Course Description
Microeconomic theories and models of consumer and household decision making with emphasis on the development of the analytical reasoning and economic tools used by consumer economists to model various economic decisions and the market forces that influence these decisions.
Athena Title
Consumer Economics Theory
Equivalent Courses
Not open to students with credit in FHCE 3150E
Prerequisite
ECON 2106 or ECON 2106E
Semester Course Offered
Offered fall and spring
Grading System
A - F (Traditional)
Course Objectives
Students in this course develop the skills necessary to: 1) recognize economic decisions relevant to individuals, families, and households, 2) identify alternative ways to understand the decision(s) to be made, 3) assess the theories and models used by consumer economists to predict or explain these decisions, 4) understand how economic theory impacts policy, 5) critique the economic content of articles or presentations, 6) communicate findings using models, charts, and graphs, 7) communicate new research findings and complex ideas to lay audiences, 8) integrate economic concepts with disciplines like sociology, history, political science, and psychology.
Topical Outline
MODULE 1: REVIEW CONCEPTS What is consumer economics all about? Review of supply and demand analysis Review of consumer and producer surplus Competitive equilibrium, allocative efficiency, and externalities The effects of price controls in a competitive market MODULE 2: THEORY OF CONSUMER CHOICE Budget constraint Consumer preferences indifference curves, marginal rate of substitution Consumer choice Demand elasticity MODULE 3: INDIVIDUAL AND MARKET DEMAND; CONSUMER BEHAVIOR Changes in income and consumption choices (normal and inferior goods) Price changes and consumption choices Income and substitution effects of a price change Income and substitution effects: Inferior goods From individual to market demand Consumer surplus Price elasticity and the price-consumption curve MODULE 4: CONSUMER CHOICE THEORY APPLICATIONS Excise subsidies, health care, consumer welfare using consumer surplus Intertemporal budget constraint Intertemporal indifference curves Intertemporal model MODULE 6: ECONOMICS OF INFORMATION AND CHOICE UNDER UNCERTAINTY Asymmetric information Adverse selection and moral hazard Limited price information Conspicuous consumption as signaling Expected utility model MODULE 7: DEPARTURES FROM STANDARD RATIONAL CHOICE MODELS Bounded rationality Judgmental Heuristics and Biases MODULE 8: LABOR MARKET The Demand for labor The Supply of labor Minimum wage Income and substitution effects of wage changes MODULE 9: CURRENT ISSUE RESPONSE
Syllabus