FOUNDATIONS OF MICROECONOMICS

IE University
Professor: ANTONELLA FAZIO
E-mail: [email protected]

Academic year: 23-24

Degree course: FIRST
Semester: 1º
Category: BASIC
Number of credits: 6.0
Language: English

PREREQUISITES
None

SUBJECT DESCRIPTION
The course provides an introduction to microeconomic theory and its applications. We will start with
an introduction to economics and how microeconomic perspectives can help explain the real world
and help solve economic problems. Microeconomics is the branch of economics that studies the
behaviour of individuals and firms in making decisions, how markets work and the conditions under
which free markets lead to desirable allocations, and when there are market failures and a need for
government intervention. After completing this course, by focusing on the individual decisions of
consumers and firms, students obtain a proper understanding of the behaviour of economic agents
and a powerful tool to analyse the outcomes that result from their interaction.

OBJECTIVES AND SKILLS

The goal is for students to start thinking as economists: first, they get to know verified basic
concepts and theories; second, they familiarize themselves with the methodology that scholars and
practitioners use in their research. The final aim is that this methodology becomes a valuable tool
that students can apply in their future professional careers.
Given its introductory nature, the course's primary objective is to familiarize students with basic
microeconomic concepts and the economic methodology. After completing this course, students
should be capable of:
- communicate effectively about economic topics
- use economic thinking to inform decision making
- make sense of economic data
METHODOLOGY

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To make the course accessible, engaging, and coherent, it is taught based on a new innovative
open-access textbook (Core, 2017) which addresses the theory and relevant real-world topics in
economics. However, some lectures will also be combined with Mankiw (2018) to deep into some
critical concepts. Sessions will incorporate the explanation of theoretical concepts with practical
activities such as exercises, discussions and class activities. They are intended to be highly
dynamic. Students will prepare the readings before class. There will be assignments in which
students will be tasked with finding sources of information, putting theory into practice,
systematizing, reasoning, and solving problems. Some of these assignments may be presented in
class.

Teaching methodology Weighting Estimated time a

student should
dedicate to prepare for
and participate in
Lectures 30.0 % 45 hours
Discussions 10.0 % 15 hours
Exercises 13.33 % 20 hours
Group work 23.33 % 35 hours
Other individual studying 23.33 % 35 hours
TOTAL 100.0 % 150 hours

PROGRAM

SESSION 1 (LIVE IN-PERSON)

INTRODUCTION
Topic: Introduction to the Course: Learning Objectives and Course Evaluation
Mandatory Reading:
- Course Syllabus

SESSION 2 (LIVE IN-PERSON)

HOW ECONOMISTS THINK
Topic: How Economists think
Mandatory Reading:
- The Economy - Unit 2 - "Technology, population and growth”
Book Chapters: "Technology, population and growth" Unit 2 in The CORE team, The Economy.
(Book)

SESSIONS 3 - 4 (LIVE IN-PERSON)

CONSUMER CHOICE

Topic: Consumers and Consumption Choice

Mandatory Reading:
- The Economy - Unit 3 - “Scarcity, work, and choice”
Book Chapters: "Scarcity, work and choice". Unit 3 in The CORE team, The Economy. (Book)

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SESSIONS 5 - 6 (LIVE IN-PERSON)
CONSUMER CHOICE
Topic: Consumer strategy and collective choice
Mandatory Reading:
- The Economy - Unit 4 - “Social Interactions”
Book Chapters: “Social Interactions". Unit 4. The Economy

SESSIONS 7 - 8 (LIVE IN-PERSON)

THE FIRM ORGANIZATION
Topic: The Firm organization and Asymmetric information
Mandatory reading:
- The Economy - Unit 6 - "The Firm: Owners, Managers, And Employers": 6.1 to 6.3, 6.9-6.10
Book Chapters: "The Firm: Owners, Managers, And Employers". Unit 6. The Economy

SESSION 9 (LIVE IN-PERSON)

SESSION 9: HOW MARKETS WORK

Topic: The Market forces of Supply and Demand

Mandatory reading:
- Mankiw, G: Chapter 4: The Market Forces of Supply and Demand
Book Chapters: Chapter 4. The Market Forces of Supply and Demand. Principles of
Microeconomics. (See Bibliography)

SESSION 10 (LIVE IN-PERSON)

HOW MARKETS WORK

Topic: Elasticity and its application

Mandatory reading:
- Mankiw, G: Chapter 5: Elasticity and its Application
Book Chapters: Chapter 5: Elasticity and its Application. Principles of Microeconomics. (See
Bibliography)

SESSION 11 (LIVE IN-PERSON)

HOW MARKETS WORK

Topic: Consumers, Producers, and the Efficiency of Markets

Mandatory reading:
- Mankiw, G: Chapter 7: Consumers, Producers, and the Efficiency of Markets
Book Chapters: Chapter 7: Consumers, Producers, and the Efficiency of Markets. Principles of
Microeconomics (See Bibliography)

SESSION 12 (LIVE IN-PERSON)

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Team Presentations:
Topic: How economists use data: Practice of concepts - Guidelines will be uploaded on
blackboard.
Empirical Project: Supply and Demand
Other / Complementary Documentation: Empircal Project 7: Supply and Demand (Book)

SESSION 13 (LIVE IN-PERSON)

FIRM BEHAVIOUR AND ORGANIZATION OF INDUSTRY HOW MARKETS WORK

Topic: The Cost of Production

Mandatory readings:
- The Economy - Unit 7 - "The Firm and its Customers" Section 7.3
- Mankiw, G: Chapter 13: The Cost of Production
Book Chapters: Chapter 13: The Cost of Production. Principles of Microeconomics (See
Bibliography)
Book Chapters: "The Firm and its Customers". Unit 7. The Economy p. 274-280 (Book)

SESSION 14 (LIVE IN-PERSON)

Mid-Term Exam

SESSIONS 15 - 16 (LIVE IN-PERSON)

FIRM BEHAVIOR AND ORGANIZATION OF INDUSTRY
Topic: Firms in Competitive Markets

Mandatory reading:
- The Economy - Unit 8 - “Supply and demand: Price-taking and competitive markets”
Book Chapters: “Supply and demand: Price-taking and competitive markets”. Unit 8 in The CORE
team, The Economy.

SESSIONS 17 - 18 (LIVE IN-PERSON)

FIRM BEHAVIOR AND ORGANIZATION OF INDUSTRY

Topic: Price-setting, competition and market power.

Mandatory reading:
- The Economy - Unit 7 - "The Firm and its Customers"
Book Chapters: “The Firm and its Customers”. Unit 7 in The CORE team, The Economy. (Book)

SESSIONS 19 - 20 (LIVE IN-PERSON)

FIRM BEHAVIOR AND ORGANIZATION OF INDUSTRY
Topic: Monopolistic Competition

Mandatory Reading:

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 - Mankiw, G: Chapter 16: Monopolistic Competition
Book Chapters: Chapter 16: Monopolistic Competition. Principles of Microeconomics (See
Bibliography)

SESSION 21 (LIVE IN-PERSON)

ECONOMICS OF THE PUBLIC SECTOR
Topic: Supply, Demand and Government Policies
Mandatory reading:
- Mankiw, G: Chapter 6: Supply, Demand and Government Policies
Book Chapters: Chapter 6: Supply, Demand and Government Policies. Principles of Microeconomics
(See Bibliography)

SESSION 22 (LIVE IN-PERSON)

Topic: Market simulation. Game
· Learn about firm behaviour and organization of industries by playing a game.
PRACTICE OF CONCEPTS FROM SESSIONS 13-21: Learn about firm behaviour and
organization of industries by playing a game:
Other / Complementary Documentation: Classroom Games for Teaching Economics

SESSION 23 (LIVE IN-PERSON)

ECONOMICS OF THE PUBLIC SECTOR
Topic: Application: The Cost of Taxation
Mandatory Reading:
- Mankiw, G: Chapter 8: Application: The Cost of Taxation
Book Chapters: Chapter 8: Application: The Cost of Taxation. Principles of Microeconomics (See
Bibliography)

SESSION 24 (LIVE IN-PERSON)

DOCUMENTARY - The Future of Work: A vice news special report
Assignment in class: Guidelines will be uploaded in Blackboard
Video: The Future of Work. (Youtube)

SESSION 25 (LIVE IN-PERSON)

MARKET FAILURE

Topic: Externalities and Market Failure

Mandatory reading:
- The Economy - Unit 12 - “Markets, efficiency, and public policy”
Technical note: “Markets, efficiency, and public policy”. Unit 12 in The Economy (Book)

SESSION 26 (LIVE IN-PERSON)

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MARKET FAILURE

Topic: Public Goods and Common Resources

Mandatory reading:
- The Economy - Unit 12 - “Markets, efficiency, and public policy”
Book Chapters: “Markets, efficiency, and public policy”. Unit 12 in The Economy

SESSION 27 (ASYNCHRONOUS)
Team Projects: Oral Presentations and writing submission: Guidelines will be uploaded to
Blackboard
Empirical Project: "Measuring the Effect of a Sugar tax"
Other / Complementary Documentation: Empirical Project 3: Measuring the Effect of a Sugar ax
(Book)

SESSION 28 (LIVE IN-PERSON)

Team Projects: Oral Presentations and writing submission: Guidelines will be uploaded to
Blackboard
Empirical Project: "Measuring the Effect of a Sugar tax"
Other / Complementary Documentation: Empirical Project 3: Measuring the Effect of a Sugar ax
(Book)

SESSION 29 (LIVE IN-PERSON)

Documentary: Inequality for all
Assignment in class: Guidelines will be uploaded in Blackboard
Video: Inequality for all (Youtube)

SESSION 30 (LIVE IN-PERSON)

Final Exam

BIBLIOGRAPHY
Compulsory
- The Core Team. (2017). The Economy. Oxford University Press. ISBN
9780198810247 (Printed)
Electronic: https://www.core-econ.org/the-economy/book/text/0-3-contents.html
- Mankiw, G.. (2020). Principles of Microeconomics. 9th Edition. Cengage
Learning. ISBN 9780357133484 (Printed)

EVALUATION CRITERIA

Your final grade in the course will be based on the following criteria:

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 Criteria Percentage Comments
Final Exam 30 % Includes all course
material
Intermediate Tests 20 % Material: Sessions 1-13
Group Presentation 15 % Empirical Project: Supply
and demand
Workgroups 10 % Documentary: The future
of work
Workgroups 5% Documentary: Inequality
for all
Group Presentation 20 % Empirical Project:
Meausuring the effect of
a sugar tax

GENERAL OBSERVATIONS
Each student has four attempts over two consecutive academic years to pass this course.
For every BIE Program mandatory class, students are required to obtain the minimum grade of 5
required to pass the course. Students whose grade in the Final Exam (or the largest assignment) is
below 5 will fail the course. The rule applies to whichever assignment carries the greatest weight to
the final grade. Dates and location of the final exam will be posted in advance and will not be
changed.
Students must attend at least 70% of the sessions. Students who do not comply with the 70%
attendance rule will receive a 0.0 on their first and second attempts and go directly to the third one
(they will need to enroll in this course again the following academic year).
Students who are in the third or fourth attempt must contact the professor during the first two weeks
of the course.

ATTENDANCE
In-person attendance is mandatory at IE University, as it is an essential factor of IE´s learning
methodology. While we do closely monitor attendance in each course, we also consider our
students responsible for their own agenda and commitments, as adult university students. With that
in mind, each student may miss up to 30% of the sessions within a given course and still maintain
the possibility of passing that given course. This 30% “buffer” is to be used for any absences, such
as: illnesses, personal emergencies, commitments, official/governmental matters, business and/or
medical appointments, family situations, etc. Students should manage their various needs, and
situations that may arise, within that 30% buffer. If a student is absent to more than the allowed
30% of the sessions (regardless of the reason), s/he will obtain a 0.0 grade for that course in both
the ordinary and extraordinary calls of the current academic year, and s/he will have to retake the
course during the following academic year.
Please pay close attention to your attendance. The program strongly encourages attending 100%
of the sessions as it will improve your learning outcomes, it will increase the class performance and
it will benefit your participation grade. Noncompliance with deadlines for Non-Classroom Learning
activities or assignments will result in an absence for the session.
Extreme cases involving emergencies such as: extended hospitalizations, accidents, serious
illnesses and other cases of force majeure, are to be consulted with the Program Management
([email protected]) for assessment of the situation and corresponding documentation, in order
to support and guide each student optimally.
For more information about the university attendance policy, please check;
https://www.ie.edu/student-guide/bir/policies-and-guidelines/attendance/

RETAKE POLICY

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Any student whose weighted final grade is below 5 will be required to sit for the retake exam to
pass the course (except those not complying with the attendance rules, whom are banned from this
possibility).
Grading for retakes will be subject to the following rules:
- The retakes will consist of a comprehensive exam or equivalent assignment. The grade will
depend only on the performance on this exam; continuous evaluation over the semester will not
be taken into account.
- Dates and location of the retakes will be posted in advance and will not be changed.
- The exam/assignment will be designed bearing in mind that the passing grade is 5 and the
maximum grade that can be attained is 8 out of 10.

PLAGIARISM / ACADEMIC HONESTY

Plagiarism is the dishonest act of presenting another person’s ideas, texts or words as your own.
This includes in order of seriousness of the offense:
- providing faulty sources;
- copy-pasting material from your own past assignments (self-plagiarism) without the instructor’s
permission;
- copy-pasting material from external sources even while citing them;
- using verbatim translations from sources in other languages without citing them;
- copy-pasting material from external sources without citing them;
- and buying or commissioning essays from other parties.
IEU students must contact the professor if they don’t know whether the use of a document
constitutes plagiarism. For help with your academic writing, contact the Writing Center
([email protected]). The professor will also advise the student on how to present said
material. All written assignments must be submitted through Turn-it-in, which produces a similarity
report and detects cases of plagiarism. Professors are required to check each student's academic
work in order to guarantee its originality. If the originality of the academic work is not clear, the
professor will contact the student in order to clarify any doubts. Students using external tutorial
support should report it to the professor and the BIR Program from the moment they began
receiving this support. In the event that the meeting with the student fails to clarify the originality of
the academic work, the professor will inform the Director of the Bachelor Program about the case,
who will then decide whether to bring the case forward to the BIR Academic Review Panel. Very
high similarity scores will be automatically flagged and forwarded to the Academic Review Panel.
Plagiarism constitutes a very serious offense and may carry penalties ranging from getting a zero
for the assignment to expulsion from the university depending on the severity of the case and the
number of times the student has committed plagiarism in the past.

PROFESSOR BIO

Professor: ANTONELLA FAZIO

E-mail: [email protected]

ANTONELLA FAZIO

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Antonella Fazio currently works at IE Business school in a research project on illegal pharma. She
studied Economics (BA and MA). She completed her PhD in History at the European University
Institute focusing on economic history. She has also been a postdoctoral researcher in the
department of Economics of the Universidad de los Andes and at SMAG and CriDIS at Université
Catholique de Louvain (UCL – Belgium) and has been an adjunct professor in economics. For
several years she was a researcher at the Center of Economic development, Universidad de los
Andes. Antonella has a special interest in empirical research and quantitative methods. Her
research interest includes political and social economy, development and economic and business
history. Before working at IE, she joined the European Parliament within the Robert Schuman
traineeship program. Previously, she has worked as economic advisor at the City Council of
Bogota as well as in an EU Legal Consultancy based in Brussels.

OTHER INFORMATION
Office hours:
-Presential / online: by appointment
-Contact details: [email protected]
CODE OF CONDUCT IN CLASS
1. Be on time. Students arriving more than 5 minutes late will be marked as “Absent”. Only
students that notify in advance in writing that they will be late for a specific session may be granted
an exception (at the discretion of the professor). Students attending online must always have their
cameras on during the session or risk being marked absent.
2. If applicable, bring your name card and strictly follow the seating chart. It helps faculty
members and fellow students learn your names.
3. Do not leave the room during the lecture: Students are not allowed to leave the room during
lectures. If a student leaves the room during lectures, he/she will not be allowed to re-enter and,
therefore, will be marked as “Absent”. Only students that notify that they have a special reason to
leave the session early will be granted an exception (at the discretion of the professor).
4. Do not engage in side conversation. As a sign of respect toward the person presenting the
lecture (the teacher as well as fellow students), side conversations are not allowed. If you have a
question, raise your hand and ask it. It you do not want to ask it during the lecture, feel free to
approach your teacher after class. If a student is disrupting the flow of the lecture, he/she will be
asked to leave the classroom and, consequently, will be marked as “Absent”.
5. Use your laptop for course-related purposes only. The use of laptops during lectures must be
authorized by the professor. The use of Social Media or accessing any type of content not related
to the lecture is penalized. The student will be asked to leave the room and, consequently, will be
marked as “Absent”.
6. No cellular phones: IE University implements a “Phone-free Classroom” policy and, therefore,
the use of phones, tablets, etc. is forbidden inside the classroom. Failing to abide by this rule entails
expulsion from the room and will be counted as one absence.
7. Escalation policy: 1/3/5. Items 4, 5, and 6 above entail expulsion from the classroom and the
consequent marking of the student as “Absent.” IE University implements an “escalation policy”:
The first time a student is asked to leave the room for disciplinary reasons (as per items 4, 5, and 6
above), the student will incur one absence, the second time it will count as three absences, and
from the third time onward, any expulsion from the classroom due to disciplinary issues will entail 5
absences.