SUFFOLK COUNTY COMMUNITY COLLEGE
Selden, New York
Area: Social
Science Office
Telephone:
Catalog No.: EK-22
Required Text:
1. Miller, Roger,
Economics Today, 12 edition
Recommended Reading:
1. The Wall Street Journal
2. The Economic Report of the President
Objectives of the
course:
In
this course we will discover ways to become more analytical about our market
economy. Using practical and
abstract techniques to examine the behavior and decision-making of individuals
and firms in our market, economic models will be developed to help in
predicting behavior and decision-making.
We
will also devote class time to merger activity as a means of growth and the
long-run consequences thereof.
Upon
completion of this course the student will be able to understand terminology
frequently encountered in the Wall Street Journal and other professional
journals.
Teaching Methodology:
The emphasis in this course will be in developing
concepts; identifying the tools economists use to deal with these concepts; and
presenting different ways economists view economic problems. To accomplish this class time will be
primarily devoted to lectures supported with an extensive selection of
transparencies of pertinent data from the professional journals.
Procedure for
Accomplishing These Objectives:
1. Read assigned chapters in text.
2. Satisfactory performance on the exams.
3. Satisfactory attendance.
4. Submission of research paper. (Due date December 2, 2004)
Sept. 16 Rosh Hashanah: No classes
Sept. 23 Gains from trade + Supply &
Demand 3 & 4
Sept. 30 Supply & Demand + Public Sector 4 & 5
Oct. 7 Exam I
Oct. 14 Theory of the firm 21
Oct. 21 Cost and Output Determination 22
Nov. 2 (Thursday classes meet on this Tuesday) Monopoly 24
Nov. 4 Exam II
Nov. 11 Oligopoly &
Monopolistic 25 & 26
Nov. 18 Mergers (hand-outs)
Dec. 2 Labor Demand and Supply 28
Dec. 9 Income, Poverty, and Health Care
Dec. 16 Exam III
Grading Procedure:
There will be three (3) in
class exams given throughout the semester. Each exam will contribute equally to the final grade
calculation. The research paper
will be equal in weight to an exam, so the final grade will be based on four
assessments: three exams and the research paper.
Attendance Policy:
Students are expected to
attend every class. Attendance
will be taken at the beginning of each class. A student who arrives late has the responsibility to notify
the instructor of their presence at the end of the class period. If you happen to be absent from a class
it is your responsibility to find out what material was covered.
Two absences are permissible,
however, if you exceed this number you may be dropped from the course. Absences should be saved for
emergencies and/or illness. Note
that an ÒabsenceÓ means that a student did not attend class. Explaining an absence does not ÒeraseÓ
it and an absence due to illness does count. DoctorÕs notes do not eliminate absences; nor does a call to
my office. Arriving late/leaving
early will count towards absences.
Absences/Lateness On
Days Of Exams:
There will be NO MAKE-UP
exams; a student absent for an exam will earn 0 for this work. A student who arrives late, will have
only the time that remains from the time allotted for the class to complete
this work.
Withdrawal Policy:
If you wish to drop this
course you must notify your instructor prior to mid-semester. Without this notification your final
grade will be calculated based on the scores you have earned.
Bartlett, Donald and James B.
Steele, America What Went Wrong, 1991
Friedman, Milton, Free To
Choose. 1981
Galbraith, John, K. The Affluent Society, The New
Industrial State, The Age of Uncertainty
Harrington, Michael. The New American Poverty, 1984
Rukeyser, Louis. WhatÕs Ahead For the Economy: The
Challenge and the Chance. Simon & Schuster 1983
Thurow, Lester, The Zero
Sum Society. 1980
You may also wish to peruse
the following periodicals that are available in the library:
1. Business Week
2. Fortune
3. Federal Reserve Bulletin
4. Monthly Labor Review
Words & Concepts
For Exam I
1. Microeconomics Ñ The study of the individual elements of the
economy.
2. Macroeconomics Ñ The study of the economy in the aggregate.
3. Aggregates Ñ Total amounts or quantities.
4. Economics Ñ The science concerned with the allocation and
distribution of scarce resources.
5. Wants Ñ What people would buy if their income were
unlimited.
6. Models or Theories Ñ Simplified representations of the real world used
as the basis for predictions or explanations.
7. Ceteris paribus assumption Ñ The assumption that nothing changes except the
factors being studied.
8. Empirical Ñ Relying on real-world data in evaluating the
usefulness of a model.
9. Correlation Ñ The mutual relationship between two or more
things.
10. Marginal analysis Ñ The analysis of what happens when small changes
take place relative to the status qou.
11. Positive economics Ñ Analysis that is strictly limited to making
either purely descriptive statements or scientific predictions. A statement of what is.
12. Normative
economics Ñ Analysis involving
value judgments about economic policies.
A statement of what ought to be.
13. Scarcity Ñ A situation i which there are insufficient
resources to freely satisfy all of our desires.
14. Resources Ñ Inputs used to produce economic goods.
15. Economic goods Ñ Any good that is scarce and has a value.
16. Services Ñ Things purchased by consumers that do not have
physical characteristics.
17. Market system Ñ A system in which individuals own the factors of
production and decide individually how to use them; a system with completely
decentralized economic decision making.
18. Command system Ñ A system in which the government controls the
factors of production and makes all decisions about their use and about the
distribution of income.
19. Opportunity cost Ñ The value of something sacrificed as a result of
choosing an alternative.
20. Production Possibilities
Curve Ñ A curve that reveals the
maximum amount that can be produced given the available resources.
21. Law of increasing
relative costs Ñ The observation
that the opportunity cost of additional units of a good generally increases as
society attempts to produce more of that good. This causes the bowed-out shape of the PPC.
22. Law of Comparative
Advantage Ñ That individuals or
nations can gain by specializing in goods they can produce efficiently and
trading for goods they are high opportunity cost producers of.
23. Division of Labor Ñ The segregation of a resource into different
specific tasks.
24. Demand schedule Ñ A series of prices and quantities for which
demand exists.
25. Relative price Ñ The price of a commodity expressed in terms of
the price of another commodity.
26. Demand curve Ñ A curve that shows the negative relationship
between price and quantity demanded.
27. Supply curve Ñ A curve that shows the positive or direct
relationship between price and quantity supplied.
28. Equilibrium Ñ A state of balance between two opposing forces.
29. Shortage Ñ A situation when the quantity demanded exceeds
the quantity supplied at some price.
30. Surplus Ñ A situation when the quantity supplied exceeds
the quantity demanded at some price.
31. Price controls Ñ Government mandated minimum or maximum prices
that can be charged for goods or services.
EK-22
TERMS FOR EXAM II
1. Indifference Curves = A locus of points or a particular combination of
goods that the consumer prefers or is indifferent to.
2. Income Consumption
Curve = The locus of equilibrium
budgets resulting from various levels of money income and constant money
prices.
3. Substitutes = Products that are related such that an increase
in the price of one will cause an increase in demand for the other.
4. Complements = Products that are usually consumed jointly. An increase in the price of one will
cause the demand for the other to fall.
5. Price Consumption
Curve = Is the locus of
equilibrium budgets resulting from variations in the price ratio, money income
remaining constant.
6. Substitution Effect = That part of an increase in the amount consumed
that is the result of a good being cheaper in relation to other goods because
of a reduction in price.
7. Income Effect = That part of an increase in amount consumed that
is the result of the consumerÕs real income being expanded by a reduction in
the price of a good.
8. Isoquants = The locus of all combinations of x1 and x2 which
yield a specified output level.
9. Ridge Lines = Specify the parameters or limits of production a
firm will experience due to the Law of Diminishing Returns.
10. Isocost Line = Locus of input combinations that may be
purchased for a specified total cost.
11. Explicit Costs = Money paid to purchase the services of
productive resources.
12. Implicit Costs = The opportunity costs associated with a firmÕs
use of resources that it owns.
These costs do not involve a direct money payment.
13. Utility = The subjecitve usefulness of something.
14. Marginal Utility = The change in total utility as a result of
consuming an additional unit.
15. Diminishing
Marginal Utility = The principle
that as more of any good or service is consumed, its extra benefit declines.
16. Short Run = The time period in which a firm cannot alter its
current plant size.
17. Long Run = The time period in which all factors of
production can be varied.
18. Law of Diminishing
Returns = The observation that
after some point, successive increases in a variable factor of production, such
as labor, added to fixed factors of production, will result in smaller
increases in output.
19. Economies of Scale = When output increases lead to decreases in
long-run average costs.
20. Constant Returns
To Scale = A situation in which
the long-run average cost curve of a firm remains flat, or horizontal, as
output increases.
21. Diseconomies of
Scale = when output increases lead
to increases in long-run average costs.
22. Perfect
competition = A market structure
in which the decisions of buyers and sellers have no effect on market price.
23. Perfectly
Competitive Firm = A firm that is
such a small part of the total industry that it cannot affect the price of the
product it sells.
24. Price Taker = A competitive firm that must take the price of
its product as given because the firm cannot influence its price.
25. Marginal Revenue = The change in total revenue resulting from a one
unit change in output.
26. Constant-cost
Industry = An industry whose total
output can be increased without an increase in long-run per-unit costs; an
industry whose long-run supply curve is horizontal.
27. Decreasing-cost
Industry = An industry in which an
increase in output leads to a reduction in long-run per-unit costs, such that the
long-run industry supply curve slopes downward.
28. Increasing-cost
Industry = An industry in which an
increase in industry output is accompanied by an increase in long-run per-unit
costs, such that the long-run industry supply curve slopes upward.
29. Marginal Cost
Pricing = A system of pricing in
which the price charged is equal to the opportunity cost to society of
producing one more unit of the good or service in question.
30. Market Failure = A situation in which an unrestrained market operation leads to either too few or too many resources going to a specific economic activity.
EK-22
Terms for
Exam III
monopolistic
competition = A market in which
many firms sell a differentiated product, into which entry is relatively easy,
in which the firm has some control over the price at which the product is sold,
and in which there is considerable nonprice competition.
product differentiation =
Physical or other differences between the products produced by different firms
which result in buyers preferring one product over another.
wastes of monopolistic competition
= refers to the price cutting that forces prices to fall below marginal
cost. Another waste is all the
advertizing associated with doing business in such a market.
oligopoly = A market in which a few firms sell either a
homogeneous or differentiated product, with relatively high barriers to entry,
and there is a mutual interdependence among firms in this market.
concentration ratio = The
percentage of the total sales of an industry made by the four largest sellers
in the industry.
mutual interdependence = Refers
to how the price established by one oligopolist can affect the sales of
another. Therefore each firm in
this market will be watching each other carefully to avoid losing market share.
kinked demand curve = The
demand curve for an oligopolist that is based on the assumption that each firm
will cheat on collusive agreements and lower prices to increase revenues.
price war = Successive
decreases in the prices charged by the firms in an oligopolistic industry with
the hope to increase revenues.
Firms seldom benefit from such actions.
cartel = A formal agreement
between firms to set the price of the product and outputs of the individual
firms or to divide the market for the product.
price leadership = An informal
price setting method in oligopolistic industries where the largest firm is
first to establish product price and the other firms in that industry follow.
Sherman Act = The Federal Antitrust Act of 1890 that declared
monopoly, restraint of trade, and attempts to monopolize illegal.
Clayton Act = The Federal
Antitrust Act of 1914 which strengthened the Sherman Act by making it illegal
for business firms to engage in certain specified practices.
Federal Trade Commission Act =
The Federal Antitrust Act of 1914 that created the Federal trade commission.
Interlocking directorate = A
situation in which one or more of the members of the board of directors of one
corporation are also on the board of directors of another corporation. This is illegal when it tends to reduce
competition.
Horizontal merger = The merger
of one or more firms producing the same product.
Vertical merger = The meger of
one ore more firms engaged in different stages of the production of a final
product into a single firm.
Conglomerate merger = The
merger of a firm in one industry with a firm in another industry.
greenmail = The premium paid by a targeted company to a
raider in exchange for his shares of the target company.
mergers = The combination of one or more firms into one.
crown jewel = The most valued asset held by an acquisition
target: divestiture of this asset is frequently a sufficient defense to
dissuade takeover.
shark repellent = Antitakeover corporate charter amendments such
as staggered terms for directors, super-majority requirement for approving
merger, or mandate that bidders pay the same price for all shares in a buyout.
hostile (unfriendly)
takeover = occur when management
of the target do not concur with the propose maerger and the raider resorts to
tender offers to the stockholders.
friendly merger = occur when management of the target firm agree
to merge with the raider.
poison pills = Gives stockholders other than those involved in
a hostile takeover the right to purchase securities at a very favorable price
in the event of a takeover.
golden parachuttes = The provisions in the employment contracts of
top-level managers that provide for severance pay or other compensation should
they lose their job as a result of a takeover.
tender offer = An offer made directly to shareholders to buy
some or all of their shares for a specified price during a specified time.
stripper = A successful raider who, once the target is
acquired, sells off some of the assets of the target company.
marginal revenue
product = The change in total
revenue associated with the use of an additional factor of production.