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PP5101 

ECONOMICS AND PUBLIC POLICY I
   2008/2009, Semester 1
   Lee Kuan Yew School of Public Policy (Lee Kuan Yew School Of Public Policy)
Modular Credits: --
  Tags: --

Learning Outcomes

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The main objective of this module is to understand microeconomics concepts and principles and their application in the formulation of public policy.

 

The course is organized in four parts. The basic demand and supply framework of microeconomic analyses is presented in part 1 where we illustrate how the market mechanism could lead to economic efficient outcomes.   In part 2, we derive the market demand and supply to gain insights into the nature of decisions made by consumer and producers. Departures from the competitive market structure are analysed in part 3.   The presence of market power, its impact on pricing and efficiency of resource allocation will be examined. In the final part, we look at how market inefficiencies can arise due to the presence of imperfect information, the special characteristics of public goods, and the incidental benefits and costs imposed on people not directly involved in an economic activity.  Throughout the course,  focus of study will be on the policy interventions that would lead to more efficient resource allocation outcomes and improved welfare of society.

 

Schedule

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Date

Group

Topic

Lecturer

 

13 August 08

A & B

Basic Economic Concepts and Application to Policy

 

 

HWT

 

20 August 08

A & B

Consumer Behaviour and Market Demand

 

HWT

 

27 August 08

A & B

 

Consumer Behaviour and Market Demand

 

HWT

 

03 September 08

A & B

 

Production and Costs

HWT

 

10 September 08

A & B

 

Production and Costs

 

HWT

17 September 08

A & B

Competitive Supply Competitive Markets

 

 

HWT

22 & 25 September 08

A & B

 

Mid-Semester Break

 

 

29 September 08

A & B

 

Mid-Semester Examination

(9.30 – 11.30 a.m)

 

HWT & WMH

07 October 08

09 October 08

A

B

 

Monopoly Power and Pricing

 

HWT & WMH

13 October 08

15 October 08

A

B

 

Monopolistic Competition and Oligopoly

 

HWT & WMH

20 October08

22 October 08

A

B

 

Markets with Asymmetric Information

 

HWT & WMH

30 October 08

29 October 08

A

B

 

Externalities, Public Goods and Role of Government

 

HWT & WMH

03 November 08

05 November 08

A

B

 

Externalities, Public Goods and Role of Government

 

HWT & WMH

10 November 08

12 November 08

A & B

 

Presentation of Group Assignments and Review

HWT & WMH

 

Syllabus

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PART-1: INTRODUCTION: MARKETS AND PRICES

 

Topic 1: Basic Economic Concepts and Application to Policy

1.1  Basic Concepts

1.2  Demand and Supply

1.3  Consumer and Producer Surplus

1.4  Market Equilibrium and Efficiency

1.5  Impact of Price Controls

1.6  Impact of  Taxes and Subsidies

1.7  Impact of Import Quotas and Tariffs

 

(Reading: P&R Chapter 1, 2 & 9 )

 

 

PART-2: CONSUMERS, PRODUCERS AND COMPETITIVE MARKETS

 

Topic 2: Consumer Behaviour and Market Demand

2.1  Consumer Preferences and Budget Constraints

2.2  Consumer Choice

2.3  Income and Substitution Effects

2.4  Individual and Market Demand

2.5  Network Externalities

2.6  Behavioural Economics

 

(Reading: P&R Chapters 3, 4 & 5)

 

Topic 3: Production and Costs

3.1  Production Functions

3.2  Marginal and Average Products

3.3  Returns to Scale

3.4  Costs in the Short Run and Long Run

3.5  Short-Run and Long-Run Cost Curves

 

 (Reading: P&R Chapters 6-7)

 

 

Topic-4: Competitive Supply Competitive Markets

4.1  Conditions of Perfect Competition

4.2  Profit Maximization and the Competitive Firm

4.3  Short-Run Supply Curve

4.4  Long-Run Supply Curve

 

(Reading: P&R Chapters 8-9)

 


PART-4: MARKET STRUCTURES

 

Topic 5: Monopoly Power and Pricing

 

5.1  Monopoly Output and Price Decision

5.2  Sources of Monopoly Power

5.3  Social Cost of Monopoly

5.4  Price Discrimination

 

(Reading: P&R Chapters 10; Frank Chapter 12)

 

 

 Topic 6: Monopolistic Competition and Oligopoly

6.1  Monopolistic Competition

6.2  Oligopoly

6.3  Game Theory and Competitive Strategy

 

(Reading: P&R Chapters 11-12; Frank Chapter 13 )

 

 

 

PART-4 MARKET FAILURE AND THE ROLE OF GOVERNMENT

 

Topic 7: Markets with Asymmetric Information

7.1  Asymmetric Information

7.2  Self Selection and Moral Hazard

7.3  Principal Agent Problem

 

     (Reading: P& R  Chapter 17; Frank Chapters 6 & 8)

 

 

Topic--8: Externalities, Public Goods and Role of Government

8.1  Externalities

8.2  Correcting for Externalities

8.3  Property Rights

8.4  Public Goods

9.1  Case for Government Intervention

 

(Reading: P & R Chapter 18; Frank Chapter 16 )

Assessment

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MODES OF TEACHING LEARNING AND ASSESSMENT

 

The modes of teaching and learning will form a mixture of lectures, open discussions and seminars.  Course participants will also be required to work in teams for selected class discussions and the final group assignment and presentation.

 

The assessment for this course will involve 2 individual assignments, 1 group assignment, a mid-term examination and a final examination. The grades will be distributed as follows:

 

  • 2 Individual Assignments (5% each)                  10%
  • 1 Group Assignment                                         10%
  • Mid-Term Examination:                                    30%
  • Final Examination:                                             50%

 

 

The due dates for the assignments are:

 

1st assignment                           : 5 September 08

2nd assignment                          : 17 October 08

Group assignment                     : 7 November 08

Readings

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Main Text:

 

Pindyck, R. s., Rubinfeld, D, L. and Koh, W, Microeconomics: An Asian Perspective, Prentice Hall, Sixth Edition 2006. (P & R)

 

Supplementary Reference Texts (These are held in our library)

 

Frank, R. H., and Bernanke, B, S., Principles of Economics, McGraw-Hill, (International Edition) 2006  (F & B)

 

Frank, R. H., Microeconomics and Behavior,7th edition McGraw-Hill, (International Edition) 2007. (Frank)

 

Additional journal and newspaper articles may be referred to during the course

Preclusions

TopMP5101

Workload

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