Montclair State University
School of Business
Department of Economics and Finance

ECON 501-01	         Dr. P. LeBel		 
Economic Analysis 	Fall 2009	
UN-3007	M 19:00-21:30	
Course Description

	The resource allocation and distribution of income implications of a market-oriented economy operating under various degrees of competition. Also analyzed are the determinants of consumer and market demand and the theoretical cost structure of firms.

Course Objectives

	A foundation in economic analysis is essential to success in the contemporary business environment.  With its managerial emphasis, this course in economic analysis explores in detail the nature of economic decisions of individual units within the overall economic system. Combining theory with contemporary applications, it examines the nature and consequences of differing market structures to determine the conditions under which market pricing satisfies or fails to satisfy alternative policy criteria. In so doing, the student acquires key analytical skills with which to assess critical business and administrative decision-making. Descriptive, geometric, and elementary quantitative methods will be used throughout the course. Class sessions, which are based on a student's prior reading of assigned materials, require a significant degree of student participation. Extensive use will be made of the course website, located at:  http://netdrive.montclair.edu/~lebelp

	A student who has completed this course is expected to demonstrate a mastery of essential concepts and analytical skills in several key areas. The most important of these areas are:

1.	The role of economic institutions in shaping the allocation of resources, including the nature of the firm, the role of profits, types of business organizations, entrepreneurship, and the role of business in society;

2.	Analytical tools used in economic analysis, including the role of functional relations, the use of basic calculus to arrive at mathematically optimal economic solutions, and the use of statistical tools such as descriptive and analytical statistics, mean, median, variance, standard deviation, coefficient of variation, t-statistics, F-statistics, coefficient of determination,  simple and multiple linear regression, to solve economic problems;

3.	The formulation and interpretation of:  consumer indifference curves, cardinal vs. ordinal and Von Neumann-Morgenstern utility, consumer budgets, revealed preference, Engel curves, and consumer and producer surplus;

4.	The computation and interpretation of point and arc price, income, and cross price elasticities of demand and supply, along with a derivation and application of the elasticity of substitution and consideration of its implications on the distribution of income;

5.	The computation and interpretation of alternative short and long-run production functions of individual firms and industries, including the derivation of total, average, and marginal products, the use of isoquants in the specification of these conditions, the differentiation of Cobb-Douglas, CES, VES, and Leontief production technologies, along with applications of production functions to such problems as linear programming decisions;

6.	The formulation, computation, and interpretation of the following categories of both cost and revenues:  total, average, fixed, variable, marginal, iso-, social vs. private, implicit vs. explicit, and shut-down versus break-even conditions;

7.	The diagrammatic specification of static and dynamic equilibrium optimal and non-optimal conditions of:  perfect competition, pure competition, monopolistic competition, oligopoly, pure monopoly, pure monopsony, monopsonistic competition, oligopsony, the cobweb theorem, Ramsey and other forms of price discrimination, the Cournot, Edgeworth, Chamberlin, Sweezy models, as well as contestable market models, and game theoretic formulations;

8.	The identification and interpretation of general economic equilibrium, including a specification of the Walrasian and Leontief models, along with applications to contemporary economic issues;

9.	The identification of market failure conditions in the context of welfare economic theory, including external economies and diseconomies, pure and quasi-public goods, merit goods, the Arrow impossibility theorem, the general theory of second best, as well as a derivation and application of the methodology of cost-benefit analysis to specific economic issues.

	The student’s knowledge in each of the above areas will be tested in three examinations, and in periodic problem sets.  A student who has successfully mastered both theory and methodological applications in these areas will be well prepared to pursue both direct career experience, as well as continuing study in Economics and/or related fields.

Educational Dimensions of the Strategic Charter Supported by the Course:
Discipline Specific Knowledge and Competencies – Students will acquire knowledge and skills in analyzing fundamental economic issues.  The perspective will vary across individual consumers, firms, and the public sector.  Emphasis in all instances will be on practical applications of basic techniques in economic analysis.
Thinking Skills – Students will use computer spreadsheets to analyze economic conditions relating to market equilibrium under various market structures, taxation, international trade, and income distribution, through both homework assignments and in-class case studies.  In addition, various links to internet data sites will be used to develop a student’s research and organizational skills.
Communications Skills – Students will make periodic presentations regarding classroom case studies they have completed, as well as to analyze contemporary economic issues.
Change Management – Students will be encouraged to think about how economic factors shape institutional decisions at a social level as well as how it affects personal and professional choices.

Montclair State University
School of Business
Department of Economics and Finance

ECON501-01	Dr. P. LeBel
Economic Analysis 	Fall 2009
Syllabus

Text:   Michael Baye, Managerial Economics and Strategy, 
            6th  edition.  (New York, NY.:  McGraw-Hill, 2009).

      Recommended Supplements:
					The Wall Street Journal

					The New York Times

					The Economist

					Financial Times

Readings on Reserve:

Allman,William F.(1985).,”Determining Risks with Statistics – and with Humanity,” Science 85/Baltimore Sun, October 13, 1985, p. 50.
Arrow, Kenneth J, Hollis B. Chenery, B.S. Minhas, and Robert M. Solow.  "Capital-Labor Substitution and Economic Efficiency". Review of Economics and Statistics LXIII (August 1961), pp. 225-250.
Arrow, Kenneth J., “The Organization of Economic Activity:  Issues Pertinent to the Choice of Market versus Non-Market Activity,” in Mansfield Readings, (437-455).
Arrow, Kenneth J.(1997), “Invaluable Goods,” Journal of Economic Literature XXXV (June): 757-765.
Arrow, Kenneth J. (1998), “What Has Economics to Say About Racial Discrimination,” Journal of Economic Perspectives 12:2 (Spring): 91-100.
Arthur, W. Brian (1989), “Competing Technologies, Increasing Returns, and Lock-In by Historical Events,” The Economic Journal 99:394 (March), 116-131.
Atkinson, Anthony B. (1987), “On the Measurement of Poverty,” Econometrica 55:4 (July), 749-764.
Bator, Francis M., “Anatomy of Market Failure,” Journal of Political Economy, (1958).
Baumol, William, (1965). “The Empirical Determination of Demand Relationships,” Economic Theory and Operations Analysis (Prentice-Hall, 1965).
Bergson, Abram.  "On Monopoly Welfare Losses".  American Economic Review LXIII (December 1973), pp. 853-870.
Bernouilli, Daniel (1954, 1738), “Exposition of a New Theory on the Measurement of Risk,” Econometrica 22:2 (January), 23-36.
Christenson, Laurits B., Dale W. Jorgenson, and Lawrence J. Lau (1973)."Transcendental Logarithmic Production Frontiers".  Review of Economics and Statistics LV, no. 1 (February 1973), pp. 28-45.
Coase, Ronald H (1937)., “The Nature of the Firm,” Economica, New Series 4:16 (November), 386-405.
Coase, Ronald H.(1960),  “The Problem of Social Cost”, Journal of Law and Economics  (October).
Conlisk, John (1996).  “Why Bounded Rationality?”  Journal of Economic Literature XXIV:2 (June 1996), pp. 669-700. 
Coughlin, Cletus K., Alec Chrystal, and Geoffrey E. Wood (1988), “Protectionist Trade Policies:  A Survey of Theory, Evidence and Rationale,” Federal Reserve Bank of St. Louis (January/February 1988): 12-30.
Dixit, Avinash, and Robert Pindyck (1994), Investment Under Uncertainty (Princeton, NJ:  Princeton University Press).
Downs, Anthony (1957), “An Economic Theory of Political Action in a Democracy,” Journal of Political Economy I, 65:2 (April);, 135-150.
Federal Trade Commission (1973).  “The Petroleum Industry:  Structure and Conduct”, in Mansfield, Microeconomics Readings, (326-341).
Friedman, Milton and Leonard J.Savage (1948), “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy I 56:4 (August), 279-304).
Galbraith, John Kenneth (1958).  “Consumer Behavior and the Dependence Effect”, in Mansfield,Microeconomics Readings, (3-6).
Harberger, Arnold C. (1954),  “Monopoly and Resource Allocation” (1954), in Mansfield, Microeconomics Readings, (198-209).
Harris, Ethan S., “Forecasting Automobile Output,” Federal Reserve Bank of New York Review (1985).
Hayek, Friedrich A.(1961),  “The Non Sequitur of the ‘Dependence Effect’”, in Mansfield, Microeconomics Readings, (7-11).
Holmstrom, Bengt, and John Roberts.  “The Boundaries of the Firm Revisited,” Journal of Economic Perspectives 12:4 (Fall 1998): 73-94.
Houthakker, Hendrik S. "An International Comparison of Household Expenditure Patterns, Commemorating the Centenary of Engel's Law'. Econometrica 25:4 (October 1957), pp. 252-272.
Kakwani, Nanak C. (1977). “Applications of Lorenz Curves in Economic Analysis,” Econometrica 45:3 (April), 719-728.
Landers, Renée M., James B. Rebitzer, and Lowell J. Taylor.  “Rat Race Redux:  Adverse Selection in the Determination of Work Hours in Law Firms”.  American Economic Review 86:3 (June 1996), pp. 329-346.
Leibenstein, Harvey,  “Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand” Quarterly Journal of Economics  (1950).
Leibenstein, Harvey,  “Allocative Efficiency vs. ‘X-Efficiency’” (1966), in Mansfield, Microeconomics Readings, (210-229).
Lorie, James H.,and Leonard J. Savage.  “Three Problems in Rationing Capital”, in Mansfield, Microeconomics Readings, (499-512).
Magee, John F.,  “Guides to Inventory Policy:  Functions and Lot Sizes”, in Mansfield, Managerial Economics Readings, (481-505).
Moore, Frederick T.,  “Economies of Scale:  Some Statistical Evidence” (1959), in Mansfield, Microeconomics Readings, (117-128).
Pareto, Vilfredo (1897), “The New Theories of Economics,” Journal of Political Economy 5:4 (September), 485-502.
Parkinson, C. Northcote, “Parkinson’s Law”, in Mansfield, Managerial Economics Readings, (63-70).
Porter, Robert H.,  “The Role of Information in U.S. Offshore Oil and Gas Lease Auctions”.  Econometrica 63:1 (January 1995), pp. 1-28.
Ramsey, Frank P. (1927), “A Contribution to the Theory of Taxation,” The Economic Journal 37:145 (March), 47-61.
Samuelson, William (1984), “Bargaining Under Asymmetric Information,” Econometrica 52:4 (July): 995-1007.
Shubik, Martin,  “A Note on Decision-Making Under Uncertainty”, in Mansfield, Managerial Economics Readings, (418-420).
Simon, Herbert A.,  “Theories of Decision-Making in Economics and Behavioral Science”, American Economic Review (1959).
Stigler, George J. (1957), “Perfect Competition, Historically Contemplated,” Journal of Political Economy 65:1 (February), 1-17.
Stiglitz, Joseph E., “The Causes and Consequence of the Dependence of Quality on Price,” Journal of Economic Literature 25 (March 1987): 1-48.
Walters, A.A.,  "Production and Cost Functions:  An Econometric Survey".  Econometrica 31:1-2 (January-April 1963), pp. 1-66.

	All class sessions are based on the student's prior reading of assigned material.  Class sessions contain basic text reading assignments, key terminology with some web links, readings on reserve, application modules, data sets, and classroom case studies.  Exceptions to reserve readings will be announced by the instructor.
***

I.The Nature and Significance of Economic Analysis
Class   1 -	Overview of Economic Analysis, text, chapter 1 (1-34).  
(9/14/09)	Keys:  states, institutions, markets, positive vs. normative economics, individual vs. collective decision-making, economic functions of the public sector, linearity vs. nonlinearity in economic models, functional vs. inverse demand and supply equations, point vs. arc own-price elasticity of demand and supply, constant vs. variable elasticity of demand and supply, income elasticity of demand, cross-price elasticity of demand and supply, elasticity of substitution, short-versus long-run conditions, price controls, welfare criteria of Pareto, Kaldor, Scitovsky, Bergson, Samuelson, Rawls, Atkinson.
Application Module(s):  The Circular Flow Diagram; Economic Functions of the Public Sector, The Measurement of Risk
Data Sets:  Global Data; Bills, Bonds, Stocks, Inflation. 
Sample Case Study: Basic Supply and Demand
Reserve Readings:  (1) Kenneth J. Arrow, "The Organization of Economic Activity:  Issues Pertinent to the Choice of Market versus Non-market Activity”,JEC (437-455); (2) Kenneth J. Arrow, “Invaluable Goods,” Journal of Economic Literature XXXV (June 1997): 757-765.

Class   2 -	 Consumer Behavior I, text, chapter 2 (35-72); chapter 3 (73-84)
(9/21/09) Keys:  Indifference curves, ordinal versus cardinal rankings, the marginal rate of substitution (MRS), perfect substitutes vs. perfect complements, budget constraints, effects of changes in income and prices, total versus marginal utility, cost of living indices, individual versus market demand, bandwagon, snob, and Veblen effects, income and substitution effects, Giffen versus inferior versus superior goods, from individual to market demand, Giffin goods,
Application Module(s): Simple Regression; Regression Supply and Demand;   Income and Substitution Effects, 
Data Set(s): Variety in Consumer Choice
Sample Case Study: Cobb-Douglas Utility Function
Reserve Readings: (1) Joseph E. Stiglitz, “The Causes and Consequences of the Dependence of Quality on Price,” Journal of Economic Literature 25 (March 1987): 1-48; (2) Harvey Leibenstein.  “Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand” Quarterly Journal of Economics (1950); (3) John Kenneth Galbraith.  “Consumer Behavior and the Dependence Effect”, from The Affluent Society (1958);  (4) Friedrich A. Hayek.  “The Non Sequitur of the ‘Dependence Effect’” Southern Economic Journal (1961). 
 
Class   3 -	Consumer Behavior II – text, chapter 3,(73-116); chapter 4 (117-125)
(9/28/09)	Keys: Demand elasticities and the total revenue test, experimental approaches to demand determination, statistical demand curves, utility maximization, duality in consumer theory, economic choices under uncertainty, expected value versus expected utility, preferences toward risk, diversification, insurance, the economic value of perfect information, trade-off between risk and return.
Application Modules: Engel Curves; Introductory Price Elasticity; Price Elasticity Profiles, 
Data Sets:  Bond Market Profile; U.S. Futures and Options Markets;
Sample Case Study: Own Price Elasticity of Demand.; The Total Revenue Test ; Engel Curves and the Income Elasticity of Demand
Reserve Readings:  (1) Hendrik S. Houthakker.  "An International Comparison of Household Expenditure Patterns, Commemorating the Centenary of Engel's Law'. Econometrica 25:4 (October 1957), pp. 252-272; (2) William Baumol, “The Empirical Determination of Demand Relationships,” Economic Theory and Operations Analysis (Prentice-Hall, 1965) 

II.  Firms, Technology, and Optimal Production Decisions
Class 4 –	Production:  Technology  and Costs– text, chapter 4 (126-155) 
(10/05/09)Keys: isoquants, short versus long run, the law of variable proportions – the law of diminishing marginal returns, average and marginal products, labor productivity, production with two variable inputs, substitution among inputs, production functions 
Application Module(s): The Cobb Douglas Production Function;
Data Sets: One Hundred Largest Companies, 2004; One Hundred Largest Companies, 2003; One Hundred Largest Companies, 2001; One Hundred Largest Companies, 1998;  One Hundred Largest Companies, 1995; U.S. Small Business Profile. 
Sample Case Study:  Excise Taxation
Reserve Readings:  (1). Ronald Coase, "The Nature of the Firm," Economica, New Series 4:16 (November), 386-405; (2) Herbert A. Simon.  “Theories of Decision-Making in Economics and Behavioral Science,” American Economic Review (1959); (3) Bengt Holmstrom and John Roberts, “The Boundaries of the Firm Revisited,” Journal of Economic Perspectives 12:4 (Fall 1998): 73-94; (4) (1) Conlisk, John, “Why Bounded Rationality?”  Journal of Economic Literature XXIV:2 (June 1996), pp. 669-700.
	Sample Case Study: Variable Inputs in Production 

Class  5 - Firms and Markets – text, chapter 5 (156-202).  
(10/12/09)Keys: economic versus accounting costs, sunk costs, determinants of cost relationships, cost-minimizing input relationship, short run average cost (SRAC) versus long run average cost (LRAC), economies of scale versus economies of scope, learning curves, marginal rate of technical substitution (MRTS), duality in production and cost theory, the Cobb-Douglas Cost and Production Functions.
Data Set(s):
Application Module(s): Cost Analysis; The CES Production Function; Basic Forecasting; 
Sample Case Studies:. Production and Cost Functions; Basic Economic Efficiency.
Reserve Readings: (1) A.A. Walters, "Production and Cost Functions:  An Econometric Survey".  Econometrica 31:1-2 (January-April 1963), pp. 1-66; (2) Kenneth J. Arrow, Hollis B. Chenery, B.S. Minhas, and Robert M. Solow, "Capital-Labor Substitution and Economic Efficiency", Review of Economics and Statistics LXIII (August 1961), pp. 225-250; (3) Laurits B. Christenson, Dale W. Jorgenson, and Lawrence J. Lau. "Transcendental Logarithmic Production Frontiers".  Review of Economics and Statistics LV, no. 1 (February 1973), pp. 28-45.
First Examination:  text (1-202), case studies, application modules, data sets, and reserve readings.

Class   6 - Static and Dynamic Market Efficiency – text, chapter 6 (203-234); 
(10/19/09) chapter 7 (235-250) Keys: Profit maximization vs. other objectives, short vs. long-run goals, responses to input price changes, elasticity of market supply, short-run producer surplus, zero profit economic rent, constant-cost industry, decreasing-cost industry, increasing-cost industry, maximization goals of firms (profits, sales, market share, satisficing), marginal revenue (MR), marginal cost (MC), economic rent, contestable markets, long run elasticity of supply and demand.
Application Module(s): Static Market Equilibrium; Strategic Convergence; The Cobweb Model.
Data Sets:   Risk and Growth
Sample Case Studies: Basic Market Dynamics (Producer Density)
Reserve Readings: 	(1) Ethan S. Harris, “Forecasting Automobile Output,” Federal Reserve Bank of New York Review (1985);  (2) “A New View of Investment”, and “Developing the Concepts Through Simple Examples,” in Avinash Dixit and Robert Pindyck, Investment Under Uncertainty (Princeton, NJ: Princeton University Press, 1994), pp. 3-58.

III.  Output Market Structure and Public Policy
Class   7 -	 Effects of Government Intervention in Markets 
(10//26/09) text, chapter 7 (251-264); chapter 8 (265-294) Keys: consumer surplus, producer surplus, total social welfare, domestic and international price controls, deadweight social welfare losses from taxation, price supports, impacts of a tax or subsidy. 
Application Modules: Excise Taxation
Data Sets: East Europe Per Capita GDP 1997, Economic Freedom and Corruption, 2001 Corruption Perceptions Index 
Sample Case Studies: Trade and Tariff Economics;  Optimal Excise Taxation.
Reserve Readings: (1) Cletus Coughlin, K. Alec Chrystal, and Geoffrey E. Wood, “Protectionist Trade Policies:  A Survey of Theory, Evidence and Rationale,” Federal Reserve Bank of St. Louis (January/February 1988): 12-30.

Class   8 -	Perfect vs. Imperfect Competition – text , chapter 8, (294-314); 
(11/02/09) chapter 9 (315-332) Keys: average and marginal revenue, shifts in demand, multi-plant firms, measuring monopoly power via the Lerner index.
Application Module(s): Random Demand Profit Maxima, Price Discrimination
Sample Case Studies: Pure Monopoly; Competition and Monopoly; Price Discrimination.
Reserve Readings: (1) Arnold C. Harberger.  “Monopoly and Resource Allocation” (1954), in Mansfield Microeconomics Readings, (198-209); (2) Harvey Leibenstein.  “Allocative Efficiency vs. ‘X-Efficiency’” (1966), in Mansfield Microeconomics Readings, (210-229); (3) Abram Bergson.  "On Monopoly Welfare Losses,”American Economic Review LXIII (December 1973), pp. 853-870.

Class   9 -	Oligopoly – text , chapter 9 (332-351); chapter 10 (352-374)
(11/09/09)Keys: competition versus collusion – the prisoners’ dilemma, price rigidity, price signaling and price leadership, the dominant firm model, cartel pricing and stability, social costs of monopoly power, price regulation, monopsony and monopoly compared, social costs of monopsony power, bilateral monopoly, antitrust laws and their enforcement.
Application Module(s): Market Structures; Concentration Ratios; The Kinked Demand Curve Model;
Data Set(s):
Sample Case Studies: The Multi-Product Monopoly Model, The Cournot Duopoly Model.
Reserve Readings: (1) C. Northcote Parkinson.  “Parkinson’s Law”, in Mansfield Managerial Economics Readings, (63-70); (2) Federal Trade Commission (1952), “The Petroleum Industry:  Structure and Conduct”, in Mansfield Microeconomics Readings, (326-341).

Class 10 -	Monopolistic Competition and Game Theory – text, chapter 10 (374-396);
(11/16/09)chapter 11 (397-416) Keys: monopolistic competition and economic efficiency, oligopoly, the Cournot Model, the Stackelberg Model, the Bertrand Model, first, second, and third degree price discrimination, inter-temporal price discrimination and peak-load pricing, two part tariffs, bundling in theory and practice, advertising, gaming and strategic decisions, non-cooperative versus cooperative games, dominant strategies, the Nash equilibrium, maximin and minimax strategies, repeated games, sequential games. threats, commitments, and credibility, entry deterrence, bargaining strategy.
Application Module(s):  Market Structure and Conduct; Oligopoly Models
              Data Set(s): Prisoner’s Dilemma.
Sample Case Study: Monopolistic Competition, Profit Maximization Under Risk; Strategic Behavior of Firms
Reserve Readings: (1) Frederick T. Moore.  “Economies of Scale:  Some Statistical Evidence” (1959), in Mansfield Microeconomics Readings, (117-128); (2) Robert H. Porter.  “The Role of Information in U.S. Offshore Oil and Gas Lease Auctions”, Econometrica 63:1 (January 1995), pp. 1-28; (3) Martin Shubik.  “A Note on Decision-Making Under Uncertainty”, Management Science (1955).
Second Examination: text(204-396), application modules, data sets, sample case studies, reserve readings.

IV.  Factor Market Structure and Public Policy
     Class 11 - Factor Market Behavior: Labor and Entrepreneurship, 
(11/23/09)   text , chapter 11 (417-434); chapter 12 ( 434-456). Keys: factor demand with single and multiple inputs, input supply, economic rent, marginal (ME, or marginal resource cost as MRC) and average expenditure, bilateral monopoly in the labor market, the allocation of exhaustible resources, user costs.
Application Module(s): Optimal Resource Pricing; Joint Optimum Input Use; Educational Forecasting Model; 
Data Sets: Education and Income; International Health Care; 
Sample Case Study:  Commodity Stabilization Models
 Reserve Readings: (1) Daniel Bernoulli (1954, 1738), "Exposition of a New Theory on the Measurement of Risk”, Econometrica 22:1 (January), 23-36; (2) Daniel Hahneman and Amos Tversky (1979), "Prospect Theory: An Analysis of Decision Under Risk," Econometrica 47-2(March), 263-292; (3) Renée M. Landers, James B. Rebitzer, and Lowell J. Taylor.  “Rat Race Redux:  Adverse Selection in the Determination of Work Hours in Law Firms”.  American Economic Review 86:3 (June 1996), pp. 329-346, (4) Helen F. Ladd (2002), "School Vouchers:  A Critical View",  Journal of Economic Perspectives, 16:4 (Autumn), 3-24.

Class 12 -	Factor Market Behavior:  Capital and Land
(11/30/09) text, chapter 12 (456-474); chapter 13 (475-496). Keys: stocks versus flows, present discounted value (PDV), valuation of bonds, perpetuities, effective bond yields, net present value (NPV) criterion, diversifiable versus non-diversifiable risk, the capital asset pricing model, 
Application Module(s): Fundamentals of Finance; Optimal Investment Storage, Exhaustible Resource Model; Optimal Investment Decisions; The Cobweb Model
Data Set(s): Energy Efficiency; U.S. Agriculture.
Sample Case Study:  Optimal Pricing of Exhaustible Resources
Reserve Readings: (1) John F. Magee.  “Guides to Inventory Policy:  Functions and Lot Sizes”, Harvard Business Review (1957); (2) James H. Lorie and Leonard J. Savage. “Three Problems in Rationing Capital”, Journal of Business (1949); (3) Michael Kremer (2000), "Elephants", American Economic Review 90:1 (March), 212-234.

Class 13 -	Analysis of Competitive Markets – text, chapter 13 (497-508); chapter 14
(12/07/09)  (509-546). Keys: efficiency in exchange, the Edgeworth Box diagram, the contract curve, the utility possibilities frontier, equity and perfect competition, the production possibilities frontier and output efficiency, gains from free trade, reasons for market failure based on market power, incomplete information, externalities, and public goods.
Application Module: The Leontief Static IO Model; Externalities; The Basic Option Price Model Data Sets: Corruption and Economic Development, Corruption Perceptions Index 2001
Sample Case Studies: The Harrod-Domar Growth Model, Project Financial Analysis, The Am Djena Livestock Project, 
Reserve Readings: (1) Francis M. Bator, "The Anatomy of Market Failure", Quarterly Journal of Economics (1958) (2) William Samuelson, “Bargaining Under Asymmetric Information,” Econometrica 52:4 (July 1984): 995-1007; 
Darom Acemoglu and Thierry Verdier (2000), "The  Choice Between Market Failures and Cottuption," American Economic Review, 90:1 (March), 194-211;

Class 14 – Optimal Functions of the Public Sector – text, chapter 15 (548-583).
(12/09/09) Keys: quality uncertainty, insurance, reputation and standardization, market signaling, principal-agent problem, incentives in the principal-agent framework, managerial incentives in an integrated firm, efficiency wage theory under asymmetric information, externalities, emissions standards, emissions fees, standards versus fees, transferable emissions permits, recycling, externalities and property rights, bargaining and economic efficiency, common property resources; public goods and market failure, basics of regression analysis, statistical tests, goodness of fit texts, economic forecasting, mean, median, variance, standard deviation, coefficient of variation..
Application Module(s): Income Differentials; The Gini Inequality Model. Voting Systems, Value At Risk Models, Risk and Pension Reform; Efficient Portfolio Decisions, 
Data Sets: Africa Data, Human Development Index 2004, Generosity Index 2004, Stock Market Bubbles, The Ranking of Risk
Sample Case Study: Income Distribution.
Reserve Readings: (1) Coase, Ronald H., “The Problem of Social Cost”, Journal of Law and Economics  (October 1960); (2) Kenneth J. Arrow, “What Has Economics to Say About Racial Discrimination,” Journal of Economic Perspectives 12:2 (Spring 1998): 91-100; (3) Acemoglu, Daron and James A. Robinson (2001), "A Theory of Political Transitions," American Economic Review, 91:4 (September), 938-963.
Final Review:  Economic Terminology

***

Policies and Procedures:

1.  	Grading:  Final examination:	     40% (cumulative; essays and objective)
					     Monday,December 14, 2008, 19:30-21:30
		   Other examinations:   60% (30% each; essays and objective)
2.  	Make-up examinations:  None.  A student who misses an exam for a valid reason may request permission from the instructor to submit a substitute paper, with the instructor's prior approval of the topic. The paper is to be typed, at least 10 double-spaced pages in length, and is to be submitted within 2 weeks of the previously scheduled exam. No paper substitute is permitted for the final examination. 
3. 	Office Hours: Partridge Hall, PA-412, with hours to be posted on the website at: 
               http://netdrive.montclair.edu/~lebelp/CurrentCourseMaterials.html
4.	Other Contacts: 	Telephone (973)-655-7778; 
					e-mail: LeBelp@mail.montclair.edu. 

Montclair State University
School of Business
Department of Economics and Finance

ECON501	       P. LeBel
Economic Analysis	
Reading List

	I.  Texts in Microeconomics
A. Asimakopoulos.   An Introduction to Economic Theory:  Microeconomics.  (New York:  Oxford University Press, 1978).
Roger D. Blair and Lawrence W. Kenny.  Microeconomics With Business Applications.  (New York:  John Wiley and Sons, 1987).
Edgar K. Browning and Jacqueline M. Browning.  Microeconomic Theory and Applications, fourth edition.  (Boston:  Little Brown, 1992).
Thomas M. Carroll.  Micro Theory:  Concepts and Applications.  (New York:  St. Martin's Press, 1983).
Robert W. Clower, Philip E. Graves, and Robert L. Sexton.  Intermediate Microeconomics.  (New York:  Harcourt Brace Jovanovich/Academic Press, 1988).
Allen C. DeSerpa.  Microeconomics:  Theory and Applications, second edition.  (Newton, Massachusetts:  Allyn and Bacon, Inc., 1988).
Donald Dewey.  Microeconomics:  The Analysis of Prices and Markets.  (New York:  Oxford University Press, 1975).
A.K. Dixit.  Optimization in Economic Theory, second edition.  (New York:  
	Oxford University Press, 1990).
B. Curtis Eaton and Diane E. Eaton.  Microeconomics.  New York:  W.H. Freeman and Company, 1988).
Robert H. Frank.  Microeconomics and Behavior, fifth edition.  (New York:  McGraw-Hill Publishers, 2005).
A. Myrick Freeman, III.  Intermediate Microeconomic Analysis.  (New York:  Harper and Row, 1983).
David D. Friedman.  Price Theory.  (Cincinnati:  Southwestern Publishing Company, 1987).
Lee S. Friedman.  Microeconomic Policy Analysis.  (New York:  McGraw-Hill, 1982).
Fred R. Glahe and Dwight R. Lee.  Microeconomics:  Theory and Applications.  (New York:  Harcourt Brace Jovanovich, 1980).
H. Gravelle and R. Rees.  Microeconomics.  (New York:  Longman, 1981, 
	1985).
J.P. Gould and C.E. Ferguson.  Microeconomic Theory, fifth edition.  (Homewood, Illinois:  Richard D. Irwin, Inc., 1984).
John M. Heinecke.  Microeconomics for Business Decisions:  Theory and Applications.  (Englewood Cliffs, New Jersey:  Prentice-Hall, 1976).
James M. Henderson and Richard M. Quandt.  Microeconomic Theory:  A Mathematical Approach, third edition.  (New York:  McGraw-Hill, 1980).
Jack Hirshleifer, Amihai Glazer, and David Hirshleifer.  Price Theory and Applications, seventh edition.  (New York:  Cambridge University Press, 2007).
David N. Hyman.  Modern Microeconomics:  Analysis and Applications, third edition.  (Homewood, Illinois:  Richard D. Irwin, 1993)
David M. Kamerschen and L.M. Valentine.  Introductory Microeconomic Theory.  (Cincinnati, Ohio:  Southwestern Publishing Company, 1977).
Michael L. Katz and Harvey S. Rosen.  Microeconomics, second edition.  (Homewood, Illinois:  Irwin Publishers, 1994).
Paul G. Keat and Philip K.Y. Young.  Managerial Economics, third edition.  (Upper Saddle River, N.J.:  Prentice-Hall, 2000).
David Keating and J. Holten Wilson.  Fundamentals of Managerial Economics.  (New York:  Harcourt Brace Jovanovich, 1987).
Heinz Kohler.  Intermediate Microeconomics:  Theory and Applications, third edition. (Glenview, Illinois:  Scott, Foresman and Company, 1990).
Steven E. Landsburg.  Price Theory and Applications, second edition.  (New York:  The Dryden Press, 1992).
Richard H. Leftwich and Ross Eckert.  The Price System and Resource Allocation, tenth edition.  (Hinsdale, Illinois:  The Dryden Press, 1988).
Aroop K. Mahanty.  Intermediate Microeconomics with Applications.  (New York:  Academic Press, 1980).
Edmund Malinvaud.  Lectures on Microeconomic Theory.  (Amsterdam:  North-Holland Publishing Company, 1972)
Edwin Mansfield.  Microeconomics:  Theory and Applications, seventh edition.  (New York:  W.W. Norton and Company, 1991).
Andreu Mas-Colell, Michael D. Whinston and Jerry R. Green.  Microeconomic Theory.  (New York:  Oxford University Press, 1995).
Donald M. McCloskey.  The Applied Theory of Price, second edition.  (New York:  Macmillan Publishing Company, 1985).
Robert A. Meyer.  Microeconomic Decisions.  (Boston:  Houghton Mifflin, 
	1976).
Roger Leroy Miller and Roger E. Meiners.  Intermediate Microeconomics:  Theory, Issues, and Applications, third edition.  (New York:  McGraw-Hill, 1986).
Edwin Mansfield.  Microeconomics, eighth edition.  (New York:  W.W. Norton & Company, 1994).
Walter Nicholson.  Intermediate Microeconomics and Its Applications, fifth edition.  (Hinsdale, Illinois:  The Dryden Press, 1992).
Walter Nicholson.  Microeconomic Theory:  Basic Principles and Extensions, sixth edition.  (Orlando, Florida:  The Dryden Press, 1995).
Robert Pindyck and Daniel Rubinfeld.  Microeconomics, sixth edition.  (Englewood Cliffs, N.J.:  Prentice-Hall, 2005).
R. Stephen Polkinghorn.  Micro-Theory and Economic Choices.  (Homewood, Illinois:  Richard D. Irwin, Inc., 1979).
Ivan Png and Dale Lehman.  Managerial Economics (New York:  Blackwell Publishing, 2007).
Jonas Prager.  Applied Microeconomics:  An Intermediate Text.  (Homewood, Illinois:  Richard D. Irwin, Inc., 1993).
Ramon Rabinovitch.  Managerial Economics:  Theory and Its Applications.  (Boulder, Colorado:  Kolb Publishing Company, 1995).
Roy J. Ruffin.  Intermediate Microeconomics, second edition.  (New York:  Harper Collins Publishers, 1992).
Dominick Salvatore.  Microeconomics:  Theory and Applications.  (New York:  Harper Collins 1991).
William F. Samuelson and Stephen G. Marks.  Managerial Economics, third edition.  (Orlando, Florida:  The Dryden Press, 1999).
Andrew Schotter.  Microeconomics:  A Modern Approach.  (New York:  HarperCollins Publishers, 1994).
George J. Stigler.  The Theory of Price, fourth edition.  (New York:  Macmillan Publishing Company, 1987).
Henri Theil.  The System-Wide Approach to Microeconomics.  (Chicago:  University of Chicago Press, 1980).
Lila J. Truett and Dale B. Truett.  Intermediate Microeconomics.  (St. Paul, Minnesota:  West Publishing Company, 1984).
Hal Varian.  Microeconomic Analysis, third edition.  (New York:  W.W. Norton and Company, 1992).
Hal Varian.  Intermediate Microeconomics, fourth edition  (New York:  W.W. Norton and Company, 1996).

II.  Theory of Demand:  Consumers, Rationality, and Individual Choice
John S. Chipman, Leonid Hurwicz, Marcel K. Richter, and Hugo F. Sonnenschein.  Preferences, Utility, and Demand.  (New York:  Harcourt, Brace, and Jovanovich, 1971).
Gerard Debreu.  Theory of Value.  (New Haven:  Yale University Press, Cowles Foundation for Publications in Economics, 1959).
John R. Hicks.  Value and Capital, second edition.  (Oxford:  The Clarendon Press, 1965 reprint of 1946 edition).
John R. Hicks.  A Revision in the Theory of Consumer Demand.  (Oxford:  Oxford University Press, 1965 reprint of 1956 edition).
Eugenio Slutsky.  "On the Theory of the Budget of the Consumer", English translation of 1915 article in Italian, in George J. Stigler and Kenneth E. Boulding, editors, Readings in Price Theory.  (Homewood, Illinois:  Richard D. Irwin, Inc., 1952), pp. 27-56.

III.  Theory of Supply:  Firms, Technology, and Costs
Richard M. Cyert and John G. March.   A Behavioral Theory of the Firm.  (Englewood Cliffs, New Jersey:  Prentice-Hall, 1963).
Melvyn Fuss and Daniel McFadden, editors.  Production Economics:  A Dual Approach to Theory and Applications.  (Amsterdam:  North-Holland Publishing Company, 1978).
Ronald W. Shephard.  Cost and Production Functions.  (New York:  Spring Verlag, 1981 reprint of 1953 Princeton University Press edition).
Ronald W. Shephard.  Theory of Cost and Production Functions.  (Princeton:  Princeton University Press, 1970).

IV.  Market Structure and General Equilibrium
A. Market Structure
Augustin Cournot.  Recherches into the Mathematical Principles of the Theory of Wealth, translated from the French by Nathaniel T. Bacon.  (New York:  Macmillan Publishing Company, 1897, published originally in French, in 1838).
Michael D. Intriligator.  Mathematical Optimization in Economic Theory.  (Englewood Cliffs, New Jersey:  Prentice-Hall, 1971).
Morton I. Kamien and Nancy L. Schwartz.  Market Structure and Innovation.  (New York:  Cambridge University Press, 1982).
Morton I. Kamien and Nancy L. Schwartz.  Dynamic Optimization:  the Calculus of Variations and Optimal Control in Economics and Management.  (New York:  North-Holland Publishing Company, 1981).
Frederic Scherer.  Industrial Market Structure and Economic Performance, second edition.  (Boston:  Houghton Mifflin Publishing Co., 1980).
William G. Shepherd.  "Contestability versus Competition" American Economic Review 74:4 (September 1984), pp. 572-587.
Michael Spence.  Market Signaling.  (Cambridge:  Harvard University Press, 
	1974).
Oliver Williamson.  Markets and Hierarchies.  (Glencoe, Illinois:  The Free Press, 1975).

B.  General Equilibrium Analysis
Kenneth J. Arrow and Frank H. Hahn.  General Competitive Analysis.  (San Francisco:  Holden-Day Publishing Company, 1971).
Gerard Debreu.  Theory of Value:  An Axiomatic Analysis of Economic Equilibrium.  (New Haven:  Yale University Press for the Cowles Foundation for Research in Economics, 1973 reprint of 1959 edition).
Robert Dorfman, Paul Samuelson, and Robert Solow.  Linear Programming and Economic Analysis.  (New York:  McGraw-Hill Publishing Co., 1958).
Hollis B. Chenery and Paul G. Clark.  Interindustry Economics.  (New York:  John Wiley and Sons, 1959).
John D. Hey.  Economics in Disequilibrium.  (New York:  New York University Press, 1981).
Robert E. Kuenne.  A Theory of General Economic Equilibrium.  (Princeton:  Princeton University Press, 1963).
Wassily W. Leontief.  Input-Output Economics.  (New York:  Oxford University Press, 1966).
William A. Miernyk.  The Elements of Input-Output Analysis.  (New York:  Random House Publishers, 1965).
James Quirk and Ruben Saposnik.  Introduction to General Equilibrium Theory and Welfare Economics.  (New York:  McGraw-Hill, 1968).
Herbert Scarf and John B. Shoven.  The Computation of Economic Equilibrium.  (New Haven:  Yale University Press, 1973).
Herbert Scarf and John B. Shoven.  Applied General Equilibrium Analysis.  (New York:  Cambridge University Press, 1984).

C.  Uncertainty in Economic Decisions
H. Scott Bierman and Luis Fernandez.  Game Theory with Economic Applications.  (Reading, Mass.:  Addison-Wesley Publishers, 1993).
Kenneth Binmore.  Fun and Games:  A Text on Game Theory.  (Lexington, Mass.:  D.C. Heath & Company, 1992).
Morton D. Davis.  Game Theory:  A Nontechnical Introduction.  (New York:  Harper and Row Torchbooks, 1973).
Avinash K. Dixit and Robert St. Pindyck.  Investment Under Uncertainty.  (Princeton, N.J.:  Princeton University Press, 1994).
Henry Hamburger.  Games as Models of Social Phenomena.  (San Francisco:  W.H. Freeman and Co., 1979).
John D. Hey.  Uncertainty in Economics.  (New York:  New York University Press, 1979).
Jean-Jacques Laffont.  Essays in the Economics of Uncertainty.  (Cambridge:  Harvard University Press, 1980).
R. Duncan Luce and Howard Raiffa.  Games and Decisions.  (New York:  John Wiley and sons, 1957).
Hervé Moulin.  Game Theory for the Social Sciences.  (New York:  New York University Press, 1982).

V. Welfare Economics
Kenneth J. Arrow.  Social Choice and Individual Values.  (New Haven:  Yale University Press, 1951).
Elizabeth E. Bailey.  Economic Theory of Regulatory Constraint.  (Lexington, Massachusetts:  D.C. Heath, 1973).
Francis M. Bator.  "The Simple Analytics of Welfare Maximization", American Economic Review 47:1 (March 1957), pp. 22-59.
Francis M. Bator.  "Anatomy of Market Failure", Quarterly Journal of Economics 72:3 (August 1958).
William Baumol.  Welfare Economics and the Theory of the State.  (Cambridge:  Harvard University Press, 1965 reprint of 1949 edition).

VI. Microeconomic Data Source Materials 
	(see:  Useful Economic Data Links)

VII.	
Publication Sources
A.	Economic Journals (selected listing)
 
Agricultural and Resources Economics
	Agricultural Economics
	American Economic Review
	American Economist
	American Journal of Agricultural Economics
	Antitrust Bulletin
	Applied Economics
	Brookings Papers on Economic Activity
	Bulletin of Economic Research
	Business Economics
	Computational Economics
	Eastern Economic Journal
	Economic Development and Cultural Change
	Economic Geography
	Economic History Review
	Economic Inquiry
	Economic Journal
	Economics of Education Review
	Economics Letters
	Econometrica
	Energy Economics
	Environment and Development Economics
	Environment and Resource Economics
	Family Economics and Nutrition Review
	Games and Economic Behavior
	Health Economics
	History of Political Economy
	Industrial and Labor Relations Review
	Information Economics and Policy
	Journal of African Economics
	Journal of Agricultural and Applied Economics
	Journal of Agricultural and Resource Economics
	Journal of Banking and Finance
	Journal of Business
	Journal of Cultural Economics
	Journal of Development Studies
	Journal of Economic Issues
	Journal of Economic Literature
	Journal of Economic Perspectives
	Journal of Financial Services Research
	Journal of Futures Markets
	Journal of Health Economics
	Journal of Human Resources
	Journal of Political Economy
	Journal of Population Economics
	Journal of Risk and Insurance
	Land Economics
	Marine Resource Economics
	Public Choice
	Quarterly Journal of Economics
	Real Estate Economics
	Resource and Energy Economics
	Review of Economics and Statistics
	World Development

B.  General Business Periodicals (see also:  Useful Economic Data Links )
	Business Week
	The Economist
	The Financial Times
	U.S. News and World Report
	The Wall Street Journal