Economics I

Teacher(s)

Truyts Tom;

Language

Dutch

Learning outcomes

At the end of this learning unit, the student is able to :

The aim of this course is to provide the students with a first approach to a rigorous analysis of the micro-economic mechanisms of a market economy. More specifically, the objectives are: 1. Familiarize the students with the basic concepts and the fundamental mechanisms of the micro-economic analysis; 2. Get the students to use those mechanisms and concepts to carry out a rigorous analysis of several "real-life" economic problems and economic policy recommendations; 3. Introduce students to information literacy in order to help students to deal efficiently with information and carry out effective research. Train the students to read critically and synthetize the contents of economic articles/texts. The chosen methodology is a qualitative and graphical presentation of economic models, so as to draw the students' attention to the explanative power as well as the limits of the modelling approach.

Content

The Economics 1 course will start with a presentation of the economic model of demand and supply in order to provide an analysis of the mechanisms of competitive markets (price determination, equilibrium quantity, etc.). It will also be the occasion to investigate the impact of some public policies such as price control and indirect taxation on the competitive equilibrium.
The course will then determine why, and under which conditions, free trade can be viewed as an efficient way to coordinate the actions of specialized economic agents. Through a careful examination of the (utopic) necessary conditions a market must fulfil to be considered perfectly competitive, it will be brought to the students' attention that those conditions are seldom (if ever) respected: the course will then provide an overview of several market failures, as well as study in detail several types of imperfect competition.
Finally, the question of the possibility (and the necessity) of public intervention in a market economy will remain a central focus throughout the course.

Part I: Introduction
Chapter 1: What is economics? - basic concepts (Decoster & Ooghe, ch 1)
Chapter 2: Individual rationality and social interaction (Decoster & Ooghe, ch. 2)

Part II: Supply and demand - how markets work
Chapter 3: The market forces of supply and demand (Decoster & Ooghe, ch. 3)
Chapter 4: Elasticities and shocks (Decoster & Ooghe, ch. 4)
Chapter 5: Supply, demand and government policies (Decoster & Ooghe, ch. 5)


Part III: Firm behavior in competitive markets
Chapter 6: The firm as an organization (Decoster & Ooghe, ch. 7)
Chapter 7: Technology and costs of production (Decoster & Ooghe, ch. 8)
Chapter 6: Profit, output and perfect competition (Decoster & Ooghe, ch. 10)

Part IV: Market failures and welfare analysis
Chapter 8: The monopoly (Decoster & Ooghe, ch. 10)
Chapter 9: Imperfect competition (Decoster & Ooghe, ch. 11)
Chapter 10: The invisible hand? (Decoster & Ooghe, ch. 12)
Chapter 11: Public goods and Externalities (Decoster & Ooghe, ch. 13)

Teaching methods

a) Plenary lectures
During the plenary lectures, the professor presents the concepts and mechanisms associated to the different models. Those lectures will follow the course outline presented above.
From a methodological point of view, numerous press articles will be used as bibliographical support beyond the reference book. The objective is twofold: train the students to a careful reading and synthesis of economic texts, as well as draw the students' attention to the omnipresence of economic questions in the public debate.

b) Exercise sessions (TA sessions)
The exercise sessions are carried out in small groups, and aim at checking knowledge acquisition as well as applying the theoretical concepts presented in class to solve exercises and case studies. So as to benefit from those sessions, the students should have reviewed the corresponding lectures.

c) Personal work
Regular personal work is critical for success. As the course goes on, each student is expected to devote sufficient time so as to make sure he/she understands the subjects being treated. The revision period at the end of the semester should not be the occasion to discover the course contents, but rather to strengthen the comprehension of a course that is already known by the student. Personal meetings with the course assistants and the professor can be arranged for the students who specifically ask it.

d) Paper assignment
Each student will hand in a short paper in which concepts of the course are applied to a press article, chosen by the student from a list of press articles made available on the course website.

Evaluation methods

Written exam (90% of final result) and paper assignment (10 of final result).
The final exam requires a knowledge of the theoretical concepts as well as the ability to apply those concepts to the resolution of applied exercises (similar but not identical to those treated in the exercise sessions) and the analysis of real-life economic problems.

Bibliography

Ouvrage de référence: André Decoster et Erwin Ooghe, Economie. Een inleiding, édition 2017, ISBN 9789462701090. Disponible au service de reprographie
Syllabus: Tom Truyts, Economie 1. Disponible au service de reprographie

Faculty or entity

ESPB