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Principles of Economics II


ECO 212


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Purely Competitive
Short Run Equilibrium



Instructor Contact Information
The Efficient Approach to a High Grade
Attendance Policy
Make-up Examinations
Make-up Quizzes
Written Assignments
Reading Assignments
Topical Outline
Progress Sheet (How can I keep up with my grades?)
Class Participation
Transfer of ECO 212 to Area
4-year Schools

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ECO 212




Spring, 2010  

ECO 212 Principles of Economics II (3)
Explores the role of markets in capitalistic economies in generating information and allocating resources, the theory of consumer choice, and production cost.  Also includes the economics of the firm, an examination of government regulation of business, the operation of resource markets and the determination of income distribution and international trade.  PREREQUISITE:  An acceptable placement score or DSPM0800; an acceptable placement score or DSPR0800.

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INSTRUCTOR                              Richard Rouch
Pickel Building, P115, 230-3246, on campus Ext. 3246,
OFFICE HOURS Office hours will be posted by the office door and on the web.
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TEXTBOOK Economics, 8th edition, by William A. McEachern


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To provide information which enables students to identify and analyze the social aspects of culture and cultural  heritage.
To provide information which enables students to recognize, describe, and explain social institutions, structures, and processes and the complexities of a global culture and diverse society.
To explore the relationship between the individual and society as it affects the personal behavior, social development and quality of life of the individual, the family, and the community.
To examine the impact of behavioral and social scientific research on major contemporary issues and their discipline's effects on individuals and society.
To analyze and communicate the values and processes that are used to formulate theories regarding the social context of  individual human behavior in the social and behavioral sciences.
This course focuses on one particular aspect of our culture: the economic system.  More specifically, it concerns the process of exchange, which is central to that system, and the markets, which are the primary mechanisms for that exchange.  Upon successful completion of this course, the student will be aware of the
properties of the exchange process which make it advantageous, whether that exchange occurs between individuals, between individuals and firms, or between nations.  The student will also understand how the efficiency associated with the market mechanism is affected by the degree of competition among producers and the size of the producing firms and  will recognize how  these matters are related to issues involving the government regulation of business.  Similarly, the student will understand how efficiency and the equity of income distribution are influenced by the degree of competition that exists among both buyers in sellers in resource markets such as those which exist for labor. 
To expose students to systems of mathematical logic. 
To ensure that students develop effective written communication skills.
To encourage the development of skills for identifying  problems and selecting appropriate means for solving them.
To foster the development of critical skills that will encourage student growth in the areas of personal assessment and the evaluation of values.
ASSESSMENT         Student performance will be assessed by the use of a series of major examinations,  daily quizzes, and written assignments.  The  examinations and quizzes are designed to determine the degree of success which the student is experiencing in achieving outcomes relating to the Topical Outline and, thus, the general educational goals of the course.
  The questions on these examinations and quizzes may take a  variety of forms.  Brief discussion, short answer, multiple choice, and true/false questions will be used.  In addition, some questions will require the solution of math problems or  the creation of graphs.
  Successful preparation for major examinations is facilitated by referencing the attached detailed topical outline.  This is more fully explained under the heading of  “Grading”.
GRADING                  Grading policies are best understood by referring to two attachments:  the “Topical Outline” and the “Progress Sheet.   A major examination will be given for each of the five units on the topical outline.  Each of the items in the topical  course outline which is followed by a designated point value (usually 15 points) will be the subject of at least one  question on the appropriate major examination.  Each of these items will be discussed extensively in class.  At least 70% of the total point value of each major examination is provided by questions relating to these items.  As a result, a student who completely masters the course outline items is guaranteed a minimum grade of “C” on each major examination.
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  Daily quizzes of various types will also be given.  Students will be informed as to what to expect on each of these quizzes at the appropriate time.  The point values for these quizzes are shown on the "Progress Sheet".  The point values for other daily  grades  (written assignments) are also included on the  “Progress Sheet”.
  The “Progress Sheet” also indicates the minimum final accumulated point totals required for the various letter grades.
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ATTENDANCE        Attendance will be taken daily.  An attendance bonus will be given at the end of the semester to students who have no more than 3 absences for Monday, Wednesday, and Friday classes, no more than 2 absences for Tuesday and Thursday classes, or no more than 1 absences for classes meeting one night per week.  During the summer five-week term, this bonus will be given to students who miss no more than 2 classes.  To avoid being counted  as absent, the student must be in class at the time that the attendance is taken.  This bonus will be equal to 1% of the maximum possible point total for the term.
  This attendance policy is designed to provide an extra incentive to encourage regular attendance.  Because the policy involves a bonus rather than punitive measure, all absences will be counted, whether excused or unexcused.
  The attendance bonus aside, regular attendance is highly recommended.  Success in this course will be difficult at best without regular attendance.  The student should also recognize that a failure to attend class will likely result in the missing of unannounced quizzes.  These quizzes cannot be made up at a later date. 
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The student is encouraged to take all major examinations at the appointed time.  If an examination is missed, however, that examination will be made up at the last class meeting of the semester.  This last class meeting is, of course, also the time at which the final examination is taken.
  If a major examination has been scheduled, it will be given regardless of weather conditions as long as the school remains open.  If a student misses an examination due to unfavorable weather, that student will make up the examination in accordance with the policy previously stated.
  If the school is closed due to weather on a day when a major examination is scheduled, the examination will be given at the next scheduled class meeting.
    DAILY QUIZZESDaily quizzes cannot be made up at a later date.  If a daily quiz is missed, a grade of zero will be recorded for that quiz.  Note that the lowest quiz grade will be dropped at the end of the semester, so that the student who misses only one quiz will not be unduly penalized.    
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Cheating will not be tolerated.  If a student is observed cheating on an examination or a daily quiz, a grade of zero will be assigned for that particular work.
A bonus of up to 3% of the total possible points for the course will be given for outstanding class participation and/or for diligence and originality on written assignments.  This is a bonus, NOT an entitlement.  It will be awarded at the instructor's discretion to borderline students whose exam and quiz grades do not (in the instructor's judgment) reflect learning, effort, and accomplishment.
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The use of any electronic or other noise- or light-emitting device such as beepers, cell phones, PDA'S, laptop computers, games, etc, that can distract or disturb the owner or others is prohibited during class.  In particular, cellular telephones are not to be used during class for any purpose, including making or receiving calls, photographs, or text messages, or playing games.  A student who uses a cell phone during class will be directed to leave the class and will be counted as absent for that day.
CALCULATORS       The use of basic calculators (5 functions plus memory) on examinations and quizzes is permitted.  The use of more advanced calculators, particularly those capable of storing and working formulas, is prohibited on examinations and quizzes.
 DISABILITIES          It is the student’s responsibility to self identify with the Office of of  Disability Services in order to receive accommodations.  Disability Services is located in the Wood Campus Center, Suite C206B.  Only those students with official documentation from the Office of Disability Services will  receive services.
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It is the intent of Volunteer State Community College to fully comply with Executive Order 11246, as amended, the Rehabilitation Act of 1973, as amended,  and the Vietnam Era Veterans Readjustment Act of 1974, as amended, and all regulations implementing those laws and orders,  for the promotion and ensuring of equal opportunity for all persons without regard to race, color, religion, sex, national origin, age, disability, political affiliation, sexual orientation, or status as a qualified disabled veteran or veteran of the Vietnam era.  It is the intent of VSCC to be free of discrimination or harassment on the basis of sex, race, color, religion, national origin, age, disability, political affiliation, sexual orientation, veteran status, or physical appearance.  It is the intent of VSCC to fully comply  with Titles VI and VII of the Civil Rights Act of 1964, as amended, and the CRA of 1991, Title IX of the Education Amendments of 1972, as amended, the Equal Pay Act of 1963, as amended, the Age Discrimination in Employment Act of 1976, the Age Discrimination Act of 1975, and the Pregnancy Discrimination Act and the Americans with Disabilities Act of 1990, applicable state  statutes and all regulations promulgated pursuant  thereto.        

No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal Financial assistance. 20 U.S.C.  § 1681.

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Students who are receiving Title IV financial assistance (Pell Grant, Student Loan or SEOG Grant) must regularly attend class or be subject to repay PART or ALL of the Federal Financial Aid received for the semester.
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Progress Sheet


ECO 212



UNIT I (see course outline)

425 (375 from outline, 50 from reading)
UNIT II                                                                            107 (75 from outline, 32 from reading)
UNIT III 250 (175 from outline, 75 from reading)
UNIT IV                                                                        250 (180 from outline, 70  from reading)
UNIT V                                                                                                                                                                 125 (125 from outline)
Total Possible Points                                                 1157


Daily Quizzes(16 WORTH 50 POINT EACH)             750
TOTAL POSSIBLE POINTS 750 (lowest of the 16 grades is dropped)
OTHER                                                            POSSIBLE POINTS
_____________________________________________ ____________


1878 - 2087




1670 - 1877




1461 - 1669


D 1252 - 1460
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Reading Assignments in Red


ECO 212


  A. The Art and Science of Economic Analysis (Chapter 1) and Economic Tools and Economic Systems (Chapter 2)   
    1. Scarcity (15 points)   Printer Friendly Version Handout on Scarcity
    2. Opportunity cost (15 points) Printer Friendly Version Handout on Opportunity Cost
    3.  Creating graphs (15 points) Printer Friendly Version
    4. Interpreting graphs (15 points) Printer Friendly Version
    5. Production Possibilities curves ... interpretation(15 points)  Printer Friendly Version  Study Guide on Production Possibilities    
    6. The “isms” (15 points)
    7. Pure Capitalism and the Market System .  .  .  .  .  . The framework of the capitalist ideology (15 points) Handout on Framework of Capitalism
  B. Demand, Supply, and Markets (CHAPTER 4)
    1. Demand (15 points) Printer Friendly Version
    2. Supply (15 points) Printer Friendly Version
    3. Equilibrium price and quantity .. stationary supply and demand (15 points) Printer Friendly Version
    4. Equilibrium price and quantity .  .  . changing supply and demand (15 points)  Printer Friendly Version Handout on D and S Changes
    5. A "good" equilibrium in the short run . . . allocative efficiency  Printer Friendly Version(15 points)
    6. A "good" equilibrium in the long run . . . allocative and technical efficiency Printer Friendly Version(15 points)
    7. The consequences of price ceilings Printer Friendly Version(15 points)
    8. The consequences of price floors Printer Friendly Version(15 points)
    1. Price elasticity of demand
      a. Calculation (15 points) Printer Friendly Version
      b. Interpretation (15 points) Printer Friendly Version
      c. Price elasticity of demand and total revenue ( 15 points) Printer Friendly Version
    2. Price elasticity of supply
      a. Calculation (15 points) Printer Friendly Version
      b. Interpretation (15 points) Printer Friendly Version
    1. The law of diminishing marginal utility (15 points) Printer Friendly Version
    2. Derivation of demand - - - the equimarginal principle (15 points) Printer Friendly Version
    3.  Marginal Benefits stated in dollar terms...the meaning(15 points) Printer Friendly Version
    4. The substitution effect (15 points) Printer Friendly Version
    5. The income effect (15 points) Printer Friendly Version
  A. The distinction between short run and long run  (15 points)   Printer Friendly Version
  B. Short run
    1. Calculation of production costs and completion of the  cost schedule (15 points)  Printer Friendly Version  Handout on Calculation of Short Run Costs
    2. The law of diminishing marginal returns and marginal production costs (15 points)  Printer Friendly Version
  C. The interpretation of average costs in the long run  -- returns to scale (15 points)  Printer Friendly Version
  D. Distinction between accounting and economic profits (15 points)  Printer Friendly Version Handout on Explicit and Imlicit Costs

    1. Recognition of pure competition (15 points) Printer Friendly Version
    2. Revenue profile for the pure competitor --- Price, Average, Revenue, Marginal Revenue (15 points)  Printer Friendly Version Calculation of Revenue Handout
    3. Short run
      a. Equilibrium for the firm (15 points) Printer Friendly Version Handout - Equilibrium for Firm
      b. Implications --- allocative efficiency (5 points) Printer Friendly Version  Handout on Allocative Efficiency
    4. Supply and marginal costs (15 points) Printer Friendly Version
    5. Long run
      a. Equilibrium for the firm (15 points) Printer Friendly Version
      b. IImplications
        1. Allocative efficiency (5 points) Printer Friendly Version
        2. Technical or productive efficiency (5 points) Printer Friendly Version
    6. Qualifications pertaining to the evaluation of pure competition (15 points) Printer Friendly Version
  B.  MONOPOLY  (CHAPTER 9)     
    1. Recognition of monopoly (15 points) Printer Friendly Version
    2. Revenue profile of the pure monopoly --- Price, Average, Revenue,  Marginal Revenue (15 points) Printer Friendly Version
    3. Short run
      a. Equilibrium for the firm (15 points) Printer Friendly Version 
      b. Implications --- allocative inefficiency (5 points) Printer Friendly Version
    4. Long run implications:  Technical or productive efficiency --- the conflicting views (5 points) Printer Friendly Version
    5. Regulated monopoly --- two approaches (15 points) Printer Friendly Version
    1. Recognition *
    2. Long run equilibrium *
    3.  Short run implications --- allocative inefficiency *
    4. Long run implications --- technical or productive inefficiency *
    5. Wastes of monopolistic competition versus benefits*
  D.  OLIGOPOLY  (CHAPTER 10)     
    1. Recognition *
    2. Kinked demand model
      a. Assumptions * 
      b. Prediction *
    3. Other models of oligopoly *
    4. Oligopoly and economic efficiency
      a. The traditional view * 
      b. The Schumpeter-Galbraith view *
* Items marked with asterisks will not be covered on major examinations, but they will be involved in two of the daily quizzes.  This will be explained at the appropriate time.
  A. Marginal productivity theory of resource demand
    1.  Calculation of Marginal Revenue Product (15 points) Printer Friendly Version 
    2.  Derivation of a purely competitive seller’s demand for a resource and the market demand for the resource (15 points) Printer Friendly Version
    3. The resource demand of an imperfectly competitive seller (15 points) Printer Friendly Version
    4. The Marginal Productivity Theory of Income Distribution (15 points) Printer Friendly Version
  B. Purely Competitive Labor Markets
    1. Recognition (15 points) Printer Friendly Version 
    2. Wage determination (15 points) Printer Friendly Version
  C. Monopsonistic labor markets
    1. Marginal Resource Cost and Wage (price of labor) – comparison (15 points) Printer Friendly Version 
    2. Wage determination (15 points) Printer Friendly Version
  D. Reasons for the existence of wage differentials (15 points)
  E. Craft unions (15 points) Printer Friendly Version
  F.  Industrial unions (15 points) Printer Friendly Version
  G.  Bilateral monopoly (15 points) Printer Friendly Version
  A. Comparative advantage ... the reasons for international trade Printer Friendly Version Study Guide to Accompany PowerPoint  (25 points)  
  B. The theory of comparative advantage --- the maximum and minimum terms of trade Printer Friendly Version Study Guide to Accompany PowerPoint
(25 points)
  C. The gains from international trade ... a market view Printer Friendly Version Study Guide to Accompany PowerPoint (25 points)
  D. The effects of trade restrictions Printer Friendly Version Study Guide to Accompany PowerPoint (25 points)
  E. The case for protectionism (25 points)

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You will accumulate your written assignment grade by completing 9 written assignments
which are each worth a maximum of 20 points.  Due dates for written assignments will be announced in class. 


Assignments must be turned in at the beginning of class on the due date to be considered for credit.  Late assignments will not be accepted………..regardless of circumstances.  ASSIGNMENTS MUST BE STAPLED AND READY TO TURN IN AT THE BEGINNING OF THE CLASS ON THE DUE DATE…OTHERWISE THEY WILL NOT BE ACCEPTED


The minimum number of points, which will be awarded for each assignment, is 10.  Put another way, you will earn 10 points just by turning an assignment in on time. 


Complete, legible assignments will be awarded full credit of 20 points, whether or not all answers are correct.  If evident on most or all written assignments, effort, thoughtfulness, originality, and diligence may be rewarded with bonus points (see "Participation and Performance Bonus").


Assume that the audience you are writing for has less expertise in economics than you. Attempt to explain to that audience in the most simple language possible.


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