The topic of elasticity further enhances our understanding of the operation of markets.
To this point, the unit has focused on markets. In Module 3 we begin to examine the economic choices of the firm as it tries to produce efficiently, exploring some key issues surrounding production and cost.
Module 4 explores the way in which the particular market structure in which the firm operates affects the choices and efficiency of the firm and the market. We explore the behaviour of firms in monopoly, monopolistic competition and oligopoly and compare the performance of these market structures with perfect competition.
In Module 5, we investigate the notion of market failure and how these might lead to a sub-optimal allocation of resources. The module concludes with an evaluation of the role of markets and government in attempting to provide the best use of society’s limited resources.
0.3Aims and Objectives
LBE 100 - Microeconomics has two broad aims.
- The first is to help students to understand some of the basic tools and concepts of microeconomics and to apply those tools and concepts to a variety of economic issues faced by individuals, business, non-profit organisations and government.
- The second is to help students develop expertise in using an analytical approach to problem-solving which will benefit them in their personal and professional lives.
At this stage, we simply indicate the broad learning objectives which you should achieve as a result of your study in Microeconomics. More specific objectives for each Module and Topic are identified later in this Learning Guide, along with the tasks which you will undertake to achieve those objectives.
| After completing LBE 100 - Microeconomics you should be able to: 11 appreciate the nature and significance of the key economic concept of opportunity cost and its relevance in a variety of contexts;| 12 understand a range of economic concepts and their relevance to your personal and professional decision-making; 13 understand and use graphical representations and economic models; 14 evaluate newspaper articles dealing with micro-economic issues; 15 apply economic concepts and reasoning to real-world issues facing government, business and consumers; 16 contribute to the on-going debate about economic issues of interest to you.
0.1Introduction
Welcome to LBE 100 Microeconomics. You may be taking this unit as part of an Economics major or minor, or as one of the required units for professional recognition in Accounting, or to support your major in Finance, Marketing, Management, or because you recognise that some knowledge of economics is essential these days for understanding key issues in business, politics and society, whatever career you pursue. In each case, we hope you will enjoy the unit, as well as finding it useful. We will be using the unit to introduce you to the economic way of thinking and analysing problems. Obviously, we will only be able to tackle some of the many aspects of economics in this unit, but the economic way of thinking and approaching issues is a skill you will find useful in a variety of settings. We firmly believe that a knowledge of the basics of economics is important for successful participation in business life, and would strongly encourage you to explore the possibility of also including some Macroeconomics in your degree.
Economic issues play a very important part in all of our lives, as citizens, as consumers, and as employees or employers. Understanding economic terminology and being able to use economic principles, concepts and tools can assist all of us to make more effective decisions in our personal and professional life.
The aim of this subject is to introduce you to some of the key issues, concepts and theories in Microeconomics, and to encourage and assist you to apply the concepts and tools in a variety of contexts. The key to success in the subject lies in regular and consistent effort on your part to learn, understand and apply the concepts. Such effort will also lead to maximum long-term ability to utilise these tools and principles in your everyday life.
To help you achieve success in the subject, a specific work program has been devised for each week of the semester. You will need to work consistently throughout the semester at the various tasks specified in the work program. The program includes several short assessment tasks which are designed both to assist your learning and understanding and to provide feedback about how you are coping with the unit and the areas with which you should be seeking help. The main components of the learning program - lectures, tutorials, drop-ins, textbook and online resources - are introduced in the next few paragraphs.
Lectures
| There are one hour of lectures per week. These lectures will not attempt to cover every aspect of the topic, but will provide:| 0 an overview of the week’s topic;
1 a guide to reading and other resources on the topic, and to the economic terminology involved; 2 detailed guidance and instruction on the more difficult / technical parts of the topic; 3 some discussion of the topic;
4 applications of the topic and demonstration of examples; 5 occasionally, the lecture may include screening and discussion of video resources. *
* Lectures will be much more useful if you prepare for them in advance. You should at least consult the relevant topic section of this Learning Guide before coming to the lecture. It is desirable that you also skim quickly through the relevant section of the textbook before the lecture. *
* Outline lecture powerpoint slides are available on the Unit website. Printed copies of these free you from copious note taking in the lecture. Rather, you will be able to annotate these slides, and concentrate in the lecture on understanding and applications. *
* Tutorial Workshops
*
* | * You are required to attend a two hour tutorial/workshop each week. Tutorial groups will work on appropriate pre-set problems and exercises and allow an opportunity for individual concerns, interests and issues to be raised and attended to. The set problems and questions are to be attempted prior to the tutorial, so you will know from your attempts at them the areas where you need help. Please use the opportunity provided by the tutorial to raise matters arising from the week’s work that are of particular interest to you, to clarify issues which are not clear and to relate the material more directly to the real world. Workshop problems will be attempted during tutorials. * Note also that assessment tasks will be undertaken in tutorials in weeks 5, 7 and 10, and detailed feedback on the formal assessment tasks will also be provided in the tutorials. * | *
* Drop-ins
*
*
* | * Provision may be made for “drop-in” sessions during the semester. These are not compulsory, but are available for you to seek extra assistance and support (from staff and from peers) if you are having difficulties. The drop-ins will deal with your specific concerns.| *
*
*
* In Your Own Time
*
* | * Each week, you will be expected (in your own time) to: * | 6 complete the set reading and other tasks specified in the Learning Guide; 7 ensure you have copies of the powerpoint lecture outline slides; 8 attempt the set questions and exercises from the textbook and Learning Guide; 9 add to your file of newspaper clippings relating to real world microeconomic issues; 10 prepare for the next class, noting any areas where you require further clarification.
Note that in addition to the three hours of class time, you should expect to spend approximately another six or seven hours working on your microeconomics outside class. It is in your interest to make this work as effective and enjoyable as possible!
Prescribed Text
| The textbook chosen for this subject is:Hubbard G., Garnett A., Lewis P. & O’Brien P., 2011, 2nd Edition, Microeconomics, Pearson Education Australia.Books are available from the Swinburne bookshop.The Microeconomics text can also be packaged with Macroeconomics. The Microeconomics text would suffice, but the full package is much better value for students intending to pursue further studies in Economics.Using the textWhen reading the text, try to do so actively, asking questions of yourself and the text, and checking that these questions are being answered. One way to do this is to look carefully at the topic’s learning objectives (shown in this Learning Guide) and the text headings and summary before commencing your reading. As you work through each textbook section, make notes and jot down questions that come to mind as you read, and, where you have difficulty, check the explanation given in one of the other references listed in the Learning Guide Topic Bibliography.|
Using this approach means your reading will be intentional, guided and therefore more enjoyable, effective and efficient. This makes good economic sense!
After you have read the text, attempt the Tutorial Questions set in this Learning Guide (including the Multiple Choice Questions from Appendix Two and the end of chapter questions from the textbook). Make a note of any problems you wish to have discussed in the tutorial.
Online Resources
The unit website contains powerpoint lecture outlines which should be printed off to facilitate lecture note taking. | Further assistance is available via both the LBE100 unit website. There are interactive self assessment activities and links to other resources which can assist your learning. The unit website will be regularly updated during the semester and will include notices about assessment details. It can also be used to facilitate communication with your peers. NOTE: The publishers of your textbook have an online resource “myeconlab”. This contains a variety of practice exercises and resources that some students may find interesting. However, access to this website requires the purchase of a new copy of the textbook to obtain an access code which is only valid for a semester.Using “myeconlab” is not required for this Unit.|
Peer Support
| Remember, too, that a very effective way of improving your understanding is to share your ideas and problems with other students, in the class tutorials, via the web, and in your informal interactions. |
Access to Staff
| You are encouraged to consult members of the teaching panel about your individual problems and progress - and about new understandings and successes! Please don’t wait for small problems to become large before contacting us for assistance. Remember that you can contact us by telephone (including Voicemail) or Email as well as by seeing us in person. If you are using Voicemail, please leave your name and phone number clearly so we can get back to you as soon as possible. If you are using email, please specify LBE100 as the subject of the email.|
We hope you enjoy this unit and find it helpful, both now and for the future.
This enjoyment and usefulness will both be considerably enhanced if you consistently try to apply the material we are studying to events occurring in the Australian (and global) economy. Keep a news file of relevant items and discuss them with your family, friends and peers.
0.2Unit Overview
Economics starts with the premise that “wants” (things that individuals and societies would like to have) are unlimited, whilst “resources” (the means of satisfying those wants) are limited. As a result, choices have to be made, and choosing always involves foregoing some other alternative. Thus, the cost of choosing to do or to have something is the benefit foregone by not being able to do or to have the best alternative that is not chosen. This benefit foregone is called “opportunity cost”.
Economics is therefore a science of making wise choices - of trying to ensure that the resources are used in such a way that the maximum benefit is obtained from them, and that scarce resources are not wasted or misused.
There are two broad areas in which economics then tries to apply this concept of choice - Macroeconomics (concerned with the economy as a whole, and concentrating on “big picture” issues such as the overall level of unemployment, prices, growth) and Microeconomics which focuses on smaller parts of the economy, such as the price and quantity of a particular good or service.
As the unit title indicates, we will be concerned with Microeconomics.
We start with an overview of the problem of scarcity, and the consequent need to make choices. This first module also enables us to illustrate and apply some of the basic tools of economics and the economic way of thinking.
We then look in detail at the way in which a market economy attempts to solve the economic problem, by allocating resources efficiently to the production of a wide range of goods and services. In exploring the operation of markets, we use the powerful and versatile tools of supply and demand analysis. The topic of elasticity further enhances our understanding of the operation of markets.
To this point, the unit has focused on markets. In Module 3 we begin to examine the economic choices of the firm as it tries to produce efficiently, exploring some key issues surrounding production and cost.
Module 4 explores the way in which the particular market structure in which the firm operates affects the choices and efficiency of the firm and the market. We explore the behaviour of firms in monopoly, monopolistic competition and oligopoly and compare the performance of these market structures with perfect competition.
In Module 5, we investigate the notion of market failure and how these might lead to a sub-optimal allocation of resources. The module concludes with an evaluation of the role of markets and government in attempting to provide the best use of society’s limited resources.
0.3Aims and Objectives
LBE 100 - Microeconomics has two broad aims.
- The first is to help students to understand some of the basic tools and concepts of microeconomics and to apply those tools and concepts to a variety of economic issues faced by individuals, business, non-profit organisations and government.
- The second is to help students develop expertise in using an analytical approach to problem-solving which will benefit them in their personal and professional lives.
At this stage, we simply indicate the broad learning objectives which you should achieve as a result of your study in Microeconomics. More specific objectives for each Module and Topic are identified later in this Learning Guide, along with the tasks which you will undertake to achieve those objectives.
| After completing LBE 100 - Microeconomics you should be able to: 11 appreciate the nature and significance of the key economic concept of opportunity cost and its relevance in a variety of contexts;| 12 understand a range of economic concepts and their relevance to your personal and professional decision-making; 13 understand and use graphical representations and economic models; 14 evaluate newspaper articles dealing with micro-economic issues; 15 apply economic concepts and reasoning to real-world issues facing government, business and consumers; 16 contribute to the on-going debate about economic issues of interest to you.
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