Econ 12, Firms and Industries, 8:00 AM

Winter 2005, Jan. 3 - Mar. 16

Fred E. Foldvary

Santa Clara University


Class web site:

Textbook web site: account 55881

Aplia web site: (class key: S42N-GAAY-A2RA cost: $28)

MWF, 8:00-9:05 AM , Kenna 214, 4 units, #12060

Telephone: office 408/554-6968; home 510/843-0248. Office: Kenna 209.

Please do not call my home telephone after 10 PM.

Office hours: Monday, Wednesday, & Friday 10:30-11 AM and by appointment

Fax (econ dept.) 408/554-2331. Mailbox is in the Department of Economics, Kenna 300.

e-mail: [email protected] with "econ 12" on the subject line. Please do not send duplicate messages.

Please do not email me any attachments; I do not open them. Do not email me any problem sets; they must be on Aplia or on paper. If you cannot come to class, then place assignments in my mailbox at the Dept. Of Economics, Kenna 3rd floor.

Course overview:

"Firms and industries" deals with the structure and behavior of various types of markets, and of government policy to affect the behavior. This includes an analysis of competition, monopoly, monopolistic competition, and oligopoly. Questions to consider include the effectiveness of markets and of government policy.

You the student should take a professional attitude as a true student of the subject, and as a rule, never let any word or concept go past you that you do not thoroughly understand. Do not be afraid to ask questions, even if you think it might be a simple thing that only you don't get. It is your job here to understand the material, and most likely if something puzzles you, it also has been unclear or confusing to other students. I will try to be clear, but I cannot read minds.

As feedback to my teaching, I will also occasionally conduct informal, anonymous evaluations. On a scale of 1 to 5, 5 being the best, I am aiming for a 4.8 on all aspects of teaching. If you think my performance has been less than 5, I will ask you to please tell me what it would take to bring it up to a 5. If you get evaluated at less than what you think you merit, you would want to know why. So please extend me the courtesy and consideration of providing reasons, so that I can know how to bring up my score, which will also help you to learn more and get a better grade. If you help me be a better teacher, it will help make you a better student.

The objectives of the course:

1. A lifetime intuitive understanding of the basic principles of market structures.

2. The ability to analyze economic issues and distinguish good from bad economic thinking.

3. The ability to apply economic concepts to your own life, including your role as a citizen, investor, worker, and consumer.

The ideals of this university are competence, conscience, and compassion. My goal is that when the class ends, you will be more competent in economics than 99% of the public. You will then be able to direct your conscience and compassion for much better effect, and you will be able to use your reasoning more effectively to avoid making economic and financial mistakes and to have a prosperous and satisfying life.

Biographical sketch:

Fred E. Foldvary received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University, Virginia. He has taught economics at Santa Clara University, Latvia, Virginia Tech, California State University at Hayward, John F. Kennedy University, and University of California Extension.

Dr. Foldvary is the author of Public Goods and Private Communities and Dictionary of Free-Market Economics. He edited Beyond Neoclassical Economics and co-edited The Half-Life of Policy Rationales. 0His areas of research include public finance, business cycles, governance theory, the economics of transition, ethical philosophy, and real estate.

Elements of the Class

The following constitutes an agreement between I the instructor and you the student. By staying in the class, you agree to the terms of the syllabus.

Use of class time

The usual structure of class time is:

1. Possible quiz. 2. Announcements and news.

3. Hand back assignments and go over them.

4. Discussion of feedback on previous class.

5. Lecture and discussion of new material.

6. Possibly a report of the main things learned and any remaining puzzles.

Expressing yourself.

You are encouraged to express yourself in class freely and openly by raising your hand. Do not fear asking a question. All questions relevant to the class topics are good questions. Usually, other students may have a similar question. You are also encouraged to send me suggestions by email or at my office.

Student progress.

Your scores on problem sets, exams, and reports will be recorded on computer, and I will occasionally post them on the class web site. You will be assigned a number, and this will be shown rather than your name. If you don't wish to be included in this viewing, let me know. I am concerned with your success and progress, and will let you know your status at any time on request. I will assume that you agree that I am being actively helpful with your progress unless you say otherwise

Grades and the criteria for evaluating your work.

The maximum points for each category are:

First midterm exam: 144 points (24 questions)

Second midterm exam: 144 points "

Third midterm exam: 144 points "

Final exam: 288 points (48 questions)

Quizzes, problem sets, reports 260 points

Oral exam conversation 20 points

total = 1000 points.

You are assigned to attend the four public lectures of the Civil Society Institute and submit reports. Those who do not attend these may do alternative assignments. There is also a project to interview the manager of an enterprise and answer questions about it.

There will be an conversation and oral exam in my office. You don't need to prepare for it. It will usually last about 5 minutes. These conversations will help me get to know you better and see how you are developing your economic understanding.

Aplia readings and problem sets

To do some of the problem sets, you will be required to periodically access an economics website by a company called Aplia. To access the website, you will first need to register for an account with Aplia at

The class grading is as follows.

A : 921-999, A-: 900-920, B+: 880-899, B : 821-879; B-: 800-820; C+: 780-799,

C : 721-779, C-: 700-720; D+: 680-699; D : 621-679; D-: 600-620; F : 0-599

All problem sets, quizzes, and exams are open book and open note- the purpose is to test your ability to analyze rather than memorize. But your homework must be your own work. You may work with others in doing a problem set if all the names are listed and you write up the report yourself and do any required calculations, graphs and analysis. You may NOT copy the work of another student. Cheating is a serious violation of university rules and can result in a zero for the assignment or possibly an F for the course or reported to the university.

Essays are graded by the following criteria:

1) presentation (language, legibility, organization);

2) how completely it covers the topics;

3) focus (avoiding irrelevancies and redundancies);

4) knowledge of the relevant theory, facts, and terms, and defining of key terms;

5) warranting (by clear, sound, organized reasoning) and citing of sources.

You will be assigned to either attend four lectures of the Civil Society Institute or else to do assigned readings on the topic, and write an analysis of it, answering the questions asked.

Unless you let me know soon after the return of each assignment or exam, I will assume that you agree that I have used fair and appropriate methods to evaluate your work. If you miss a problem set, you may do a written make-up, with your score reduced by 20% of the total maximum score, if submitted by the next class day. After the following class day, the grade will be zero.

Text books

Principles of Microeconomics, 3nd edition, by N. Gregory Mankiw

Adventures of Jonathan Gullible, by Ken Schooland

Readings in Aplia

The class web site has lecture notes for some of the class material. These are not polished prose, and are available to help you. See also the textbook web site for online quizzes and information. The midterms and final exam will include material from both class lectures, problem sets, and readings, but not from the web lectures. You are responsible for obtaining the material if you miss class. You are expected to have read the assigned material before the class meets. You are encouraged to bring the currently used book to class.

Reading Assignments

Note: the schedule is approximate; sometimes we may be ahead or behind.

The Aplia schedule is online there.

Week 1.

Jan. 3+: The meaning of the market. Mankiw: Chapter 13, costs.

Register with Aplia and do the introductory practice problem sets.

Week 2.

Jan. 10+ Theory of the firm. Types of firms. Profit.

Mankiw Chapter 14: firms in competitive markets.

Week 3.

Jan. 19+ (Jan. 17 is MLK holiday):

Monday: first midterm.

Economics of Agriculture. Chapter 15: Monopoly. Anti-trust policy.

Week 4.

Jan. 24+: Chapter 16: Oligopoly and game theory. Chapter 17: monopolistic competition

Week 5.

Jan. 31+: Second midterm. Adventures of Jonathan Gullible

Week 6.

Feb 7+: Adventures of Jonathan Gullible

Week 7.

Feb. 16+ Auctions. Asset Markets. Social choice and demand revelation. Public choice.

Week 8.

Feb. 23+: (Feb. 21: Presidential birthday holiday). Law and economics. Feminist economics.

Austrian-school economics. Personal finances, taxes, investing. Negotiations and decisions.

Week 9.

Feb. 28+: Theory of clubs. General equilibrium. Real estate economics and other topics.

Friday: third midterm.

Week 10.

March 7+: Economic simulation. Review for final exam.

Final exam: Wednesday, March 16, 9:10-12:10