CdSMANAGEMENT FOR BUSINESS AND ECONOMICS
Codice545PP
CFU12
PeriodoSecondo semestre
LinguaInglese
This module 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.
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:
- Be familiar with many of the core concepts in modern economics and be able to relate these to a range of applications in the real economy.
- Be able to apply these concepts, along with some elementary mathematical techniques acquired on this and other courses, to solve numerical or algebraic economic problems.
- Be able to move without undue difficulty to the more advanced analysis of the core concepts and methods they will encounter on the second year of the degree course.
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 mixture of demonstration classes and smaller-group tutorial classes with accompanying 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,
chapters 1-12, 19, 20, Leibnizes and Doing Economics, chapters 1, 2, 4, 5, 7, 8, 11
Detailed list of topics we will deal with:
- General introduction to some common economic concepts (GDP, inequality, …)
- Absolute and comparative advantages
- Causality vs correlation
- Basic concepts (ceteris paribus, incentives, relative prices, economic rent, technology, isocost lines, innovation)
- Schumpeter’s creative destruction and Malthus’ subsistence wage and diminishing
average product of labour
- Production function, average and marginal product
- Utility, indifference curves, opportunity cost and marginal rate of substitution
- The feasible set and frontier, scarcity and marginal rate of transformation
- Budget constraint, income effect and substitution effect
- Real world data on working hours over time and between countries
- Game theory, free riders and dominant strategies
- Prisoner’s dilemma and Nash equilibria
- Public goods with repeated games
- Pareto optimality
- Inequality, Lorenz curve, Gini coefficient and public policies to tackle inequality
- Firms, labour contracts incompleteness, asymmetric information and unemployment
benefits
- Efficiency wages and involuntary unemployment
- Economies of scale and network economies
- Cost function, marginal and average cost
- Demand function, profit maximization and isoprofit curve
- Consumer, producer and total surpluses
- Demand elasticity to price, markup, competition, monopoly, market failure
- Demand and supply curves and market equilibrium dynamics
- Exogenous shocks, barriers to entry, taxes as a behavior-changing tool
- Perfect competition and law of one price, price-takers and price-setters
- Unemployment, wages and the labour market, indices of interest
- Labour market shocks and types of unemployment, rigidity of wages
- Unions and bargaining power, wage subsidies, reservation wage and education
- Money, wealth and income. Flows and stocks. Consumption, saving and investment
- Interest rates,intertemporal decisions, myopia vs prudence
- Assets, liabilities, net worth and equity
- Short- and long-run equilibria and elasticities, oligopoly
- Bonds, shares and different types of risk, market bubbles
- Price/rent ceilings and floors
- Positive/negative externalities and market failure, marginal private and social benefits
- Government policies and Pigouvian tax
- Non-rival, non-excludable public goods vs private goods
- Missing markets, merit goods, moral hazard and adverse selection
- Inequality across countries and across time, types of inequality
- Fair and unfair inequality, endowments and human capital
- Redistribution tools, equality and economic performance
- Economic activity and climate change
- Abatement policies(price and quantity based), costs and benefits
- Introducing environment in economic analysis and policies
- Mathematical formalization of fundamental topics
- Introduction to R and R Studio within real economic problems
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. Students with a mark strictly above 21 can decide not to take the oral exam, but must register the mark during that time.
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.
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=919
The web page of the teacher:
https://people.unipi.it/simone_dalessandro/