ECTS - University of Pisa
This course provides the introduction to economics for undergraduates in the Bachelor of Science in Management for Business and 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 assessments to monitor progress in knowledge development will be carried out during lessons and in two midterm exams in the form of tests (multiple choice questions) and open questions.
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.
We will use a plurality of methods and materials.
The free e-book The Economy is the basis of your study. The lectures will follow the book structure and present the selected Units (see below for the complete list).
Lectures slides will also be available on the course web page, but they just provide you with a summary of the main topics and do not substitute the reading of the book and other materials.
For each Unit, you will train yourself both by answering the Questions for self- evaluation on the e book (where you can check the correct answers) and by doing the problem sets that we will weekly assign you and whose solutions will be explained during lectures.
The Mathematical Appendix, called “Leibnizes" gives a mathematical formulation and/or derivation of fundamental microeconomic results that encompass topics of all the course. These mathematical competences are a fundamental of any microeconomics course in economics department, and thus learning them is compulsory also for us.
In the second part of the course, we will organise seminars that are meant to improve oral and written skills that will help you to successfully complete your degree (and beyond). You will be asked to address one of the main problems tackled during lectures by both a) presenting a research paper during classes and b) write an essay on it. The topics for the seminars are listed below. Each of the topic is introduced by a video by a prominent economist which will give you some hints for choosing.
Further details and the list of papers to be presented and discussed will be provided during lectures and uploaded on the course webpage.
Preliminary programme (please check the elearning platform for update)
List of book units 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 profits, 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. Definition of economic surplus, inequality and analysis of public policies to contrast it.
Unit 6 - The firm: 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, diversification 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 firms.
Unit 11 - Rent-seeking, price-setting, and market dynamics
Definition 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, differences 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.
Seminar topics
1. Thomas Piketty: The long-run economics of wealth inequality
2. James Heckman: The economics of inequality and childhood education
3. Lisa Cook: What promotes or kills innovation?
4. Suresh Naidu: Why some countries grew rich
5. Juliet Schor: Why do we work so hard?
6. Juan Camilo Cárdenas: Invisible hands working together
7. Richard Freeman: You can’t outsource responsibility
8. Michael Sandel: Why we shouldn’t trust markets with our civic life
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/
Further readings and reserach papers for the seminar will be suggested in class and listed in the course webpage.
The program is exactly the same for attending and non-attending students.
The exam is composed of two midterm exams and participation in the seminars (oral presentation and written essay).
Grades will be determined based on:
a. Two midterm exams (scored on a 31-point scale), each worth 35% of the final course grade.
b. Presentation and Essay, worth 30% of the final course grade, overall.
The final course grade will be scored on a 30-point scale, with 18 being the minimum passing grade.
Scores higher than 30 will be graded as 30 e lode (with distinction).
If you fail or miss one midterm, then you will have to take a comprehensive written exam (scored on a 31-point scale) worth 70% of the course grade.
Students who will choose not to give the seminar will compulsorily sustain an oral exam about all the topics of the course including those discussed during seminars. This oral exam is worth 30% of the final course grade.
Students who will choose to give the seminar can register the final course grade without an oral examination. To take advantage of this opportunity they must a) present the paper on the scheduled date (TBD), b) submit their essay by May 31st 2023, c) pass the comprehensive written exam by July 31 (in case they hadn’t passed the midterms). If these requirements are not fulfilled, students must sustain the comprehensive oral exam.
The active participation of students during the seminars (questions, comments, participation in the discussion, etc.) will be taken into account in the seminar grade (or in the grade of the oral exam, for those who will choose not to give the seminar).
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=2202
The web page of the teachers:
https://people.unipi.it/simone_dalessandro/
https://sites.google.com/ec.unipi.it/pietroguarnieri/
