ECTS - University of Pisa
This course provides the introduction to economics for undergraduates in the Department of Economics. It introduces the characteristics of economies using historical and crosscountry comparisons across the major dimensions of economic performance (growth, inequality, stability). The aim if the course is to provide an analytical introduction to the core concepts of modern microeconomics.
By taking the main economic actors and showing how they make decisions, the course covers behaviour in goods, labour and credit markets, highlighting the role of the rules of the game (institutions), and showing the sources of market successes and market failures.
The course will also investigate two contemporary issues: inequality and the environment.
Ongoing assessment to monitor academic progress will be carried out in the form of tests (multiple choice questions) and open question in the midterm exam
Students learn how to analyse a wide variety of economic situations by identifying the decision maker(s) (including individuals, households, firms, communities, and unions), their objectives, the action(s) they have to decide, the constraints they face (the feasible set) and the decision rule. This provides a broadly applicable method for identifying the possibilities for mutual gains from an economic interaction and the presence of conflicts of interest. The concepts of trade-offs and opportunity cost, and the evaluation of economic outcomes according to the criteria of efficiency and fairness are used repeatedly. Students will use (a) historically and methodologically informed narrative, (b) graphical economic models and (c) mathematical models to analyse these issues.
At the end of the course, students should:
Students will have to prepare a written assigment using data and creating graph to discuss an actual problem of real economies
The module enables the student to be able to work individually and sometimes in groups, to acquire flexibility and willingness to discuss.
During the oral exam, the teachers will assess the behaviour acquired, verifying the way in which the work is managed and organised.
No prerequisite is required, mathematical tools will be used at a basic level.
There will be 32 2-hour lectures in all (16 in each module). Other teaching (10 lectures) will be a mix of in-depth studies on some transversal topics and exercises.
Preliminary programme (please check the elearning platform for update)
Studying Material:
Slides, Lecture Notes and, from the books available on core-econ.org: The Economy,
units 1-8, 11, 12, Leibnizes (appendixes of analytical models) and Doing Economics (for the assignment). If we have time, we will focus also on inequality and climate change issues (Units 19 and 20)
List of topics we will deal with:
Unit 1 - The capitalist revolution
Empirical data on common economic indicators and the importance of this approach in the economic analysis. Take a glimpse at absolute and comparative advantages and some topics of interest today such as causality, inequality, long run growth and its environmental impact.
Unit 2 - Technology, population, and growth
What an economic model is by looking at the Classical economics and at Schumpeter's idea of creative destruction. We introduce the concepts of costs and pro ts, innovation and the diminishing average product of labour.
Unit 3 - Incentives and the Moral Economy
Analisys of individual choices, budget constraints, the feasible frontier and the solution of constrained maximisation in individual behaviour. Marginal rate of substitution and marginal rate of transformation.
Unit 4 - Social interactions
Game theory is the starting point for behavioral economics, which is slightly introduced in this unit. Dominant strategy, the prisoner's dilemma, the resulting Nash equilibria and the problem of free riding. Focus on altruistic preferences and the concept of fairness.
Unit 5 - Property and power: Mutual gains and conflict
What happens when there is more than one actor in the economy and how they trade, depending on their initial endowments. De finition of economic surplus, inequality and analysis of public policies to contrast it.
Unit 6 - The fi rm: Owners, managers, and employees
Investigation of the labour market and the basic microeconomic model used for the determination of wage.
Unit 7 - The firm and its customers
How a firm decides the quantity to produce (and to sell) and which price it chooses for its good. Demand elasticity, firms' market power and the reasons behind innovation, diversi cation and advertisement.
Unit 8 - Supply and demand: Price-taking and competitive markets
Price-taker firms, competitive equilibrium and what impacts trade, reallocation, supply/demand shocks and taxes have on the equilibrium. Distinction between price-taking and price-setting fi rms.
Unit 11 - Rent-seeking, price-setting, and market dynamics
De nition of exogenous and endogenous shock, how and when a market is not in equilibrium. Price makers behaviour and rent extraction may bring to a new, competitive, equilibrium. Innovation, di erences between short- and long-run equilibria and elasticities.
Unit 12 - Markets, efficiency, and public policy
Market failures and missing market. Externalities and public good. Bargaining, policies and income distribution.
Mathematical Appendix - LEIBNIZES
These appendixes give a mathematical formulation and/or derivation of fundamental microeconomic results that encompass topics of all the course, and which are a characterizing competence of any microeconomics course in economics department.
Doing Economics
These section introduces a more modern way of approaching economic problems. Using the software R, it is possible to obtain statistically strong results in a fairly simple way, while also introducing one of the more used, open-source, software used in economic research.
The refernce manual is "The Economy" by The Core Project. There is a physical book published by Oxford University Press and a free e-book available at:
https://www.core-econ.org/project/core-the-economy/
Moreover, few lectures will use the "Doing Economics: Empirical Projects" available at:
https://www.core-econ.org/doing-economics/
Further readings would be suggested in class.
The program is exactly the same for attending and non-attending students. Attendance is useful but not compulsory.
The exam will be written and oral. Students must obtain 18/30 to be admitted to the oral exam.
At the end of the first module there will be the possibility to take an intermediate exam. Student who get more than 18/30 can take only the second module exam at the first prove of the summer exams (end of May or beginning of June). The total mark will be an average of the two intermediate exams.
Info about assessment methods are available on the course webpage
The virtual room will be available few days before the exam
At the web site of The Core Project there is all the material needed and other interesting readings:
https://www.core-econ.org/
All the slides of the course will be available at the elearning platform:
https://elearning.ec.unipi.it/course/view.php?id=1307
The web page of the teachers:
https://people.unipi.it/simone_dalessandro/
https://sites.google.com/ec.unipi.it/pietroguarnieri/
