Published Aug 30, 2022
Choice lies at the heart of all economic models. This course focuses on choice by consumers and firms. It explains the notion and use of utility functions and budgets, and shows how their interaction allows economists to make predictions about behaviour. The constrained maximization techniques from ECON 211 are used extensively, and extended to situations covering uncertainty (risk) and time. Profit maximization by firms is explored.
Prereq: ECON101 or ECON100/COMM103;ECON211 or one of MATH128,138,148; ECON221 or one of ARTS280,ENVS278,KIN222,232,PSCI214/314,PSYCH292, REC371, SDS250R, SMF230, SOC/LS280,STAT202, 206,211,220,230,240, SWREN250R; or Math/FARM stdnts. Antireq: ECON301,302
Detailed outline of topics.
1 The fundamental model of economic choice
1.1 Alternatives and budgets
1.2 Preferences and utility
2 Consumer choice
2.1 Utility maximisation
2.2 Application: the Law of Demand
3 Intertemporal choice
3.1 Intertemporal utility maximisation
3.2 Application: consumption dynamics
3.3 Application: infinite horizon and the Permanent Income Hypothesis
4 Producer choice
4.1 Production technology
4.2 Profit maximisation
4.3 Application: returns to scale and firm size
5 Choice under uncertainty
5.1 Expected utility maximisation
5.2 Application: attitudes to risk and insurance contracts
6 Relaxing rationality assumptions
6.1 Decision-makers who do not optimise: satisficing
6.2 Uncertainty about probabilities: aversion to ambiguity
We will work through the topics listed above. Some topics may be omitted in during the term because of time considerations. Students will be notified, in class and on LEARN, of the material they are responsible for prior to all assignments, midterms and exams.
| Title / Name | Notes / Comments | Required |
|---|---|---|
| ECON 290 Lecture Notes, by Jean Guillaume Forand | These are my own notes, and they are posted on LEARN | Yes |
The topics from class are (almost) all covered by standard intermediate microeconomics goods (that use calculus). You may want to read through the relevant sections of some such book because (a) it can provide a different perspective on material presented in class, (b) it has more space devoted to discussions and examples, and (c) it serves as an additional source of exercises and practice problems. Here is a non-exhaustive list of such textbooks.
| Component | Value |
|---|---|
| Assignments | 10% |
| In-class participation questions | 10% |
| Midterm 1 | 20% |
| Midterm 2 | 20% |
| Final exam | 40% |
-The aim of assignments is to help you integrate the material from class and prepare you for the exams. Teamwork is expected (and to some degree recommended), although each student must hand in their own assignments. The assignments will consist of questions drawn for the course's problem sets, available on LEARN. The exact questions covered by the assignments will be announced on LEARN at least one week before the assignment's due date. Assignments must be submitted in the relevant dropbox on LEARN.
Each assignment will be graded on a 0-1-2 basis. I will only count your five best assignments, and your total points on these assignments will be the mark that goes into your final grade. Late assignments will not be accepted and will automatically receive grade of 0.
-In six instances during the term, I will ask an in-class participation question. Students will have 10-15 minutes to answer this question. Students will be encouraged to discuss among themselves before writing down their answers, which must be handed in at the end of that class. Each in-class participation question will be graded on a 0-1-2 basis, with students absent for that lecture getting a grade of 0. I will only count your five best participation questions, and your total points on these questions will be the mark that goes into your final grade.
-Midterm 1 will be held in class on Tuesday October 4. The material covered by the midterm will be specified in class and on LEARN prior to the test.
-Midterm 2 will be held in class on Tuesday November 8. The material covered by the midterm will be specified in class and on LEARN prior to the test.
There is no makeup exams for missed midterms; their weight will be shifted to the final exam, after receipt of suitable medical justification.
-The final exam will be held during the university's exam period. This exam is cumulative.
No assignment screening will be used in this course.
Please note that a cross-listed course will count in all respective averages no matter under which subject code it has been taken. For example, a PHIL/PSCI cross-list will count in a Philosophy major average, even if the course was taken under the Political Science subject code.
All deferred Final Exam requests for economics courses are administered by the Economics Undergraduate Office. Please consult the Deferred Exam Policy at
https://uwaterloo.ca/economics/undergraduate/resources-and-policies/deferred-final-exam-policy.
Academic integrity: In order to maintain a culture of academic integrity, members of the University of Waterloo community are expected to promote honesty, trust, fairness, respect and responsibility. [Check the Office of Academic Integrity for more information.]
Grievance: A student who believes that a decision affecting some aspect of their university life has been unfair or unreasonable may have grounds for initiating a grievance. Read Policy 70, Student Petitions and Grievances, Section 4. When in doubt, please be certain to contact the department’s administrative assistant who will provide further assistance.
Discipline: A student is expected to know what constitutes academic integrity to avoid committing an academic offence, and to take responsibility for their actions. [Check the Office of Academic Integrity for more information.] A student who is unsure whether an action constitutes an offence, or who needs help in learning how to avoid offences (e.g., plagiarism, cheating) or about “rules” for group work/collaboration should seek guidance from the course instructor, academic advisor, or the undergraduate associate dean. For information on categories of offences and types of penalties, students should refer to Policy 71, Student Discipline. For typical penalties, check Guidelines for the Assessment of Penalties.
Appeals: A decision made or penalty imposed under Policy 70, Student Petitions and Grievances (other than a petition) or Policy 71, Student Discipline may be appealed if there is a ground. A student who believes they have a ground for an appeal should refer to Policy 72, Student Appeals.
Note for students with disabilities: AccessAbility Services, located in Needles Hall, Room 1401, collaborates with all academic departments to arrange appropriate accommodations for students with disabilities without compromising the academic integrity of the curriculum. If you require academic accommodations to lessen the impact of your disability, please register with AccessAbility Services at the beginning of each academic term.
Turnitin.com: Text matching software (Turnitin®) may be used to screen assignments in this course. Turnitin® is used to verify that all materials and sources in assignments are documented. Students' submissions are stored on a U.S. server, therefore students must be given an alternative (e.g., scaffolded assignment or annotated bibliography), if they are concerned about their privacy and/or security. Students will be given due notice, in the first week of the term and/or at the time assignment details are provided, about arrangements and alternatives for the use of Turnitin in this course.
It is the responsibility of the student to notify the instructor if they, in the first week of term or at the time assignment details are provided, wish to submit alternate assignment.