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UNIVERSITY OF ZIMBABWE

DEPARTMENT OF ECONOMICS
PRINCIPLES OF MICROECONOMICS (ECON104) COURSE
OUTLINE

DURATION:
ONE SEMESTER
First Year (Semester 1)
COURSE ADMINISTRATION
Lecturers:
Mrs. E. Rwaveya(Room 212 commerce building)
email ejanhi@sociol.uz.ac.zw.
Mr. B. M. W. Zwizwai (Room 14 Economics Department)
email bmzwizwai@science.uz.ac.zw
Mr. T. Makova (Room 234 commerce building)
email tmakova@sociol.uz.ac.zw

Contact Hours: 60 lecture Hours

 45 Lecture Hours
 15 Tutorial Hours

PURPOSE OF THE COURSE


This course intends to give students awareness on the operation of Microeconomics: which deals with the
economic behaviour of households, individuals, firms, or a particular market. It introduces students to the
‘economic way of thinking’, which recognises that economic agents must make trade-offs which involve
costs between competing alternative uses of scarce resources. This basic economic problem has
implications at the microeconomic level as it guides individuals in making best decisions. Microeconomic
models are used to analyse decision-making by individual consumers and firms within various market
structures.

COURSE AIMS
The major aims of the course to ensure that on completion of this unit, students should have:
 an understanding of the theoretical foundations of microeconomics;
 acquired generic skills essential for progression to upper level units by applying rigorous
thinking and understanding to analytical geometric models; and
 an appreciation of microeconomics as an evolutionary science and its ability to address, in a
microeconomic framework, the persistent social and economic problems confronted by
society.

LEARNING OUTCOMES
By the end of the course it is expected that the student will:
 be able to understand and apply the basic tools of supply and demand;
 know how to apply the basic theory of how consumers and firms respond to a range of problems;
 be familiar with simple models of competitive behaviour and industrial organisation;

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 be able to recognise the limitations of markets and understand how governments can sometimes
improve on market allocations.
PREREQUISITES
 The prerequisites for this course are 5 O’Levels (including Maths and English) and 3 A’levels.
Many students feel disadvantaged if they have not studied Economics previously at the secondary
level. This feeling is entirely unnecessary as the unit is commenced on the basis of no previous
knowledge. The only required prerequisites are a willingness to learn and, in particular, the
ability and motivation to read all material prescribed.

COURSE CONTENT

1.1 Introduction to Microeconomics (WEEK 1)


1.1.1 What is Economics?
1.1.2 Economic issues and concepts
1.1.3 The Economic Problem:- Scarcity and Unlimited Wants
1.1.4 Economic Way of Thinking
1.1.5 Basic economic questions and economic systems
1.1.6 How do Economists work?- models:- Production Possibility Frontier
[Samuelson and Nordhaus chapter 1]

1.2 Partial Equilibrium Analysis of Markets (WEEK 2 AND 3)


1.2.1 Elementary demand analysis: theory of demand, demand curves, the determinants of
demand;
1.2.2 Elementary supply analysis: theory of supply, supply curves , the determinants of supply;
1.2.3 Market price determination and Changes in market prices,
1.2.4 Applications: Government Actions in the Market:- price controls, minimum price
legislation, indirect taxes.
[Samuelson and Nordhaus chapters 3 and 4]

1.3 Elasticity and its application (WEEK 4)


1.3.1 Demand elasticity:Own;Cross Price Elasticity; Income Elasticity
1.3.2 Supply Elasticity: Own;Cross Price Elasticity; Income Elasticity
1.3.3 Taxonomy of Goods
1.3.4 Elasticity applications: incidence of tax
[Samuelson and Nordhaus chapters 3 and 4]

*****TEST ONE covers materials from section 1.1 to 1.3*****


1.4 Introduction to consumer behaviour (WEEK 5 AND 6)
1.4.1 Marginal utility theory: concepts, consumer equilibrium.
1.4.2 Indifference curve analysis: budget line, indifference curves, derivation of demand curve
1.4.3 Consumer surplus and the paradox of value
[Samuelson and Nordhaus chapter 5]

1.5 Consumers, producers and efficiency of markets (WEEK 7 and 8)


1.5.1 Markets and welfare: consumer and producer surplus; economic efficiency
1.5.2 Application the cost of taxation: deadweight loss
1.5.3 Government and Market Failure
1.5.4 Externalities: positive and negative; policies to control market failures
1.5.5 Types of goods: private goods, monopoly goods, public goods and common resources

*****TEST TWO covers materials from section 1.4 to 1.5 *****


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1.6 Theory of the firm (WEEK 9 and 10)
1.3.1 Theory of production: Basic concepts: Production function; Total, Average and Marginal
product, law of diminishing returns; returns to scale; short run and long run.

1.3.2 Costs of production: Costs in the short and long run including marginal, average, fixed,
and total costs
[Samuelson and Nordhaus chapter 6 and 7]

1.7 Market Structures 1(WEEK 11 and 12)


1.7.1 Firms in competitive market
1.7.2 Monopoly

[Samuelson and Nordhaus chapters 8, 9 and 10]

1.8 Market Structures 2 (WEEK 13)


1.8.1 Monopolistic competition ,
1.8.2 Introduction to oligopoly and game theory
[Samuelson and Nordhaus chapters 8, 9 and 10]

*****TEST THREE covers materials from section 1.6 to 1.8 *****

3. TEACHING
The course will be taught on the basis of 3 lectures and one tutorial per week. In general
lectures will concentrate on the application of the techniques being discussed, while tutorials
will focus on the techniques themselves. Tutorials will cover some material which has not
been covered in lectures.

Tutorials will focus on work covered in the preceding week’s lecture. For example, the
material covered in the lecture for Week 1, will be discussed in the tutorial in Week 2.
Tutorials will look at questions which are frequently posted on the Economics Dept notice
board and TSIME e-learning portal for each week as well as individual problems raised by
students.

4. COURSE ASSESSMENT
Each course has its own language, so students must write their assignments and tests like an
economist to succeed. Assessment of the course will be based on a 2 hour final examination
(75%) and a coursework mark (25%). The coursework mark will be derived from 3 tests
during the course. Details of the tests are in the course outline section.

N.B. if a student misses a test or fails to submit an assignment the mark allocated is zero.

Grades in the course are as follows:

Grade Description Range


1 First class 75 – 100%
2.1 Upper-Second class 65 – 74%.
2.2 Lower-Second class 60 – 64%
3 Pass 50 – 59%
F Fail 0 – 49%

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If a student obtains below 49%, the student will repeat the course the following year and will
not progress to higher Economics courses.

5. Course Resources
Prescribed texts
Baumol, W.J. and. Blinder A. S (2007) Economics: Principles and Policy, Harcourt: San Diego.
Lipsey R.G (2009) An Introduction to Positive Economics, 7th Edition, Oxford University Press: Oxford
Lipsey R.G and Chrystal A. K., (2007), Economics, Oxford University Press, New York
Mankiw G.N. and Taylor M. P. (2006), Economics, Thomson Learning, London, UK.
McConnell C.R. and. Brue S.L. (2000) Economics, Principles, Problems and Policies, McGraw-Hill:
New York.
Samuelson P. A. and Nordhaus W.D. (2005) Economics, 18th Edition McGraw-Hill: New Delhi.
Sloman J. (2003) Essentials of Economics, Prentice Hall: London.

E-resources
a. TSIME E-learning Portal: //tsime.uz.ac.zw
b. E-books: http://www.uz.ac.zw/index.php/library.html
c. www.myeconlab.com

In addition to these textbooks, it is important that you read the business sections of the local newspapers
and other local financial journals so that you keep up with developments in the Zimbabwean economy. All
standard textbooks in microeconomics cover the same principles and ideas.