Course: ECO310

Instructor: Morris

S 2014

### Description of Course Goals and Curriculum

ECO 310 is designed as an introduction to true microeconomic theory. It is the more mathematical version of the class (while ECO 300 is non-math track), but this just means that ECO 310 problem sets and exams involve longer, more involved derivatives and equation-solving than in ECO 300. It is helpful to take ECO 100 or AP Microeconomics before taking the class, as both of these courses do a good job of explaining the basic concepts (consumer choice, supply and demand, externalities, etc.) that are covered in microeconomic theory. However, the entire point of 310 is to derive these concepts mathematically from scratch, so there is much more math involved than in ECO 100. Having a multivariable calculus background (MAT 175/201/203) is very helpful- most of the problem sets involve taking partial derivatives. There are also some statistical concepts (minimal), so some knowledge of statistics is useful but certainly not necessary. The first half of the course is devoted to the standard consumer choice model (indifference curves, budget constraints, how to derive supply and demand functions, and how to find an equilibrium) as well as to decision-making under uncertainty. The second half is more interesting, as it applies this framework to many different topics (insurance, risk, externalities) and also touches on game theory.### Learning From Classroom Instruction

There are two lectures and one precept each week. Morris’ lectures are highly theoretical, and he spends the majority of time walking through highly mathematical proofs. For those without a background in proof-based math or probability theory, these will often be difficult to follow. The upside is that no theorem needs to be proved on the exams, so students just need to be able to memorize and apply key equations/methods. The precepts are excellent and are where most of the true learning takes place. Preceptors generally present Morris’ lectures in a more applied light, making them easier to understand. They also do practice problems that are similar to the ones that are found on problem sets and exams. One can essentially get through the entire course simply by reading the lecture sides on Blackboard and paying attention in precept. To do extremely well, however, it probably makes sense to go to lecture, as the final exam covered some topics found only in lecture.### Learning For and From Assignments

The problem sets are crucial for this class—unlike in, say, a math class, it is difficult to find different ways to test students on the same concept in economic theory. As a result, exam problems are very similar to problem set questions. Since there are very few practice exams available before the midterm and final, it is important to do the problem sets well (have a good p-set group!). They are often very tricky, mainly because they require an incredible amount of computation involving multivariable equations; this is tedious, and it takes a while before the intuition emerges. Morris’ midterm was very straightforward, since very few topics are covered in the first half of the course. The first few p-sets all deal with deriving demand functions, and the midterm is naturally similar. In contrast, the final is difficult because it encompasses the myriad topics covered in the second half of the course, and in many cases students have not seen a near-identical problem beforehand. Therefore it is very important to study both the slides and the precepts, do all the problem sets, and understand all graphs before the final. Grades in the course were relatively homogenous until the midterm, but the final did allow for a lot of differentiation. At the end of the course, about 45-50% of students received A-grades. This is because the department recognizes that ECO 310 is conceptually and mathematically difficult, especially for students without prior background.### External Resources

The textbook is absolutely crucial for understanding the concepts in class. It is dry, but after struggling through it, the concepts and problem sets make much more sense. The book also has sample problems that are useful as examples for the p-sets. There is very little useful outside material- KhanAcademy and Youtube videos sometimes help with economic intuition, but there is not much that can help with the methods other than experience/meticulous practice with derivatives and equation-solving. At the end of the day, the course is all about knowing which derivatives to take, differentiating properly, and solving without making mistakes.### What Students Should Know About This Course For Purposes Of Course Selection

This course is required for math-track economics majors and finance certificate students. It gives you a solid foundation of economic theory that will be very helpful in other theory classes (ECO 311, ECO 418) as well as in many Econ departmentals. In all honesty, if you are deciding between ECO 300 and ECO 310, only take 310 if you need it for the finance certificate, are considering graduate school in economics, or are mathematically oriented (i.e. are comfortable in MAT or ORF classes). ECO 300 covers all the same topics, but with more of an emphasis on conceptual understanding and less on computation. The one other upside of ECO 310 is that the curve is extremely generous—though most economic intuition is lost in the process. In terms of timing, if you are considering an economics major, take ECO 300 or 310 as early as you can, preferably sophomore fall or even freshman year. This is because micro theory concepts are useful for many other econ courses, and you will find yourself at a disadvantage in any other departmentals (especially ECO 301 or 311) that you take concurrently or beforehand.Microeconomic Theory: A Mathematical Approach