Introduction to Microeconomics

Welcome to ECON A231 Introduction to Microeconomics.

This course is a one-semester, five-credit, middle-level course for HKMU students seeking one of the following degrees:

• Bachelor of Social Sciences in Economics (BSSCE, BSSCHE or BSSCHEM, BSSCHEF, BSSCHEEC);
• Diploma or Higher Diploma in Economics (DE, HDE);
• Bachelor of Social Sciences in Police and Security Management (BSSCPSM);
• Bachelor of Business Administration (with many different concentrations); or
• Diploma or Higher Diploma in Business Studies (DBS, HDBS).

Although ECON A231 Introduction to Microeconomics is a middle-level course, there are no specific prerequisites for enrolment in the course. ECON A231 is really an introductory course — offered at the middle level — which aims to provide you with the microeconomic knowledge that is essential for understanding the forces underlying business and social interactions.

The study units, textbook, assignments and self-tests will help you master the topics over a period of around 16 weeks.

Purpose of this Course Guide

As this course might be your first course at Hong Kong Metropolitan University (HKMU), you might not be aware of the study skills required for distance learning or how HKMU courses are organized. If you have taken HKMU courses before, then you should be well aware of both.
Whichever group you belong to, it is recommended that you read this Course Guide thoroughly before looking at the study units or your textbook.

This Course Guide tells you briefly what the course is about, and how you can work your way through the course materials. It suggests the amount of time you will likely need to complete the course, and gives you a general idea of when your assignments are due. For detailed information on assignments, however, please refer to the Assignment File; and for information concerning due dates for the submission of work, please refer to the Presentation Schedule.

The study units for ECON A231 have been prepared by your university professor. You can read and work through these specially designed study materials at your own pace, at times and places that suit you best.

You can think of working through each study unit as reading your lectures instead of hearing them from a lecturer. But in the same way that a lecturer might assign some readings to you, the study units will tell you when to read your textbook or other materials.

Also in the same way that a lecturer might give you an in-class exercise, your study units also provide exercises (i.e. self-tests and activities) for you to do at appropriate points of time. You should do your best to complete them all as these exercises and questions give you the practice necessary to achieve the objectives of the course and pass the examination. Finally, just as you 'make notes' in a direct face-to-face lecture, you are advised to take notes as you work through the study units and your textbook, and to read and think about them in relation to each other.

Course aims

This course aims to introduce you to the problems of microeconomics and to enable you to explore the ways in which private and government agents deal with them. It will cover economic efficiency and resource allocation, market versus command economy, product and factor markets, and the problem of externalities.

Course learning outcomes

After completing the course, you should be able to:

• explain the fundamental problems and principles of economics;
• explain the meanings of demand for and supply of goods, and discuss how markets work;
• analyse the production and cost functions of a firm;
• explain the market structure with its implications for a firm's optimal decisions on prices and/or quantities;
• apply the theories of factor market to analyse labour, capital and land markets; and
• discuss the meanings of externalities and market failures, and explain the effects of policy intervention.

ECON A231 Introduction to Microeconomics has been designed to create a structured yet stimulating environment in which you will learn the fundamental concepts of this fascinating subject. The course includes the topics presented in the 'Course overview' below, which is followed by brief descriptions of each unit in the section 'Study units'.

Course overview

The following table gives a general overview of the course structure.

Study units

There are six study units for this course. The discussions and topics progress from basic concepts to fundamental analyses and then to real-world applications.

The discussion begins with the behaviour of individual consumers and producers in a market economy, with applications to the economies of Hong Kong, China and the US. You will examine market structure and market power, as well as their implications for pricing, production and competition; and then you will consider factor markets, market distortions and public goods. The resource allocation and welfare effects of government policies under different scenarios will also be discussed.

You have a well-written textbook (Mankiw, Quah and Wilson, 2021, Principles of Economics, An Asian Edition, Third Edition) as the basis for your studies in this course. The following units are based on groups of chapters from this extremely readable resource. Furthermore, a series of excellent online quizzes support the textbook itself — they will be listed later in this Course Guide.

Unit 1: What is economics?

This introductory unit explains what economics is, and introduces an economic model — the production possibility frontier (PPF). The focus is on learning and understanding Mankiw's seven microeconomic principles and the PPF model, which show that the study of microeconomics is guided by a few big ideas.

Unit 2: Demand, supply and markets

This unit defines and examines the economic factors that affect demand and supply behaviour. Competitive markets and the role that the market mechanism plays in the economy are discussed, together with how equilibrium price and quantity are determined. Wherever possible, the economic concepts are applied to real-world problems or issues such as those concerning Hong Kong's housing policy, sales taxes and the minimum wage law.

Unit 3: Firm organization, production and cost

The behaviour of a firm's production is the focus of this unit. The unit first discusses what a firm is, then investigates a firm's costs and profits from a number of perspectives, and finally looks at the behaviour of firms in competitive markets.

Unit 4: Market structure and market power

This unit extends the discussion of competitive markets by investigating other types of market structures — monopolies, oligopolies and cartels — and examines their influence on the behaviour of firms and the economy as a whole. Production, pricing decisions and strategies such as price discrimination, are examined, and you will study basic game theory and its applications in relation to the oligopolistic market (in which there are only a few sellers). This unit contains some interesting applications for Hong Kong.

Unit 5: Factor markets

This unit deals with the factor markets of labour, capital and land. Labour productivity is defined and the importance of human capital to productivity is highlighted. The relationships between labour and other production factors such as capital and land are examined, and their interdependence is analysed. Income distribution, the issues of income inequality and government policies to help poor families escape poverty are investigated, and you will have the chance to apply what you have learned to local cases.

Unit 6: Externalities and public goods

Externalities and market failures are common in a market economy. You will find out what these terms mean, and look at why they can make market outcomes inefficient. You will also examine why private solutions to externalities might not work. The unit examines some optimal government policies for correcting the distortions caused by externalities.

Print media

Textbook

There is one compulsory textbook for ECON A231:

Mankiw, N G, Quah, E and Wilson, P (2021) Principles of Economics, An Asian Edition, Third Edition, Cengage Learning.

This well-established introductory textbook will be provided to all students of the course.

Readings

The textbook illustrates basic concepts and principles very well. A number of readings from journals, reports from local/international institutions and case studies will also be used to provide you with the necessary knowledge of the issues at hand.

Non-print media

The Online Learning Environment (OLE)

A dedicated area for ECON A231 students has been set up on HKMU's OLE. You will be able to log on to the OLE to access the course discussion board, the ePub version of the course study units and other materials. You will also submit your assignments via the OLE.

Equipment needs

You should have a personal computer (PC) that meets the minimum hardware and software requirements needed to gain access to the Internet.

Assignment File

Assignment details for this course are contained in your Assignment File. The nature of these assignments is described in the 'Assignments' section of this Course Guide. You are required to complete your assignments and submit them via the OLE in accordance with the timetable provided in the Presentation Schedule.

Presentation Schedule

The Presentation Schedule is available on the OLE. It gives the dates for completing assignments and attending tutorials, day schools, and so on.

You should pay particular attention to this Course Guide and all the instructions in the study units. You are highly recommended to attend all your tutorials, where you will meet your tutor and fellow learners.

Study units

You should read the study units carefully as they guide your learning and tell you how to approach any assignments related to the unit. Otherwise, you may miss important information. You must read both the study units and the textbook — they are not alternatives. Moreover, you should also read newspaper and journal articles, and other books related to the topics. The more widely you read, the better your appreciation and understanding of the course will be.

Each unit is divided into a number of sections. The first section provides the objectives of the unit and introduces the materials to be covered. The next section constitutes the contents of the unit. This section will guide your learning and direct you to complete self-tests. The final section contains a summary of the unit and feedback on the self-tests.

Non-assessed self-tests

You will come across non-assessed self-tests in each of the study units. These are designed to help you remember and apply what you have learned and to prepare for your assignments and the examination. The self-tests provide you with immediate feedback on your understanding of the subject matter just learned. By answering the self-test questions and referring to the feedback (included at the end of every unit), you can check your progress accordingly. You should attempt all questions before referring to the answers. The online quizzes are not assessed either — except by you, as a measure of your understanding.

Checking understanding

While you are studying each unit, please keep in mind the unit's objectives. After you have finished the unit, check whether you have achieved the set objectives. If you encounter any problems, please make notes and raise them with your tutor as soon as possible.

This course is designed to assist learners to move easily from the stated objectives, through the required readings in the textbook and supplementary materials, to the assignments and examination. You are expected to apply concepts and techniques you have acquired during the course when completing assignments and case studies; you will also undertake short practice exercises while working your way through the textbook and study units.

The study units will include self-assessment exercises that allow you to develop and monitor your own progress. The formal assessment requirements of the course will include two assignments and a final examination. Assignments serve as continuous assessment within the study period and contribute 50% of the total course mark. The other 50% is evaluated through the final examination.

You are required to achieve at least 40% or above for the average assignment score and 40% or above in the final examination in order to obtain a pass for this course.

Assignments

During the 16-week period of distance learning for this course, submission of the two assignments serves three purposes:

1. to provide a mechanism for you to keep up your progress;
2. to test your understanding of the topics and require you to demonstrate your achievement of the objectives of each unit; and
3. to also provide you with an opportunity to apply what you have learned by completing some application work and case studies.

Assignments, after being marked by your assigned tutor, are returned to you so that you will be aware of your mistakes and can clarify any misunderstandings. In addition, you can also widen your perspectives through your tutor's feedback.
Assignments generally consist of short problem-solving questions. There are two assignments for the course, and both of them will be counted towards the final assessment.

• Assignment 1, worth 25%, evaluates materials contained in Units 1 and 2.
• Assignment 2, worth 25%, evaluates materials contained in Units 3 and 4.

How to do your assignments

For each assignment, please read through the question and the instructions that accompany the question in the Assignment File. Please read the question carefully and make sure you understand what is required before attempting to answer.

Once you have completed each assignment, you must submit it via the OLE. Please ensure you do this on or before the deadline. However, if you cannot finish your assignment on time, you must contact your tutor before the deadline to discuss the possibility of an extension. Your tutor may grant you an extension of up to seven days. If more time is needed, you must obtain approval from the Course Coordinator or the Dean of the School of Arts and Social Sciences. No marks will be awarded for any late assignments without prior approval obtained from the Course Coordinator or the Dean.

Assignments will not be marked after the deadline for the final assignment, unless prior approval has been obtained for submitting them late.

Note that the table in the 'Course overview' section, shown earlier in this Course Guide, indicates when your assignments are due, but for actual dates, please check your Presentation Schedule and the Assignment File.

If your assignments call on you to write a 'research type' paper, you must be careful when you are using other references in your research. If you commit plagiarism, you will be penalized severely. Plagiarism is the theft of somebody else's work or ideas. This applies just as much to using work of other students as it does to authors of books and articles.

For further information about how to avoid plagiarism and acknowledge sources properly, as well as the procedures for submitting assignments via the OLE, please see the item 'General Information' under 'Assignments' on the OLE. For the University's position on ChatGPT and other AI chatbots, please visit https://ole.hkmu.edu.hk/ChatGPT/index.html.

Assignment extension policy

The assignment policy of the University as stated in the Student Handbook should be observed. Applications for extensions of up to seven days should be submitted to your tutor. For extensions of over seven days, you should note the following:

1. Assignment extensions may be granted in extenuating circumstances, which should be interpreted as circumstances that are unexpected. Work commitments and travelling are not regarded as extenuating circumstances unless they are unexpected.
2. Supporting documents must be submitted along with the application for extension of over seven days to justify the claim. Applications without supporting documents will not be considered.
3. Applications for extensions should be submitted either before or on the due date.
4. The decision to grant or refuse an extension is made by:
   • the Course Coordinator for extensions of up to 21 days; or
   • the Dean for extensions of over 21 days.

After an assignment is submitted via the OLE, it is your responsibility to check that the assignment has been successfully submitted. Extension applications due to any problem with uploading will not be accepted. The University cannot accept any responsibility for assignments that are not received by your tutor due to any problem with submission via the OLE. As a precaution, you are advised to keep a copy of each assignment you submit.

Examination

The final examination accounts for 50% of the total course marks. It will be held at the end of the course and will be two hours long. It will contain multiple-choice questions and short problem- solving questions, and covers materials from all units.

Final examination and grading

The final examination for this course will be two hours long (closed-book) and counts for 50% of the total course grade. You should use the time between finishing the last unit and taking the examination to review the entire course. You might find it useful to review your self-tests, your assignments, and the tutor's comments on your assignments before sitting for the examination.

The final examination covers information from all parts of the course and will be in a form you have already experienced in self-tests and assignments. Do not worry that the examination will contain tricky questions. That would not be consistent with the clear, open approach HKMU takes to helping its learners succeed in their studies.

To earn a pass grade for the course, an overall mark of 40% or better is required, but you must attain an average mark of 40% or better on the assignments and a mark of 40% or better on the final examination. You are therefore required to submit all assignments and to sit for the examination. If, for some good reason, you are not able to complete all assignments or sit for the examination, contact your Course Coordinator to see if alternative arrangements can be made.

Tutors

Tutors conduct face-to-face non-compulsory tutorial sessions with a group of students (approximately 30) over the course presentation as per the tutorial schedule. At these sessions, key course concepts are reviewed and reinforced; group and individual exercises are conducted; topical issues are discussed; individual student questions are answered; and assistance to assignments may also be provided.

Tutors also make themselves available for online contact with their tutorial groups. In addition to the tutorial work and online tutoring, tutors mark student assignments according to marking criteria provided by the Course Coordinator. Tutors are encouraged to provide comprehensive and timely feedback to students. The Course Coordinator is responsible for training the tutors, providing marking criteria, monitoring a sample of marked assignments and providing feedback to tutors.

Tutors are required to start tutorial sessions on time. If a tutor fails to turn up 30 minutes after the scheduled starting time, students may assume that the session is cancelled and they should report the case to the Course Coordinator so that a make-up session can be arranged.

Tutorials and day school

There will be eight two-hour tutorials and one four-hour day school for students of ECON A231 Introduction to Microeconomics. Tutorials are not compulsory, but you are strongly recommended to attend them.

You are encouraged to put into practice the following strategy for working through the course:

1. Read this Course Guide carefully. Check the suggested study schedule and mark down important dates, such as the assignment due dates and tutorial dates. Try to keep up with the schedule and meet these important dates.
2. Start the first study unit. Read the introduction and objectives of the unit. The objectives indicate the main topics and expectations for the unit.
3. Work through the unit. The unit embodies a suggested sequence of study, but you can revise it to suit your own judgement and strategy.
4. Read the supplementary readings whenever the unit suggests you do so.
5. Attempt the exercises at the end of each section. Then check the answers given at the end of the unit, and read the discussions of the exercises.
6. Review the objectives for the unit to confirm that you have achieved them. Review the study materials and/or talk to your tutor if you are not sure that you have met the expectations.
7. Turn to your Assignment File and complete the assignments according to the instructions given. Submit your work no later than the due date.
8. After you have turned in your assignment, do not wait. Start working on the next unit. Note that only in this way can you keep on schedule.
9. After your assignment has been marked and returned to you, read through it and pay particular attention to your tutor's comments and queries. Clarify any doubts immediately by contacting your tutor.
10. After completing the last unit, review the whole course and prepare yourself for the final examination. Check again that you have met the course objectives and unit objectives.

You need to be regular in your study, because only in this way can you keep what you have learned fresh in your mind, and keep on schedule. Note that time is tight, but that time is in your own hands! You also need to be active in thinking, and always ask 'Why?' The exercises in the units will stimulate your thinking, but you also need to challenge yourself to further your understanding of the logic underneath the study materials.

This course has been designed to introduce you to the basic concepts of microeconomics and their application in your daily life. It will help you understand the world in which you live and give you a better idea of the potential and limits of economic policy.

After taking the course, we hope that you can answer questions about the economy. Why are there always some people unemployed? What are the effects of copyright protection on the movie industry? How does a government tackle environmental problems? And so on!

We hope you enjoy studying microeconomics and find it useful in your daily life — from reading the news to running a business. You may find some units of the course easy, but some are more difficult and challenging. Although you have to depend on yourself to go through the course, assistance from HKMU is always available and your tutor is ready to help.

We wish you every success!